Influences of context, motivation, and cognition of small business entrepreneaurs on enterprise performance

Date
2018
Authors
Owoseni, Taofeek Adejare
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Abstract
The development of a viable small, medium and micro enterprises (SMMEs) sector has been a major priority in the economic policy agenda of South Africa since 1995. However, there are challenges regarding the viability and performance of these SMMEs. Although several studies have made significant attempts in understanding the factors militating against the growth and performance of SMMEs including individual characteristics and systemic factors, there is no consensus on the major determinants of business performance. However, studies have already identified the methodological gaps. While key factors of motivation have been widely tested, the extant literature has not clearly identified the underlying cognitive factors and the effects of such factors on business performance in an African emerging market context. This study was designed to fill the research gap by testing the multidimensional model of enterprise performance regarding individual characteristics and contextual factors based on social cognitive theory to understand factors influencing business performance among SMMEs in South Africa. This study utilised a cross-sectional research design through a mixed-method primary data collection involving both quantitative and qualitative data. Data were collected in the three metros of Cape Town, Durban and Johannesburg. The quantitative phase involved the collection of data through questionnaires from 312 entrepreneurs at different stages of business. The qualitative phase involved in-depth interviews with 32 entrepreneurs. The quantitative data were analysed with SmartPLS version 3.2.4 and STATA version 13 in line with the objectives. Both descriptive and inferential statistics including partial least square structural equation modelling (PLS-SEM) were used. Content analysis was used to analyse qualitative data with ATLAS.ti software. The main findings of the study were that the level of education and managerial experience enhanced enterprise performance. Statistically significant factors of motivation that influence financial performance are need for achievement (0.269, p<0.05), locus of control (-0.292, p<0.05) and risk-taking propensity (0.285, p<0.05). Further, cognitive factors of skills (0.189, p<0.05) and ability (0.160, p<0.05) were found to influence financial performance. Knowledge showed a significant relationship with relative performance (0.236, p<0.05) and satisfaction with performance (0.223, p<0.05). The combined influence of the need for achievement, locus of control, risk-taking propensity, skill and ability on the financial performance of the firm (R2=0.305) recorded the highest behavioural propensity combination. In addition, motivational factors of need for achievement, risk-taking propensity and the cognitive factor of knowledge significantly influenced performance indicators of relative (R2=0.236) and satisfaction with performance (R2=0.339) respectively. Further analysis shows entrepreneurs as being rational and purposive in their risk-taking according to normative socio-cultural, political and economic indicators in the country. There is consistency in the joint influence of some factors of motivation and cognition on different performance indicators within the interaction terms using contexts as moderators. There are indications that limited capacity may impact negatively on the coping capability of entrepreneurs in an unfavourable context leading to a cautious approach to risk-taking. The study concluded that both individual and cognitive factors played significant roles in the prospect of an SMME’s viability and overall performance, and that contexts matter. Overall, this study made significant methodological contributions, both in terms of the analytical approach adopted and the development of new measurement scales for key constructs. Keywords: Motivation, cognition, SMMEs, financial performance and South Africa.
Description
Thesis submitted to the Faculty of Commerce, Law and Management University of the Witwatersrand, Johannesburg, South Africa, in fulfilment of the requirements for the award of PhD in Management (Entrepreneurship) 2018
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Citation
Owoseni, Taofeek Adejare. (2019). Influences of context, motivation and cognition of small business entrepreneurs on enterprise performance. University of the Witwatersrand, https://hdl.handle.net/10539/28879
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