Internal sources of competitive advantage of South African SMMEs in the IT industry.

Abstract

It is argued that the economic growth of South Africa can be bolstered by nurturing and growing small, medium and micro enterprises (SMME). However, most SMMEs have a short lifespan and those that survive, struggle to grow. This leads to the question of whether SMMEs have a sustainable competitive business edge to contribute to economic growth. In order to respond to this question, this research considered strategic growth theories to assess SMMEs with respect to their potential to achieve sustainable competitive advantage. The resource based view (RBV) postulated that an organisational resource that is valuable, rare, not imitable and non-substitutable can be a source of competitive advantage for an organisation. The emergent theory on dynamic capabilities states that it is rather the bundling and configuration of resources that leads to a position of competitive advantage for an organisation. The study used the RBV and dynamic capability framework on 85 SMMEs in the IT sector to assess whether human capital, knowledge capital technology capital and marketing capability are the resources and capabilities that could be a source of competitive advantage respectively. Although none of these resources and capabilities were demonstrated to be sources of competitive advantage, the study highlighted the significance of development and training of SMMEs to achieve improved performance.