Collaboration between state-owned enterprises and technology-based small medium enterprises: assessing the impact on SME performance
The importance of technology-based Small and Medium Enterprises (SMEs) in most economies cannot be underestimated. Their contribution, through high impact growth that is brought about by their innovative ability is felt through the job creation, contribution to the gross domestic product (GDP) and it is evident that support of such enterprises by government to ensure sustained growth is not only beneficial to the individual businesses but also to the growth of the economy. Existing literature points to the fact that government support through policy, financial and other factors result in improved performance of these firms which in turn, assist in their sustainability in the long run. In the American, Asian and European environments a lot of literature exists on the study of the performance of these tech-based SMEs. In Sub-Saharan Africa, however, the study of these enterprises is sparse and the technology-based industry is still in its infancy. This may be due to the fact that most of the economies are subsistence and most of the SMEs in these countries are survivalist in nature, unlike in the more technologically-advanced economies. In the South African economy, the country recognises the importance of these enterprises and appreciates the need to support them to ensure that their growth and sustainability are protected and maintained. The promulgation of policies aligned to supplier development and localisation is evidence for that. This study focuses on the performance of technology-based SMEs that are doing business with state-owned enterprises (SOEs). The variables examined are SMEs Entrepreneurial Capacity and Technological Capacity of these firms and their impact on the performance of the technology-based SMEs doing business with SOEs in South Africa. The study involved diligent selection of technology-based SMEs on the Treasury Department’s customer supplier database, commonly referred to as the CSD, that are actually doing business with SOEs. A total of 263 firms responded to the survey. Exploratory factor analysis was performed to estimate the underlying variables and factor loadings. The correlations between Entrepreneurial Capacity and Technological Capacity and SME performance measurements were examined. The mediating effect of Absorptive Capacity on the relationship between Technological Capacity and SME performance is also examined. The findings indicate that Entrepreneurial Capacity does have an impact on the performance of technology-based SMEs in the South African SOE environment. This is consistent with existing literature. The study also found that there is a positive impact of SME technological Capacity on SME performance as a result of doing business with SOEs. This is also consistent with existing and reviewed literature, together with the researcher’s preliminary assumptions during the course of the study. The findings of the study, however, did not find any mediating effect of Absorptive Capacity on the relationship between Technological Capacity and the SME performance. The results do not support the researcher’s assumed position that there is a mediating role of Absorptive Capacity on the relationship between Technological Capacity and technology-based SME performance. The evidence generated from this study contributes to the sparse extant literature on the performance of technology-based SMEs in South Africa. The study will assist policy makers who use SOEs to implement SME growth and sustainability policies.
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management in Entrepreneurship and New Venture Creation, March 2019
Tarusarrira, Cocky, (2019) Collaboration between state-owned enterprises and technology-based small medium enterprises: assessing the impact on SME performance, University of the Witwatersrand, Johannesburg, https://hdl.handle.net/10539/28570