Business sustainability: empirical evidence on operational skills in SMEs in South Africa

Abstract

Purpose

Activities in the manufacturing sector are often considered the bedrock of an economy and a key driver of growth and development. Within the South African manufacturing sector, operations skills are reported to be deficient and are often cited as a main cause of failure in small, medium and micro enterprises (SMMEs). This study aims to explore and test this fragile relationship between operations skills and SMME sustainability. It also aims to conduct empirical investigations in a high density SMME manufacturing environment.

Design/methodology/approach

Building on previously established literature on SMME sustainability and operations skills, various measures are developed and tested for reliability and validity. Factor analysis is used to identify relevant factors in terms of operations skills. Correlational analysis is then employed to test the hypothesized relationship. The study is cross‐sectional in design and relies on trained fieldworkers administering surveys to a diverse set of SMMEs.

Findings

Five clear factors for operations skills are identified which further show links with business sustainability. The hypothesis is supported where significant correlations reveal that several operations skills are positively associated with sustainability.

Practical implications

SMME owners, educators and service providers can all benefit from the study's findings by the increased awareness on the nature and associations that operational skills have on developing sustainable SMMEs.

Originality/value

The study focused on a neglected area of SMMEs – the importance of operations towards business sustainability, and has made a contribution towards theory development through empirical explorations. This is a first in South Africa where an instrument measuring operations skills has been validated and associated with SMME sustainability in a manufacturing context.

Citation

Urban, B. and Naidoo, R. (2012), "Business sustainability: empirical evidence on operational skills in SMEs in South Africa", Journal of Small Business and Enterprise Development, Vol. 19 No. 1, pp. 146-163. https://doi.org/10.1108/14626001211196451