The relevance of operational skills towards business sustainability: A focus on SMME manufacturers in the Vaal triangle region

Abstract

R Naidoo: University of Johannesburg B Urban: University of the Witwatersrand Business School Purpose: Activities in the manufacturing sector are often considered the bedrock of an economy and a key driver of growth and development. Within the South African manufacturing sector, operations skills are reported to be deficient and are often cited as a main cause of failure in small, medium and micro enterprises (SMMEs). This study explores and tests this fragile relationship between operations skills and SMME sustainability. Empirical investigations are conducted in a high-density SMME manufacturing environment -the Vaal Triangle Region.Design/Methodology/Approach: Building on previously established literature on SMME sustainability and operations skills, various measures are developed and tested for reliability and validity. Factor analysis is used to identify relevant factors in terms of operations skills. Co-relational analysis is then employed to test the hypothesised relationship. The study is cross-sectional in design and relies on trained fieldworkers administering surveys for data collection. Findings:Five clear factors for operations skills are identified through factor analysis with an overall high reliability value. Based on descriptive and co-relational analysis results reveal that operations skills are positively associated with sustainability.Implications: SMME owners, educators and service providers may benefit from the study's findings in terms of the nature and associations that operational skills have on developing sustainable SMME's. Originality/Value:The study focused on a neglected area of SMMEs -the importance of operations towards business sustainability, and made an important contribution towards theory development through empirical explorations. In South Africa, this is the first time an instrument measuring operations skills has been validated and associated with SMMEs in a manufacturing context.

Small- and medium-sized enterprises’ knowledge management systems as edifiers of new value innovations

“…A strong culture of knowledge management and information utilisation implies that most of the executives, managers and employees may tend to be motivated to act just on sensing the symptoms of the need to take certain specific actions. It signifies everyone in the organisation must be constantly inquisitive and concerned with how the existing information and new information can be gathered to devise better ways and new unique ideas for improving an enterprise's performance (Naidoo & Urban 2010). Unfortunately, the interview findings revealed that only a few enterprises tend to exhibit such characteristics.…”

“…Although this enhances the extent to which the SME's knowledge management system is able to edify new innovation processes, it is also critical that the embracement of a strong culture of information and knowledge utilisation is also accompanied by the dedication of the sufficient financial and non-financial resources (Cant & Wiid 2013;Naidoo & Urban 2010;Olawale & Garwe 2010;Pillay 2016;Ramukumba 2014;Scheers 2011). The allocation of sufficient financial resources can enhance effective use of monetary rewards to motivate talented employees to effectively use the existing information systems to constantly scan the existing information for the unfolding changes and the corresponding new innovations that can be undertaken.…”

The Necessity for Education and Training within the Survivalist Retail Entrepreneurship Sector

“…Charman, Petersen and Piper (2012:51) however, caution that even though informal sector economy presents potential opportunity for success, many, especially new entrants do not succeed. Naidoo and Urban (2010) locates lack of managerial skills among impediments of survivalist entrepreneurship, which extremely contributes to business collapse.…”

The Role of Basic Business Skills Development and Their Influence on South African Small, Medium and Micro Enterprise Sustainability

“…According to legislation 1 these business entities have the responsibility to attain three main socio-economic objectives. They pertain to the decreasing of national unemployment through job-creation, the diminishing of national poverty through wealth-dissemination, and the boosting of the national economy through adding value to the national Gross Domestic Product (GDP) (South Africa, 1996).Despite the fact that South African SMMEs make up approximately 90% of all business entities operating in the country (Mouloungui, 2012), while simultaneously contributing up to 57% to the national GDP (Naidoo & Urban, 2010;Thabethe, 2013), national unemployment 2 and national poverty 3 have not improved over the past two decades since the formal recognition of SMMEs by national government (Biyase, 2009;Cant &Wiid, 2013;Moloi, 2013).The foregoing is placed in perspective when taking into account that more than 50% of South Africans live in poverty; making ends meet on ±R25.00 per day / ±R779.00 per month (Cole, 2015;Grant, 2015). Additional evidence to support this view is provided through the statistics presented in Table 1.…”