IDEAS home Printed from https://ideas.repec.org/p/sek/iacpro/2805126.html
   My bibliography  Save this paper

Macro-economic factors influence on South African SMME business performance

Author

Listed:
  • Janine Kruger

    (Nelson Mandela Metropolitan University)

  • Rootman Chantal

    (Nelson Mandela Metropolitan University)

  • Shelley Saunders

    (Nelson Mandela Metropolitan University)

Abstract

Purpose of study: To determine the influence of selected macro-economic factors (Transportation costs, Government regulations, Access to finance, Interest rates and Inflation and economic growth) on SMME business performance in the Eastern Cape, South Africa. Research design and methodology: The positivistic research paradigm adopting a quantitative research approach was followed in the study. A structured self-administered questionnaire was used to obtain the primary data from 200 SMME?s business owners/managers in the Eastern Cape region, South Africa. Convenience and snowball sampling were used to obtain the respondents in the sample. The literature review included the effect of macro-economic factors influencing SMME business performance and the environment in which SMMEs operate. Five hypotheses were constructed from literature and empirically tested. An exploratory factor analysis confirmed the validity and Cronbach?s alpha coefficients determined the reliability of the questionnaire. Descriptive statistics (mean and standard deviation) and inference statistics were calculated. The Pearson correlation coefficients determined the strength of the relationships between the independent (Transportation costs, Government regulations, Access to finance, Interest rates and Inflation and economic growth) and dependant variables (Business Performance) and the multiple regression analysis determined if relationships exist between the independent and dependant variables. Research findings: A statistically significant relationship was found between the Access to finance and Business performance. Although the relationships between the Business performance and Transportation costs as well as Interest rates were not statistically significant, negative correlations were found. Positive correlations were found between the Business performance and Government regulations, and Inflation and economic growth although the relationships were not statistically significant.Research limitations: The study was limited to only the Eastern Cape region, South Africa. The SMME definition is broad in scope and may differ from one industry to another. Practical implications: Managers/owners need to take care when selecting transportation methods and obtaining debt capital as an increase in these factors may negatively influence business performance. However, an increase in Government regulations, and Inflation and economic growth may lead to improved business performance. In addition, the more access to finance SMME?s have the more likely business performance will be positively influenced.Contribution of paper: This paper contributes towards the body of knowledge regarding SMME?s in a developing region in South Africa. Although it is well-known that macro-economic factors influence business performance, little is known regarding the extent of the influence, especially within a developing country.

Suggested Citation

  • Janine Kruger & Rootman Chantal & Shelley Saunders, 2015. "Macro-economic factors influence on South African SMME business performance," Proceedings of International Academic Conferences 2805126, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:2805126
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/19th-international-academic-conference-florence/table-of-content/detail?cid=28&iid=078&rid=5126
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Afia Malik, 2010. "Oil Prices and Economic Activity in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 11(2), pages 223-244, September.
    2. Black, Philip & Calitz, Estian & Steenekamp, Tjaart & Siebrits, Krige (ed.), 2011. "Public Economics," OUP Catalogue, Oxford University Press, edition 5, number 9780195995152.
    3. Cassar, Gavin, 2004. "The financing of business start-ups," Journal of Business Venturing, Elsevier, vol. 19(2), pages 261-283, March.
    4. Aristea Gkagka & Grigoris Zarotiadis, 2008. "Transportation Costs and Final Prices: A Case Study of Fuels in Greece," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 6(2), pages 213-226.
    5. Neil Rankin, 2006. "The Regulatory Environment and SMMEs. Evidence from South African Firm Level Data," Working Papers 06113, University of Cape Town, Development Policy Research Unit.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zwane, Bonginkosi Keith & Nyide, Celani John, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(3).
    2. Bonginkosi Keith Zwane, & Celani John Nyide, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(3), pages 347-356, July.
    3. Bonginkosi Zwane & Celani Nyide, 2017. "SMME attitudes towards Financial Bootstrapping: A perspective from a developing economy," Proceedings of Business and Management Conferences 5607468, International Institute of Social and Economic Sciences.
    4. Bruce MASAMA & Juan-Pierré BRUWER, 2018. "Revisiting the Economic Factors which Influence Fast Food South African Small, Medium and Micro Enterprise Sustainability," Expert Journal of Business and Management, Sprint Investify, vol. 6(1), pages 19-28.

    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. Cumming, Douglas & Deloof, Marc & Manigart, Sophie & Wright, Mike, 2019. "New directions in entrepreneurial finance," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 252-260.
    2. Magnus Schückes & Tobias Gutmann, 2021. "Why do startups pursue initial coin offerings (ICOs)? The role of economic drivers and social identity on funding choice," Small Business Economics, Springer, vol. 57(2), pages 1027-1052, August.
    3. Diana Hechavarría & Charles Matthews & Paul Reynolds, 2016. "Does start-up financing influence start-up speed? Evidence from the panel study of entrepreneurial dynamics," Small Business Economics, Springer, vol. 46(1), pages 137-167, January.
    4. Usama Almulali & Che Normee Binti Che Sab, 2013. "Exploring the impact of oil revenues on OPEC members' macroeconomy," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 37(4), pages 416-428, December.
    5. Das, Willy & Das, Satyasiba, 2018. "Role of Heuristic Principles On Crowd-Funder's Investment Decision Making," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 443-452, Governance Research and Development Centre (CIRU), Zagreb.
    6. Ana Venâncio & João Jorge, 2022. "The role of accelerator programmes on the capital structure of start-ups," Small Business Economics, Springer, vol. 59(3), pages 1143-1167, October.
    7. Sun, Xiaoyan & Xie, Xuanli, 2024. "How does digital finance promote entrepreneurship? The roles of traditional financial institutions and BigTech firms," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    8. Lukas, Elmar & Mölls, Sascha & Welling, Andreas, 2016. "Venture capital, staged financing and optimal funding policies under uncertainty," European Journal of Operational Research, Elsevier, vol. 250(1), pages 305-313.
    9. Hirsch, Julia & Walz, Uwe, 2019. "The financing dynamics of newly founded firms," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 261-272.
    10. Stefanescu, Răzvan & Dumitriu, Ramona, 2016. "Planificarea financiarǎ pentru decizii asupra antreprenoriatului - Partea întâi [Financial planning for decisions on entrepreneurship, Part I]," MPRA Paper 74829, University Library of Munich, Germany, revised 30 Oct 2016.
    11. Ciro D. Esposito & Balazs Szatmari & Jonathan M. C. Sitruk & Nachoem M. Wijnberg, 2024. "Getting off to a good start: emerging academic fields and early-stage equity financing," Small Business Economics, Springer, vol. 62(4), pages 1591-1613, April.
    12. Julia Hirsch & Uwe Walz, 2009. "Financing Decisions Along a Firm’s Life Cycle: Debt as a Commitment Device," Working Papers 0409, Universidad Iberoamericana, Department of Economics.
    13. Francesco Campanella & Luana Serino, 2019. "Firms Use of Financial Leverage: Evidence from Italy," Review of Economics & Finance, Better Advances Press, Canada, vol. 17, pages 65-78, August.
    14. Ruggero Grilli & Gabriele Tedeschi & Mauro Gallegati, 2015. "Markets connectivity and financial contagion," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 10(2), pages 287-304, October.
    15. Alberto Burchi & Bogdan Włodarczyk & Marek Szturo & Duccio Martelli, 2021. "The Effects of Financial Literacy on Sustainable Entrepreneurship," Sustainability, MDPI, vol. 13(9), pages 1-21, April.
    16. Chen, Jingyuan & Calabrese, Raffaella & Cowling, Marc, 2024. "Does energy efficiency of UK SMEs affect their access to finance?," Energy Economics, Elsevier, vol. 129(C).
    17. Dirk Czarnitzki & Julie Delanote, 2015. "R&D policies for young SMEs: input and output effects," Small Business Economics, Springer, vol. 45(3), pages 465-485, October.
    18. Albert Tchey Agbenyegah, 2019. "A Comparative Study of Rural Entrepreneurial Challenges: Towards Rural Economic Development and a Policy Framework," Journal of Economics and Behavioral Studies, AMH International, vol. 11(3), pages 58-71.
    19. Hui Zheng & Xuexu Piao & Sangmoon Park, 2021. "The Role of Founder-CEO, Human Capital and Legitimacy in Venture Capital Financing in China’s P2P Lending Industry," Sustainability, MDPI, vol. 13(4), pages 1-14, February.
    20. Andy Cosh & Douglas Cumming & Alan Hughes, 2009. "Outside Enterpreneurial Capital," Economic Journal, Royal Economic Society, vol. 119(540), pages 1494-1533, October.

    More about this item

    Keywords

    Macro-economic factors; SMME; Business performance;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:sek:iacpro:2805126. 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: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .

    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.