Collaboration between state-owned enterprises and technology-based small medium enterprises: assessing the impact on SME performance
Date
2019
Authors
Tarusarrira, Cocky
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Abstract
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.
Description
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
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Citation
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