IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v13y2024i5p19-27.html

Assessing the impact of corporate governance principles on the Small and Medium Enterprises (SMEs)’ financial success in Kwa-Zulu Natal (KZN): Application of Stewardship theory

Author

Listed:
  • Tinaye Mahohoma

    (Durban University of Technology)

Abstract

This study investigates how corporate governance (CG) principles affect the financial performance of Small and Medium Enterprises (SMEs) in Kwa-Zulu Natal (KZN), South Africa, using stewardship theory. Corporate governance (CG) encompasses the regulations, procedures, and mechanisms Overseeing the administration and implementation of a business. Efficient corporate governance (CG) is crucial for Small and Medium Enterprises (SMEs) to function with maximum effectiveness and optimise entrepreneurial value. The study seeks to fill this vacuum in information by investigating the impact of using stewardship theory, which prioritises the long-term interests of stakeholders, on the financial performance of small and medium-sized enterprises (SMEs) in KZN.A quantitative approach was employed and a cross-sectional design was employed to survey 217 SMEs in the Durban South area. Descriptive statistics reveal a diversified KZN SME environment, with a predominance of medium-sized businesses, balanced gender representation, and a variety of business ages and educational backgrounds among owners and managers. Inferential statistics show significant correlations between CG principles and financial success metrics of SMEs, particularly affecting returns on invested capital and assets, net profit, asset value, and sales turnover. The results are consistent with earlier studies on the beneficial effects of CG on SME performance. The study is limited to SMEs in the Durban South area and may not be generalizable to other regions. Future research might compare studies across different areas and examine the long-term effects of CG on SMEs to identify optimum practices. The study recommends prioritizing efficient CG procedures tailored to SME needs. It suggests developing business management competencies and advocating for supporting legislation to enhance SME performance. Key Words:Corporate Governance, SMEs, Financial success, Stewardship theory

Suggested Citation

  • Tinaye Mahohoma, 2024. "Assessing the impact of corporate governance principles on the Small and Medium Enterprises (SMEs)’ financial success in Kwa-Zulu Natal (KZN): Application of Stewardship theory," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(5), pages 19-27, July.
    • Handle: RePEc:rbs:ijbrss:v:13:y:2024:i:5:p:19-27
    DOI: 10.20525/ijrbs.v13i5.3539
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/3539/2365
    Download Restriction: no
    File URL: https://doi.org/10.20525/ijrbs.v13i5.3539
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijrbs.v13i5.3539?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nava Subramaniam & Monika Kansal & Dessalegn Getie Mihret & Shekar Babu, 2019. "Outsourcing mandated corporate social responsibility in India: risks and performance," Journal of Accounting & Organizational Change, Emerald Group Publishing Limited, vol. 15(3), pages 453-472, September.
    2. Wajdi Affes & Anis Jarboui, 2023. "The impact of corporate governance on financial performance: a cross-sector study," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(4), pages 374-394, December.
    3. William Murithi & Natalia Vershinina & Peter Rodgers, 2020. "Where less is more: institutional voids and business families in Sub-Saharan Africa," Post-Print hal-02456668, HAL.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abbas Abdelrahman Adam Abdalla & Ahmad Yuosef Alodat & Zalailah Salleh & Waleed M Al-Ahdal, 2025. "The effect of audit committee effectiveness, internal audit size and outsourcing on greenhouse gas emissions disclosure," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 22(4), pages 1072-1087, December.
    2. Eduard Ary Binsar Naibaho & Amirah Mahdi Shahab, 2025. "The Role of Corporate Governance Mechanism and Sustainability Reporting in Firm Performance: Evidence on Resource Based Sectors," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 15(2), pages 1-4.
    3. Benedicte Millet-Reyes & Jonathan Daigle, 2025. "When private information becomes fraud: evidence from Euronext Paris," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 22(2), pages 362-376, June.
    4. Bagh, Tanveer & Hunjra, Ahmed Imran & Corbet, Shaen, 2025. "The impact of corporate governance on firm value: Understanding the role of strategic change," International Review of Economics & Finance, Elsevier, vol. 103(C).
    5. Silvia-Andreea Peliu, 2024. "Exploring the impact of ESG factors on corporate risk: empirical evidence for New York Stock Exchange listed companies," Future Business Journal, Springer, vol. 10(1), pages 1-34, December.
    6. Teressa Elliott & Jang-Chul Kim & Ha-Chin Yi, 2024. "The impact of corporate ethical standards on the liquidity of non-U.S. stocks: an examination of the Chinese Melamine Scandal," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(2), pages 394-418, June.
    7. Zahra Adardour & Slimane Ed‐Dafali & Hicham Sbai & Khaled Hussainey, 2026. "ESG Performance, Family Ownership, and Corporate Risk‐Taking: The Moderating Role of the CSR Committee," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 31(2), pages 1979-1994, April.
    8. Aarti Verma & Mahesh Chand Garg & Shveta Singh, 2025. "Unveiling the Influence of Women CEOs, CEO Duality and CEO Compensation on Firm Performance: Evidence from India," Indian Journal of Corporate Governance, , vol. 18(2), pages 319-348, December.
    9. Poonam Rautela & Madhulika P. Sarkar & Rekha Goel, 2024. "Factors Affecting the Outsourcing Activities in Public and Private Sector Banks in India," FIIB Business Review, , vol. 13(4), pages 452-463, August.
    10. Peiying Luo & Tim Lenton, 2026. "Opening the Black Box of Financial Innovation and Sustainability Transitions: Unveiling the Roles of Green Entrepreneurship and Carbon Finance in G20 Countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(2), pages 1952-1980, April.
    11. Wang, Dong & Ding, Bibo, 2025. "The strength of intellectual property protection, corporate financing constraints, and corporate governance efficiency: Mechanisms and heterogeneity analysis," International Review of Economics & Finance, Elsevier, vol. 103(C).
    12. repec:bcp:journl:v:8:y:2024:i:10:p:31-54 is not listed on IDEAS
    13. Laura Munoz & Richard J. Miller & Stacey Schetzsle, 2025. "Loving the Craft: Exploratory Thematic Reflections of Craft Breweries as Complex Ventures," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 34(2), pages 392-417, May.
    14. Suzan Dsouza & K. Krishnamoorthy, 2024. "Boosting Corporate Value through ESG Excellence in Oil and Gas Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 14(5), pages 335-346, September.
    15. Onyango, Gedion, 2023. "The post-COVID-19 economic recovery, government performance and lived poverty conditions in Kenya," LSE Research Online Documents on Economics 119511, London School of Economics and Political Science, LSE Library.
    16. Neha Hussain & Burhan Rasheed & Zohair Farooq Malik & Syed Taha Fraz & Muhammad Umar Munir, 2024. "Ethics Redefined: A Comparative Study on Women on Boards vs. Attributes of Corporate Governance in the Light of Firm Performance," Journal of Economic Impact, Science Impact Publishers, vol. 6(2), pages 131-137.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijbrss:v:13:y:2024:i:5:p:19-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.