Strategic Planning, Technology Orientation, and Firm Performance of Small Businesses in Mamelodi Township in Pretoria

Abstract

The fundamental aim of this study is to evaluate how strategic planning contributes to the performance of small-owner-managed spaza shops in the informal economy of Mamelodi, Pretoria. This was done by developing and testing a conceptual model which suggested that the entrepreneurial orientation of small spaza shop owners (indicating a method to use resources efficiently) has a direct effect on the performance of small businesses, depending on their ability to exploit external information (absorptive capacity), and effectively capitalize on learning capabilities (Organizational learning capabilities). A quantitative research methodology was adopted to pursue the context of this research study whereby convenience sampling was utilized to sample respondents conveniently. A self- administered questionnaire was adopted based on previous reputable benchmark studies, and this was used to sample 215 small informal traders in Mamelodi. For data collection and analysis purposes, a pilot study, as well as structural equation modeling, was conducted to ascertain the reliability, validity as well as model fitness of the data collected. This was executed using SPSS, SPSS Amos 29 and Smart PLS. The overall results of the study suggested that the 215 small businesses sampled in this study show that strategic planning does indeed impact small business performance as indicated in the data analysis section by four of the five hypotheses being significant and supported. However, it was also acknowledged that, although many respondents strongly agreed with the items presented in the Likert-scale of absorptive capacity, most of them were also not quite certain if their business was competing well against local rivals, which suggests that absorptive capacity does not necessarily impact overall performance, hence hypotheses four was deemed to be insignificant. Lastly, the insights and results attained from conducting this study can be used to assist small informal traders to potentially mitigate the challenge of using minimal resources to boost performances, which may go a long way in aiding the survival of small informal businesses.