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
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