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Macro-economic factors influence on South African SMME business performance

Author

Listed:
  • Janine Kruger

    (Nelson Mandela Metropolitan University)

  • Rootman Chantal

    (Nelson Mandela Metropolitan University)

  • Shelley Saunders

    (Nelson Mandela Metropolitan University)

Abstract

Purpose of study: To determine the influence of selected macro-economic factors (Transportation costs, Government regulations, Access to finance, Interest rates and Inflation and economic growth) on SMME business performance in the Eastern Cape, South Africa. Research design and methodology: The positivistic research paradigm adopting a quantitative research approach was followed in the study. A structured self-administered questionnaire was used to obtain the primary data from 200 SMME?s business owners/managers in the Eastern Cape region, South Africa. Convenience and snowball sampling were used to obtain the respondents in the sample. The literature review included the effect of macro-economic factors influencing SMME business performance and the environment in which SMMEs operate. Five hypotheses were constructed from literature and empirically tested. An exploratory factor analysis confirmed the validity and Cronbach?s alpha coefficients determined the reliability of the questionnaire. Descriptive statistics (mean and standard deviation) and inference statistics were calculated. The Pearson correlation coefficients determined the strength of the relationships between the independent (Transportation costs, Government regulations, Access to finance, Interest rates and Inflation and economic growth) and dependant variables (Business Performance) and the multiple regression analysis determined if relationships exist between the independent and dependant variables. Research findings: A statistically significant relationship was found between the Access to finance and Business performance. Although the relationships between the Business performance and Transportation costs as well as Interest rates were not statistically significant, negative correlations were found. Positive correlations were found between the Business performance and Government regulations, and Inflation and economic growth although the relationships were not statistically significant.Research limitations: The study was limited to only the Eastern Cape region, South Africa. The SMME definition is broad in scope and may differ from one industry to another. Practical implications: Managers/owners need to take care when selecting transportation methods and obtaining debt capital as an increase in these factors may negatively influence business performance. However, an increase in Government regulations, and Inflation and economic growth may lead to improved business performance. In addition, the more access to finance SMME?s have the more likely business performance will be positively influenced.Contribution of paper: This paper contributes towards the body of knowledge regarding SMME?s in a developing region in South Africa. Although it is well-known that macro-economic factors influence business performance, little is known regarding the extent of the influence, especially within a developing country.

Suggested Citation

  • Janine Kruger & Rootman Chantal & Shelley Saunders, 2015. "Macro-economic factors influence on South African SMME business performance," Proceedings of International Academic Conferences 2805126, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:2805126
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    File URL: https://iises.net/proceedings/19th-international-academic-conference-florence/table-of-content/detail?cid=28&iid=078&rid=5126
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    References listed on IDEAS

    as
    1. Black, Philip & Calitz, Estian & Steenekamp, Tjaart & Siebrits, Krige (ed.), 2011. "Public Economics," OUP Catalogue, Oxford University Press, edition 5, number 9780195995152.
    2. Aristea Gkagka & Grigoris Zarotiadis, 2008. "Transportation Costs and Final Prices: A Case Study of Fuels in Greece," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 6(2), pages 213-226.
    3. Afia Malik, 2010. "Oil Prices and Economic Activity in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 11(2), pages 223-244, September.
    4. Cassar, Gavin, 2004. "The financing of business start-ups," Journal of Business Venturing, Elsevier, vol. 19(2), pages 261-283, March.
    5. Neil Rankin, 2006. "The Regulatory Environment and SMMEs. Evidence from South African Firm Level Data," Working Papers 06113, University of Cape Town, Development Policy Research Unit.
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    Cited by:

    1. Bonginkosi Zwane & Celani Nyide, 2017. "SMME attitudes towards Financial Bootstrapping: A perspective from a developing economy," Proceedings of Business and Management Conferences 5607468, International Institute of Social and Economic Sciences.
    2. Bruce MASAMA & Juan-Pierré BRUWER, 2018. "Revisiting the Economic Factors which Influence Fast Food South African Small, Medium and Micro Enterprise Sustainability," Expert Journal of Business and Management, Sprint Investify, vol. 6(1), pages 19-28.
    3. Zwane, Bonginkosi Keith & Nyide, Celani John, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(3).
    4. Bonginkosi Keith Zwane, & Celani John Nyide, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(3), pages 347-356, July.

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    More about this item

    Keywords

    Macro-economic factors; SMME; Business performance;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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