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Driving SMEs’ Performance in South Africa: Investigating the Role of Performance Appraisal Practices and Managerial Competencies

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  • Nhamo Mashavira

    (Julius Nyerere School of Social Sciences, Great Zimbabwe University, Masvingo 1235, Zimbabwe)

  • Sevias Guvuriro

    (Department of Economics and Finance, University of the Free State, Bloemfontein 9301, South Africa)

  • Crispen Chipunza

    (Department of Business Management, Central University of Technology, Bloemfontein 9300, South Africa)

Abstract

Managerial competencies and performance appraisal practices are often ignored when considering the performance of Small-to-Medium Enterprises (SMEs). Yet, these competencies and practices are fundamental for the survival of the SMEs. SMEs are critical for economic growth and job creation in many economies. The current study sought to establish whether managerial competencies and performance appraisal practices correlate with SMEs’ performance in South Africa. Firm performance was measured using two variables: innovation and return on investment (ROI). The study adopted a structural equation modelling analytical approach. Interpersonal competencies were found to be a significant factor of managerial competencies, but conceptual and political competencies were not. The study also found that managerial competencies, and not performance appraisal practices, significantly correlated with both innovation and ROI. The study recommends that performance appraisal practices be tailored to suit SMEs in the developing countries context.

Suggested Citation

  • Nhamo Mashavira & Sevias Guvuriro & Crispen Chipunza, 2022. "Driving SMEs’ Performance in South Africa: Investigating the Role of Performance Appraisal Practices and Managerial Competencies," JRFM, MDPI, vol. 15(7), pages 1-18, June.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:7:p:283-:d:848498
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    References listed on IDEAS

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    2. Bjørn Andersen & Bjørnar Henriksen & Wenche Aarseth, 2006. "Holistic performance management: an integrated framework," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 55(1), pages 61-78, January.
    3. Chandler, Gaylen N. & Jansen, Erik, 1992. "The founder's self-assessed competence and venture performance," Journal of Business Venturing, Elsevier, vol. 7(3), pages 223-236, May.
    4. Haroon Bhorat & Zaakhir Asmal & Kezia Lilenstein & Kirsten van der Zee, 2018. "SMMES in South Africa: Understanding the Constraints on Growth and Performance," Working Papers 201802, University of Cape Town, Development Policy Research Unit.
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