Challenges faced by small, medium and micro enterprises in Gauteng: A case for entrepreneurial leadership as an essential tool for success

Abstract

Background: Traditional approaches to managing and leading in entrepreneurial systems, founded on traditional, reductionist and linear thinking, could have issues coping with the inherent uncertainties, complexity and dynamics of such circumstances. Entrepreneurial leadership is acknowledged as an important competency that entrepreneurs could adopt to enhance their leadership development and competitive and sustainable growth for their businesses.Aim: This research study sought to evaluate leadership challenges that affect the performance and the Gauteng province’s small, medium and micro enterprises (SMMEs) sustainability.Setting: This study focuses on SMMEs in the Gauteng province.Methods: In this qualitative study, a systems dynamics approach was used to explore the impact of the various leadership problems and dynamics influencing the SMME performance in the Gauteng province. Semi-structured interviews were conducted with 46 entrepreneurs, followed by creating causal loop diagrams to understand how system variables and components produce behaviours in interactive patterns within the entrepreneurial system.Results: Findings of the study revealed that SMMEs consistently suffer from relatively high levels of failures and lower performance levels caused by: (1) a lack of entrepreneurial leadership skills, (2) a lack of financial resources and/or finances, (3) a lack of financial education, (4) infrastructure constraints, (5) a lack of training, (6) a lack of technology and (7) crime and corruption.Conclusion: This study highlights that the entrepreneurial context in South Africa is dynamic and complex in nature and is limited by entrepreneurial leadership capabilities and a weak understanding of the business environment.Contribution: This study employs a system dynamics approach that entrepreneurs can use to understand and solve important, complex socio-economic and sustainability problems that they encounter.

Strategic decision-making in small and medium enterprises in South Africa

“…In the South African context, SMEs also face additional challenges, such as crime, corruption, challenges to market access and a lack of managerial skills (Mhlongo & Daya 2023;Viviers & Venter 2008). Tax legislation also does not always provide the necessary support and encouragement in aiding small business with lower tax incentives and initiatives (Painter-Morland & Spence 2009).…”

“…Tax legislation also does not always provide the necessary support and encouragement in aiding small business with lower tax incentives and initiatives (Painter-Morland & Spence 2009). Similar to large organisations, SMEs also face bureaucracy challenges that result in poor business and management skills, decisions and practices (Bureau for Economic Research 2016 ;Gopaul 2019;Mhlongo & Daya 2023). In addition to all these challenges, can the lack of or inadequate strategic decision-making (SDM) skills also be a stimulus for poor performance and failure in SMEs (Gopaul & Rampersad 2020;Hang & Wang 2012).…”

Effects of physical stock loss on the financial performance of retail enterprises

“…Insights from the National Development Plan (NDP) (2015) indicate that the sector is expected to create 90% of employment by 2030. Recent studies show that small businesses account for over 80% of employment in South Africa (Mhlongo & Daya 2023). The retail SMME sector's contribution towards this goal is significant.…”

Informal township businesses and socio-economic challenges: a case of South Africa.

“…Furthermore, it is under the NDP that small businesses are considered the future of business as well the economy of the country. As of 2017, small businesses accounted for about 40 percent of all businesses in SA, and it is anticipated that going forward, 90 percent of all new jobs will come from small businesses (Mhlongo and Daya, 2023;Smit, 2017).…”

“…It is to be noted that there are other institutions, policies and initiatives implemented to support and promote small businesses as one of the mechanisms to address some of the existing socioeconomic challenges in the country. Despite all these initiatives, small businesses continue to face several challenges that are restricting their potential to address socio-economic challenges (Mhlongo and Daya, 2023). This is evidenced by the persistence of socio-economic challenges (among other reasons), suggesting that increases in investments directed towards initiatives for supporting small businesses may not have yet produced the desired impact.…”