Purpose
The purpose of this paper is to determine the empirical relationships that exist between two of the elements of a sound internal control system, namely internal control activities and managerial conduct, and the perceived sustainability of South African small, medium and micro enterprises (SMMEs).
Design/methodology/approach
Data were obtained from management and employees of 100 South African SMMEs operating in the Fast Moving Consumer Goods industry. All participants were interviewed by means of face-to-face structured interviews due to the complexity of the questions posed.
Findings
Only general management competencies have a relationship with the economic sustainability of these business entities. The rejection of three of the four hypotheses supports the current poor sustainability rate with approximately 75 per cent of South African SMMEs having to close their doors after being in operation for only three years.
Originality/value
As this study is the first of its kind for SMMEs, and although limited relationships were identified, it is crucial for management of SMMEs as well as government bodies that have an influence sphere over these entities, to ensure that SMME management incorporate crucial internal control activities and appropriate management conduct in their businesses.
The purpose of this research study is to theoretically investigate the sustainability, the managerial conduct of management and the internal control systems evident in South African small, medium and micro enterprises (SMMEs). To achieve the aforementioned, a literature review was conducted through analyzing relevant secondary data from journal articles, theses, dissertations, books, and reports. According to popular literature, the overall sustainability of any organization is strongly influenced by its internal control systems. Taking into account the weak sustainability of South African SMMEs, it appears that the soundness of the internal control systems of these business entities is adversely influenced by the managerial conduct of its management. This is particularly the case, since the managerial conduct of management in South Africa is often described as flexible; the managerial conduct of management makes up a substantial part of the control environment which, in turn, is deemed as the foundation of any system of internal control. In quintessence, the literature reviewed shows that the sustainability of South African SMMEs is adversely influenced by a flexible managerial conduct of management which directly (and negatively) impacts on the soundness of their internal control systems; their abilities to attain relevant objectives in the foreseeable future
Background: Although South African small, medium and micro enterprises (SMMEs) play an imperative role in the stimulation of the national economy, previous research studies show that these business entities have severe sustainability problems as approximately 75% of them fail after being in operation for only 3 years. The latter dispensation is pinned on the belief that South African SMMEs make use of inadequate and ineffective internal control systems.Aim: Since a system of internal control comprises five inter-related elements, while also taking into consideration that management is ultimately responsible for the internal control in their respective business entities, which is greatly influenced by their managerial conduct, this research study placed focus on determining the relationship which exist between the managerial conduct and the internal control activities evident in South African SMMEs.Setting: This study was conducted in the Cape Metropole, South Africa by obtaining responses from 240 stakeholders of SMMEs: 120 members of management and 120 employees.Methods: In order to achieve the latter, quantitative data were collected through a questionnaire and analysed accordingly through both descriptive statistics and inferential statistics.Results: From the results, a very weak negative statistically significant relationship was identified between the managerial conduct and the internal control activities evident in South African SMMEs.Conclusion: Essentially, management and employees should revisit the internal control activities evident in their respective SMMEs through placing emphasis on those internal control activities which can be built on their control environment.
Small retail businesses are essential for the growth of the South African economy. Though many of these business entities need more assets to seize business opportunities, previous research studies suggest that their overall access to finance through banks and other finance providers seems to be limited. In general, small retail businesses are usually managed by entrepreneurs who lack financial knowledge, but banks, when deciding on credit applications, rely heavily on financial information, which is provided by these entrepreneurs. Notwithstanding the aforementioned, this study aimed to explore barriers that limit access to finance for South African small retailers, from the perspectives of finance providers (banking institutions) and finance seekers (small retailers). Additionally, measures were highlighted to show how those hurdles could be overcome. Qualitative research was conducted, whereby data were collected via semi-structured interviews with management personnel at banks and other financial institutions, as well as independent experts and small retail business owners and managers. The findings show that many financing opportunities are available to small retail businesses, but access to these opportunities is limited mainly owing to, inter alia, strict bank regulations and factors that are inherent to small retail business owners.
1.South African SMMEs contribute up to 57% of the national gross domestic product and provide employment opportunities to approximately 61% of the national workforce (Mouloungui 2012; NCR 2011).Background: South African small, medium and micro enterprises (SMMEs) add significant socio-economic value to the national economy. Unfortunately, up to 80% of these business entities fail after being in existence for only 4 years. Previous research shows that a probable reason for the latter dispensation is that these business entities make use of ineffective and/or inadequate internal control systems which, inter alia, comprises inadequate internal control activities.Objectives: This study seeks to ascertain whether internal control activities implemented in South African SMMEs have an effect on the perceived adequacy and effectiveness of their overall internal control systems.Method: Though exploratory in nature, this study followed an empirical stance through the assistance of survey research. Data were collected from 119 SMME managers and 98 employees of South African SMMEs operating in the fast-moving consumer goods industry.Results: Although only 18 of the 64 tested relationships are found to be statistically significant, none of the formulated hypotheses can be rejected as relevant statistically significant predictions can be made in relation to the perceived adequacy and effectiveness of internal control systems when applicable internal control activities of these business entities are taken into account.
Conclusion:This study provides a foundation for future studies to both scrutinise and enhance the internal control environment in South African SMMEs, ultimately improving the sustainability rate of South African SMMEs.
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