The impact of entrepreneurial competencies on the performance of SMEs in the eThekwini Municipal Region, KwaZulu-Natal, South Africa

Abstract

Throughout the world, SMEs play an important role in reducing unemployment and poverty. However, despite their significant socio-economic contribution, the failure rate among SMEs in South Africa is high. A number of studies conducted in South Africa by, inter alia, Olawale and Garwe (2010:732), Sha (2006:67), and Smit and Watkins (2012:6326), have identified a lack of finance; poor managerial and marketing skills, and high labour costs, as the primary reasons for the high failure rate of SMEs South Africa. However, studies conducted in other countries also highlighted the important role of entrepreneurial competencies in the success of SMEs, and, in this regard, very little research has been conducted in South Africa on the impact of entrepreneurial competencies on the performance of SMEs. To address this shortcoming, this study examined the impact of entrepreneurial competencies on the performance of SMEs in the eThekwini municipal region in KwaZulu-Natal, South Africa.

As there were no records/databases of all the SMEs in the eThekwini region, a sampling frame, which consisted of the 700 SMEs in the eThekwini region who were members of the Durban Chamber of Commerce and Industry (DCCI) in 2015/2016, was used, and, at the 95% level of confidence, a sample size of 248 was statistically determined. The primary data was collected via a self- administered quantitative questionnaire, and was analysed using the Statistical Package for Social Sciences (SPSS), Version 21.

From the empirical research undertaken for this study, the main findings that emerged regarding the impact of entrepreneurial competencies on the performance of SMEs in the eThekwini region were: that there was no statistically significant association between the level of education of SME owners and the success of their businesses; that there was a significant positive relationship between both the personality traits of SME owners as well as their leadership styles with the success of their businesses, and that there was no significant relationship between the personal values and beliefs of SME owners and the performance of their enterprises.