The Impact of Ethical Practices on the Performance of Small and Medium Enterprises in South Africa

Abstract

SMEs have become beacons of hope towards improving economic growth and development of many countries globally. However, the literature documents a high discontinuance rate among small businesses. The purpose of this study is to investigate the impact of ethical practices on the performance of SMEs in South Africa. The study was based on a quantitative research design. The survey method was used as a data collection method. Using this method, self-administered questionnaires were used as the primary data collection tool. These questionnaires were hand delivered to the participants by the researcher. The random sampling method was used to obtain the participants. The population consisted of SME owner/managers in Polokwane municipality. 74 SME owner/managers participated in the survey. Data analysis included descriptive statistics, factor analysis, T tests and regression analysis. The Cronbach’s alpha was used as a measure of reliability. The findings showed that SMEs display unethical behavior and a weak performance. It was discovered that SMEs does not have policies in place to guide their ethical behavior. The T test results showed significant differences between gender and education levels with ethical practices of SMEs. The regression results showed that there is a positive relationship between ethical practices and performance of SMEs. Recommendations were made for SMEs to treat ethical issues seriously lest they risk incurring costs associated with lawsuits and negative brand reputation.

Impact of ethical practices on small and medium enterprises’ performance in Saudi Arabia: An Partial Least Squares-Structural Equation Modeling analysis

“…In line with that, results confirm that ethical practice in the organisation had a significant positive relationship with nonfinancial performance (β = 0.397, p < 0.01). Previous studies also support this result (Dzomonda & Fatoki, 2017), For instance, Berrone, Surroca and Tribó (2007) investigated the relationship between NFP as a result of business ethics and the FP of companies. Similarly, a considerable amount of positive relationships has been found to exist between the company's financial and NFPs and commitment to business ethics (Kehoe & Wright, 2013).…”

Sustainability practices and organizational performance during the COVID-19 pandemic and economic crisis: A case of apparel and textile industry in Sri Lanka

“…The SMEs in the South African context display unethical practices generating weak performance throughout business operations, indicating the significance of ethical practices to achieve better organizational performance. Furthermore, a similar study recommended treating ethical matters critically to avoid the risk of generating costs through negative brand reputation and court cases [ 73 ]. Assuming the past study findings are similar from the developed and developing country perspectives, the Sri Lankan apparel industry must also consider ethical practices and moral obligations to achieve better organizational performance even during the above-explained crises.…”

Owners’/Managers’ Critical Success Factors in Industrial MSMEs: An Applied Study in 10th of Ramadan City Egypt.

“…A wide range of entrepreneur related factors was covered in literatures, this may include owner's/manager's age, and gender (Lampadarios, 2015;Lampadarios, 2016;Li & Eriksson, 2012;Sefiani, 2013), personality traits and leadership capabilities (Samadzad & Hashemi, 2022;Lampadarios, 2015;Okoli et al, 2020;Li, 2019;Li and Eriksson, 2012), entrepreneurial orientation (Lampadarios, 2015;Okoli et al, 2020;Rodrigues et al, 2021), management skills and experiences (Samadzad & Hashemi, 2022;Lampadarios, 2015;Lampadarios, 2016;Li and Eriksson, 2012;Benzing & Chu, 2012;Sefiani, 2013), level of education (Samadzad & Hashemi, 2022;Lampadarios, 2015;Li & Eriksson, 2012;Sefiani, 2013;Benzing et al, 2009), family support and self-employment background (Li, 2019;Benzing & Chu, 2012;Benzing et al, 2009), internal or external locus of control (Samadzad & Hashemi, 2022;Sefiani, 2013), propensity of risk taking (Sefiani, 2013), innovation (Li, 2019), and his/her reputation for honesty and ethics (Benzing & Chu, 2012;Benzing et al, 2009;Dzomonda & Fatoki, 2017). Even though MSMEs' success factors were studied in many previous research, it is unsuitable to standardize a set of factors since many cultural, political, economic, and other business environment differences influence the appreciation of these factors (Benzing &amp...…”