A proposed integrated model for innovative business leadership for the attainment of sustainable growth in small and medium manufacturing enterprises in KwaZulu-Natal

Abstract

Globally, small and medium manufacturing enterprises (SMEs) have been identified as a major source of employment and the foundation for successful entrepreneurship. They can also be a catalyst of economic transformation due to their significant contribution to any country’s gross domestic product (GDP). They have therefore been identified as key assets for any country with aspirations towards transformation, poverty reduction, employment redistribution, business innovation and strong economic growth. In countries such as Japan, the United States, China, the Czech Republic, Poland and Romania, manufacturing growth attributable to SMEs has strengthened, indicating that any predicted global downturn in industrial production may be mitigated by their input. This indicates beyond reasonable doubt that the role of manufacturing SMEs is central to any country and, it can be argued, more especially to developing countries like South Africa. Thus, their diminishing contribution towards GDP in recent years has been a significant concern of the South African Government, and of investors and policy makers, and has led to additional support being provided for the emergence and sustainable growth of manufacturing SMEs in the country. Statistics reflect that in 2018 manufacturing industry contributed only13.53% to GDP compared with 15.2% in 2013, and around 20% a decade earlier. This declining contribution has been associated with critical negative factors that affect the innovative leadership skills required to implement business innovation, manage a turbulent business environment, and achieve sustainable growth in the sector. Many researchers have studied the factors that contribute to manufacturing SMEs being successfully established. These factors include management skills, leadership ability, access to finance, the availability of resources, the economic climate, and the availability of necessary infrastructure and raw materials. The role of government regulations and compliance requirements have also been highlighted as critical factors affecting the sustainability and growth of manufacturing SMEs in the country. However, despite extensive research being carried out in the field, there remains a serious gap in studies which provide an in-depth understanding of those innovative business leadership abilities and business characteristics that critically influence manufacturing SMEs. These abilities are known to instigate, develop and promote business innovation that will subsequently attain sustainable growth. Theoretical models of the factors affecting and influencing innovative business leadership in this field are also lacking. Therefore, it can be argued that this is a critical area of research which has the potential to improve the current position of manufacturing SMEs in South Africa. This study has specific reference to manufacturing SMEs within KwaZulu-Natal (KZN). Therefore, the study aimed to identify the critical factors affecting innovative business leadership within manufacturing SMEs in KZN and to propose a prototype model for improving such leadership. Justification for the study stems from the high failure rate currently experienced in the sector which is attributable to several significant challenges faced by manufacturing SMEs in South Africa. The study was conducted within the Province of KZN, employing a quantitative research method. The population of the study consisted of 384 manufacturing SME leaders, owners and managers. A non-probability, convenience, sampling technique was adopted, while a closed-ended questionnaire was used as the primary data collection tool. Inferential and descriptive statistical analysis of the data was undertaken using the SPSS (version 23.0) computer package. The research findings indicate that manufacturing SMEs are severely affected by a variety of challenges and that they face significant hurdles that negatively affect their performance. These impact on the business leaders’ ability to implement the innovations that could promote, support and sustain the growth of their firms. The results of the study identified education and training as major positive contributory factors affecting innovative business leadership. Furthermore, technical abilities, access to financial support, and ICT awareness were also identified as critical catalysts to business success. The study therefore seeks to provide key insights into both the theoretical and practical implications of innovative leadership for manufacturing SMEs. It further provides an extensive range of recommendations and proposes a theoretical framework for those factors that can be understood by business leaders, government officials and policy makers to effect remedies for the current challenges faced by the sector.