A comparative analysis of the critical success factors affecting local and foreign owned small-medium enterprises in the Ndwedwe area of KwaZulu-Natal

Abstract

In South Africa, emphasis is being placed on the importance of establishing small and medium sized business enterprises. There is acknowledgement in the extant literature of the value of these enterprises as job creators and useful drivers for economic growth and innovation. Given the growth in small businesses, attention in this study is given on comparing the critical success factors between those businesses that are owned by foreigners and those owned by locals.

Relationships between the two groups have not always been fruitful across the country, yet synergies can be generated to shed light into how both groups cannot only co-exist but operate optimally in managing their businesses. Thus, the aim of this study was to explore (comparatively) the critical success factors between foreign and locally owned small businesses.

A qualitative, exploratory study was conducted using interviews with five (5) foreign owned and five (5) locally owned small business conducted within the Ndwedwe area of Kwazulu-Natal. A thematic analysis approach was used to analyse the data. Upon analysis of the data, three themes emerged as critical success factors affecting local and foreign owned businesses: (1) the underlying motives of starting a business enterprise, (2) the nature of business environment and (3) the necessity of formal or/and informal education in running a business. Interestingly, these themes appeared common in both groups. Furthermore, each of these factors affecting the success of small business was accompanied by poor community infrastructure and the unavailability of support and funding from government, including reimbursement during occurrence of natural disasters.

Existence of sufficiently a strong business enterprise motive based on research findings is vital in any research undertaking. Substantially, an empirical angle to map more than one overriding motive for a business enterprise provides an opportunity to evaluate business success or failure based on the grounded motives. These motives may progressively incorporate the analyses of business environments, use of indigenous business knowledge and consideration of business education (formal and informal). Findings from this study encourage knowledge-sharing and interaction of SMEs in order to improve business enterprise development in Ndwedwe.

The findings of this study also magnify the factors that are deemed critical to the success of small businesses and may be useful in mapping out recommendations on strategies and frameworks that affect either foreign or locally owned business. Based on the findings of this study, a network hub that places emphasis more on interdependence rather than isolated working between foreign and local owned businesses is encouraged. Through collaboration and sharing of experiences, small businesses in South Africa may potentially thrive.

Furthermore, the findings of this study stipulate that SMEs need to have long-term plans and grounded motives on starting businesses. This will not only encourage SMEs to plan but will also develop educational strategies where SMEs can work together and share aptitudes to engage in strategic planning related to entrepreneurial success.