The Impact of Enterprise Development Value Proposition on Small and Micro Enterprise Growth

177 Pages·2015·1.73 MB·English

by  Makhubele, Abigail: Absa

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How to cite this thesis
Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/
M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved
from: https://ujdigispace.uj.ac.za (Accessed: Date).
THE IMPACT OF ENTERPRISE DEVELOPMENT VALUE PROPOSITION ON SMALL AND
MICRO ENTERPRISE GROWTH

BY

T A MAKHUBELE

MINOR DISSERTATION

Submitted in partial fulfilment of the requirements for the degree

MAGISTER COMMERCII

in

BUSINESS MANAGEMENT

in the

FACULTY OF MANAGEMENT

at the

UNIVERSITY OF JOHANNESBURG

Supervisor: PROF CECILE NIEUWENHUIZEN

2015
DECLARATION

I certify that the minor dissertation submitted by me for the degree Master’s of Commerce (Business
Management) at the University of Johannesburg is my independent work and has not been submitted
by me for a degree at another university.

TELENI ABIGAIL MAKHUBELE
(Name in block letters – no signature)

I
The Impact of Enterprise Development Value Proposition on Small and Micro Enterprise Growth

ACKNOWLEDGEMENTS
My appreciation goes to the following for ongoing support throughout my study journey:
 God the creator for giving me the strength, wisdom and perseverance to embark on my
studies.
 My supervisor, Professor Cecile Nieuwenhuizen, for making available her time to guide,
shape and develop the research study.
 The Faculty of Business Management, Statkon – Juliana, and the library staff at Soweto
Campus, for lending the much-needed support – you are the best!
 My sponsor, Vusi Mazibuko, for inspiring me to enrol and for funding my studies.
 To my father, Mbhazima Jackson (MJ) Makhubele and my late mother, Mphephu Molli-
nah, for raising me based on the values of service excellence, honesty and perseverance,
and the ethic of hard work. I cannot thank you enough…
 The love of my life, Fickson, who stood by me through it all, for the late nights looking
after the kids. Your support, love and understanding assisted in managing my work-life
balance.
 To my adorable children, Xihluke, Emmanuel and Mukotisi, I dedicate this degree to en-
courage you to study and reach the highest levels you dream to achieve, irrespective of
the life stage you are in.

II
ABSTRACT
Small, medium and micro enterprise (SMME) prioritisation is a collaborative effort by
both the government and the private sector. The SA government called for support
through the 1995 White Paper on National Strategy for the Development and Promotion
of Small Business. The recent establishment (May 2014) of the Ministry of Small Busi-
ness Development reinforces the strategic role of SMMEs in the South African economy.
The prominent role played by SMMEs cannot be overemphasised.

ABSA Enterprise Development (ABSA ED), a division within Barclays Africa Group Lim-
ited, was established with the sole purpose of creating an enabling environment that
supports, advances funding and grants access to markets directed at SMME growth and
sustainability. ABSA ED understands the fundamental role of SMMEs in society and their
economic impact.

Government and private sector contributions and initiatives in support of SMME growth
and development indicate significant capital investment. Impact assessment by the gov-
ernment and the private sector to assess growth within SMMEs is rather lacking. The re-
search scope focused on measuring the impact of the ABSA ED value proposition on
small and micro enterprise (SME) growth within the Gauteng region for a period of a
year (2013). Measuring impact is about identifying and evaluating change. The Strategic
Management Entrepreneurial Ventures Framework is a useful framework to guide and
assess the SME journey from opportunity recognition through to growing a sustainable
enterprise.

One hundred and six SMEs participated in the survey, while four senior management
staff from ABSA ED participated in the unstructured interviews. Data was analysed sta-
tistically using SPSS by the University of Johannesburg, Statkon Department.

III
The Impact of Enterprise Development Value Proposition on Small and Micro Enterprise Growth

Findings of the study reveal that SMEs are positively impacted by ABSA ED interventions.
Firm strategy was significantly related to firm growth. Business development indicated
no significant relationship between the number of training opportunities the entrepre-
neur attended and the growth levels of the firm. The age of 55.2% of the businesses sur-
veyed ranged between 1 and 5 years, indicating the relative start-up phase of the SMEs.
SMEs confirmed the use of business skills acquired through ABSA ED training seminars.
Although the findings reflect a positive impact on the growth of the SME, the Procure-
ment Portal reflects low growth impact. Based on the above, the research aim has
therefore been achieved.

The study contributes to small business development by proposing the Strategic Man-
agement Entrepreneurial Ventures Framework to the SMEs banking with ABSA and mak-
ing use of the ABSA ED value proposition. The study has practical implications for SMEs
and ABSA ED. SMEs are encouraged to pay attention to competitive strategies while de-
veloping their businesses into sustainable growth enterprises. A change of practice in
the implementation of the Procurement Portal is recommended for ABSA ED. The study
highlights the need to do impact assessments for the various strategic projects aimed at
enabling SME growth.

IV
Contents
DECLARATION OF ORIGINAL WORK………………………………………………………….……………………………….I
ACKNOWLEDGEMENTS………..…………………………………………………………………………………………………..II
ABSTRACT ………………………………….……………………………………………………………………………..…………….III
CHAPTER 1 - BACKGROUND AND INTRODUCTION ................................................................................ 4
1.2 Rationale for the Research ................................................................................................... 6
1.3 Research Problem ................................................................................................................ 7
1.4 Research Objective ............................................................................................................... 9
1.5 Secondary Research Objectives ............................................................................................ 9
1.6 Brief Outline of the Research Design and Methodology ...................................................... 10
CHAPTER 2 - LITERATURE REVIEW ...................................................................................................... 17
2.1 Introduction ....................................................................................................................... 17
2.2 Strategic Framework .......................................................................................................... 17
2.3 Small, Medium and Micro Enterprise Business Perspective ................................................. 21
2.3.1 Definition of small, medium and micro enterprise .......................................................... 22
2.4 Collaboration ..................................................................................................................... 27
2.4.1 Definition of collaboration .............................................................................................. 27
2.4.2 Collaboration partners in support of SME growth ........................................................... 29
2.5 ABSA Enterprise Development (ABSA ED) ........................................................................... 37
2.6 Growth ............................................................................................................................... 42
2.7 Strategy.............................................................................................................................. 57
2.8 Chapter Summary .............................................................................................................. 68
CHAPTER 3 - RESEARCH METHODOLOGY ........................................................................................... 70
3.1 Research Philosophy/Paradigm .......................................................................................... 70
3.2 Research Approach ............................................................................................................ 73
3.3 Research Design ................................................................................................................. 74
3.4 Methodological Choice ....................................................................................................... 77
3.5 Research Strategy............................................................................................................... 79
3.6 Method Choice ................................................................................................................... 81
3.7 Time Horizon ...................................................................................................................... 84
The Impact of Enterprise Development Value Proposition on Small and Micro Enterprise Growth

3.8 Techniques and Procedures ................................................................................................ 84
3.9 Data Analysis ...................................................................................................................... 88
CHAPTER 4 - DATA ANALYSIS AND FINDINGS ..................................................................................... 93
4.1 Introduction ....................................................................................................................... 93
4.2 Sample Size and Response Rate .......................................................................................... 93
4.3 Demographic Background of Respondents ......................................................................... 94
4.4 Section B Statistics ........................................................................................................... 102
4.5 Qualitative Results and Findings from ABSA ED Senior Management ................................ 126
4.6 Chapter Summary ............................................................................................................ 127
CHAPTER 5 - THE INTERPRETATION OF RESULTS AND CONCLUSION ................................................. 129
5.1 Introduction ..................................................................................................................... 129
5.2 Addressing the Research Objective ................................................................................... 129
5.3 Application of Findings ..................................................................................................... 132
5.4 Findings Summary ............................................................................................................ 139
5.5 Recommendations ........................................................................................................... 140
5.6 Conclusion........................................................................................................................ 140
5.7 Suggestions for Future Research....................................................................................... 141
List of tables Page
Table 1. Categorisation of SMMEs by the NSB Act 23 - 24
Table 2. Relationship perspective 28
Table 3. Collaboration partners 35
Table 4. How an ED programme helps corporates/government entities meet their BBBEE
targets 39
Table 5. Growth indicators 51 - 52
Table 6. Stages of small business growth 53
Table 7. Questions for SWOT analysis 63
Table 8. SWOT analysis 64
Table 9. Contrasting philosophy paradigms 71
Table 10. Induction: from reason to research 74
Table 11. Characteristics of SMEs with small numbers of respondents 97
Table 12. Employee numbers and growth (measuring different constructs) 97 - 98
Table 13. Number of years the business was in operation 99
Table 14. Experience of the owner/manager in managing the business 99
Table 15. Qualification of the owner/manager 100
Table 16. Period that SME had banked with ABSA 100
Table 17. Business turnover/sales growth over the past year 101
Table 18. Case processing summary 102 - 103
Table 19. Reliability statistics 103
Table 20. Business growth – frequency table 103 - 104
Table 21. Case processing summary 107
Table 22. Reliability statistics 107
Table 23. Measures of central location 108
Table 24. Frequency distribution – competition 109
Table 25. Case processing summary 111
Table 26. Reliability statistics 111
Table 27. Measures of central location 111 -112
The Impact of Enterprise Development Value Proposition on Small and Micro Enterprise Growth

Table 28. Business strategy 114 - 115
Table 29. Case processing summary 116
Table 30. Reliability statistics 116
Table 31. Item statistics 116 - 117
Table 32. Frequency distribution – business development 119
Table 33. Correlation table validating if the business has a well-developed strategy 120 - 121
Table 34(a). Strengths 121
Table 34(b). Weakness 122
Table 34(c). Opportunities 122
Table 34(d). Threats 122 - 123
Table 35. Correlation table validating competition 123 - 124
Table 36. Impact Assessment 133 - 134

List of figures Page
Figure 1. Strategic Management of Entrepreneurial Ventures Framework 18
Figure 2. ABSA ED access to finance framework 41
Figure 3. The small firm life cycle 53
Figure 4. Six functions of strategy 59 34
Figure 5. Five forces driving industry competition 66
Figure 6. Components of a single-business organisation strategy 67
Figure 7. Research design adapted for the study 76
Figure 8. SME background data 95
Figure 9. Inter-item correlation matrix – Use of ABSA ED 105
Figure 10. Inter-item correlation matrix – Business strategy 112 - 113
Figure 11. Inter-item correlation matrix – Business development 117 - 118
Figure 12. Use of ABSA ED services by SMEs 124 45