It then looks at the debate in this regard, followed by an analysis of the South African interventions that have been or are being carried out by the South African government. The South African government has achieved some success and some failure, and the study clearly highlights both, thereby assisting the revision of the national SMME strategy.
Introduction - Research Problem and Research Objectives
- Research Problem
- Research Objectives
- Purpose of the Study
- Background and need for Study
- Research Methodology
- Hypotheses
- Synopsis of chapters
- Summary
This should contribute to a growth in the start- up rate of business in the country. The interventions to increase the start-up rate of new SMEs in the formal sector have had a positive effect.
Literature review of the debate surrounding the need for intervention
- Introduction
- The debate regarding the need for intervention in SMEs in general
- An international governmental perspective on SME interventions
- The debate regarding the need for intervention in the services sector
- Summary
The knightly approach was followed by the approach known as the Behavioral Theory of the Firm. It is further suggested that the theory of the firm is not about profit maximization but rather wealth maximization in the firm.
Literature review of factors that stimulate the establishment, growth and success of
- Introduction
- Critical success factors of SME business success during start-up
- Critical success factors of SME business success during growth
- Summary
Choosing the right location during the start-up phase is critical to the success of the business. The following table (Table 3.2) summarizes the critical success factors for the growth phase of the business.
Overview of government interventions to stimulate SME development
Introduction
Wint suggests that a functional intervention results in the improvement of the functioning of markets and that they are neutral in their impact on individual or groups of firms. Selective interventions tend to favor particular industries or firms, and by extension, disadvantage those not included in the intervention.
A literature review of government interventions to stimulate the growth of SMEs in developed nations
- Functional interventions in developed countries
- Selective interventions in developed nations
The information in the following section is an overview of the interventions that stood out as important interventions from the literature review conducted by each of these named countries. Data related to various functional interventions in developed countries are combined in two tables given in Appendix 1 and Appendix 2.
A literature review of government interventions to stimulate the growth of SMEs in developing nations
- Functional interventions in developing countries
- Selective interventions in developing countries
No mention is made of the objectives of the intervention, nor whether measurements of the intervention were taken to see if the objectives were achieved. The use of selective interventions in developing countries should also be considered to see when and how these are used, and whether there is any relationship between interventions and SME performance.
A literature review of South African government interventions to stimulate the growth of SMEs
- Functional interventions in South Africa
- Selective interventions in South Africa
The South African government had sought to break down this barrier and had indirectly made financing available to SMEs through the Khula Finance Scheme, which provides guarantees to retail finance institutions (RFIs). (Republic of South Africa. Small Medium Enterprise Development Programme; Standard Scheme-Credit Guarantee Scheme; financing for technology industry development; Technology Transfer Guarantee Fund – Credit Guarantee Scheme; and financing for tourism development (Republic of South Africa).
Summary
The only interventions that seemed to have clear benchmarks for the intervention goals were the Japanese interventions (Japan, Online April 15, 2004:3-4). The greatest similarity occurred in the choice of functional interventions, with 71% of countries selecting at least one common intervention.
Research Methodology
Introduction
The theoretical aspects related to the need and implementation of interventions to stimulate the development and growth of the SME sector, as covered in the literature review, will be empirically tested. Based on the analysis of the findings, the appropriateness and effectiveness of the current policy in the South African context will be assessed.
Nature of research
Although the government may see SMEs as a solution to the problem of unemployment, it cannot solve the problem by creating SMEs alone, as not all SMEs can be part of South Africa's solution to unemployment (Hallberg 2000:6). This chapter presents the problem statement, study objectives, hypotheses and data collection methods.
Objectives of the study
- Research problem
- Research objectives
- Determine the factors that stimulate the establishment and growth rates in SMEs and Determine the need for interventions
- Does South Africa need to implement interventions to increase the SME start-up rate? and Does South Africa need to
- Is South Africa implementing selective interventions for the SME sector?
- Are the South African selective interventions for the SME sector appropriate? Are the South African functional
Economic data show that the rate of establishment of firms in the formal sector has increased as economic conditions have improved. The South African government believes that the twin goals of increasing SME start-up rates and growth rates are imperative, and the government has made a number of statements to that end.
Hypotheses
The interventions to increase the growth rate of existing SMEs in the formal sector have had a positive effect. The interventions to increase the growth rate of existing SMEs in the formal sector did not have a positive effect.
Sample selection
- How the population was determined
- The method for selecting the sample
- The data collection procedures
It attracts formal sector businesses that are start-ups as well as existing SMEs at various stages of the business life cycle. The full SME universe of SMEs that are members of the Ladysmith, Pietermaritzburg, Durban and Zululand Chambers of.
Questionnaire design
- Part 1 – demographic information
- Part 2 – Business related information
Growth in the number of employees would tend to be a more accurate reflection of growth. These responses attempt to measure the effect/success of the interventions requested by the respondent.
The statistical analysis of the questionnaire data
Then, to assess the strength of the relationship of these multiple factors in the success of entrepreneurs, the primary data will be analyzed using correlation testing (Wegner 2001:303). All these tests aim to ensure that the results of the multiple regression tests are accurate, reliable and can be used to make predictions (Wisniewski 1997:351).
Analysis of findings
The significance level must be preset in order to calculate the acceptance zone and, for the purpose of this study, a significance level of 0.05 will be used (Welman, Kruger 2001:215). Functional and selective interventions implemented by the South African government will be evaluated in terms of their effectiveness and the need for interventions, bearing in mind the Theory of the Firm and its influence on the need for and selection of interventions.
Summary
Statistical analysis will help determine if there is any correlation between the interventions and the rate of start-up of new ventures and the rate of growth of existing interventions. The data will also provide a platform to develop recommendations to the South African government on how best to select appropriate interventions.
Findings
Introduction
- Analysis of questions pertaining to the business
The difference between GZS members and non-members regarding the effect of interventions to promote the establishment and growth rate of SMEs will be tested using the Mann Whitney U test. The Kruskal Wallis test will be used to test for differences between demographic data by race group and educational qualification on the effect of interventions to promote the establishment and growth rate of SMEs.
Gender
In this section, demographic data relating to the company and the owner are asked through a questionnaire.
Race group
Is the respondent a member of a Chamber of Commerce?
The frequency table below (Table 6.4) shows the frequency of respondents who were and were not members of a Chamber of Commerce. These two, who were not members, had apparently withdrawn as members, as they were listed in the membership database.
Is the respondent the owner of the business?
Chambers of Commerce themselves, the expected result was that all respondents would be members of the Chamber of Commerce.
If not the owner were you delegated to complete the questionnaire?
As the owner, do you agree with the answers submitted?
The data is presented in a graphical format in graph 6.3 and in the frequency table shown below in table 6.8. Service business Mining sector related business Manufacturing business Agricultural sector related business Retail or wholesale business.
Describe your business in 5 words maximum
Legal persona of enterprises
The findings on this question will be reviewed in depth in the next chapter, in an attempt to explain the bias.
Why did you decide to start or buy this business?
Analysis of questions pertaining to entrepreneurial perceptions of government interventions and experience
Has your business received any assistance from government ?
Are you aware of any interventions by government to assist SMEs?
This indicates a bias towards the control group generating more responses than the treatment group, indicating a higher level of awareness of government intervention among the control group than among the treatment group. Thus, the control group would have forty-three (43) valid responses and the treatment group would have thirty-four (34) valid responses.
Did you apply for any of these interventions you listed in Question 16?
The modal responses for the Treatment Group are the SETA skills training and the SMEDP programme.
If you applied, were you successful?
If not successful, what were the reasons for non- approval?
It was not definitively defined in the responses whether these were their own or the official responses, and the tone of the responses would tend to indicate that both apply. The responses received cannot be definitively distinguished as being either the respondents' responses or the official response from the government.
If successful, what was the reason for approval?
It should also be noted that not all respondents who were unsuccessful answered this question.
If unsuccessful, what was the reason for non- approval?
If successful, provide details of assistance
The data in the two tables above reinforce the answers to Question 16 where the Control Group indicated a broader knowledge of available interventions, and this is reflected here with the Treatment Group having eight (8) different interventions in which they participated, and the Control Group having Twelve (12) different interventions in which they participated. None of the groups found Exceptional Impact (level 7 on scale) on their business, but the Control Group seemed to experience a greater impact on their businesses than the Treatment Group.
Impact detail assessment
Ten (10) respondents claim that the intervention had a 'positive impact' on net profit, six (6) claim that there is 'no impact' on net profit, while only one (1) respondent claims that it has had a ' negative influence'. Twelve (12) respondents claimed that the Turnover intervention had a 'positive impact', four (4) claimed that there was 'no impact' on turnover, while only one (1) respondent claimed that it had a 'negative impact'.
What could government do to improve the overall business environment?
34 – assessment of various functional interventions
Lower interest rates
Lower inflation rates
Basic Conditions of Employment Act
Employment Equity Act
National Credit Act
Skills Development Act
Exchange rate stability
Access to international markets
Reduced exchange controls
Summary and broader analysis of data
The breakdown of the sample was that 33.8% of the respondents were from the Control Group (members of the Pietermaritzburg Chamber of Commerce) and the Treatment Group (members of the Ladysmith, Pietermaritzburg, Durban and Zululand Chamber of Commerce) comprised 66.2%. A majority of 56.6% of respondents indicated that their business is a service business, followed by retail or wholesale business (21.3%) and manufacturing business (19.1%).
Descriptive statistics
- The Kolmogorv Smirnov Test
- Reliability analysis - Cronbachs Alpha
The problem of non-normality is due to the distribution of responses per question, i.e. one of the most commonly used is Cronbach's alpha, which is based on the average correlation of items within a test when the items are standardized.
At the 5% level, since the p-values for Questions 2 to 34 excluding 9 (Educational level) and 29 (Equal Employment Act) are greater than 0.05, H0 is not rejected and the conclusion can be reached becomes that there is no difference between the Control and Treatment groups in relation to those questions. At the 5% level, since the p-values for all the questions are greater than 0.05, H0 is not rejected, and it can be concluded that there is no difference between the Control and Treatment groups regarding that questions not.
At the 5% level, H0 is not rejected because the p-value is greater than 0.05 and we can conclude that there is no difference between the control and treatment groups regarding question 16. At the 5% level, H0 is accepted for all questions and find out that there are no differences within educational groups according to questions 4-34.
Chi-Square Test
Assessing the benefit of the governments assistance as perceived by the respondents who applied and
At the 5% level, H0 is rejected for the hypotheses and it can be concluded that the mean score is different from 7=extraordinary impact. At the 5% level, H0 is rejected for the hypotheses and it can be concluded that the mean score is different from 5=high impact.
Assessing the benefit of government assistance by the respondents who applied and were successful in respect
Summary
Testing revealed that there were no significant differences in responses from the two groups, nor between gender types and race groups. In the next chapter, the impact of the findings will be examined in the context of the literature review and various points will be considered in depth.
Conclusions and recommendations
Introduction
