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This study tests the interaction effect of government financial support for small businesses in the relationship between business revenue and the grant-approved amount in the post-financial support scheme in South Africa. Pre- and post-internal administrative datasets of the beneficiary firm were collected from the scheme between 2011 – 2018. The regression estimation procedure was based on the Pooled OLS regression and the GLS Random Effects (RE) model based on the Breusch-Pagan Lagrangian multiplier test. The theoretical approach in the study is based on the capital-revenue framework of firm output, represented by firms’ revenue performance level post-financial assistance, which serves as a marker of the beneficiary firm's revenue performance. Findings show, grant-approved amount had a statistically significant and positive effect on the revenue growth of grant beneficiary firms. The indication is for every 1 per cent increase in grant amount received by firms led to about a one per cent increase in revenue growth. The finding has useful implications to help strengthen the provision of government grants to small enterprises and provide a new framework for future studies on small business performance looking at the small enterprise support ecosystem which can be helpful to come up with planning for the working capital business models

Author

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  • Timothy Olaniyi Aluko

    (University of South Africa, South Africa)

  • Innocent Bayai

    (University of South Africa, South Africa)

Abstract

No abstract is available for this item.

Suggested Citation

  • Timothy Olaniyi Aluko & Innocent Bayai, 2023. "This study tests the interaction effect of government financial support for small businesses in the relationship between business revenue and the grant-approved amount in the post-financial support sc," Eurasian Journal of Business and Management, Eurasian Publications, vol. 11(1), pages 46-57.
    • Handle: RePEc:ejn:ejbmjr:v:11:y:2023:i:1:p:46-57
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    References listed on IDEAS

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    1. Abdullah, Hariem & Tursoy, Turgut, 2021. "Capital structure and firm performance: a panel causality test," MPRA Paper 105871, University Library of Munich, Germany.
    2. Tiezhu Sun & Wei-Wei Zhang & Marius Sorin Dinca & Muhammad Raza, 2022. "Determining the impact of Covid-19 on the business norms and performance of SMEs in China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2234-2253, December.
    3. Hariem Abdullah & Turgut Tursoy, 2021. "Capital structure and firm performance: evidence of Germany under IFRS adoption," Review of Managerial Science, Springer, vol. 15(2), pages 379-398, February.
    4. Soonae Park & In Hyeock Lee & Jung Eun Kim, 2020. "Government support and small- and medium-sized enterprise (SME) performance: the moderating effects of diagnostic and support services," Asian Business & Management, Palgrave Macmillan, vol. 19(2), pages 213-238, April.
    5. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad, 2019. "Optimal credit guarantee ratio for small and medium-sized enterprises’ financing: Evidence from Asia," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 342-356.
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