International learning : the role of transnational corporations in the development of small businesses' international competitiveness in South Africa

Abstract

The South African small business sector, particularly the manufacturing industries, such as textile, clothing, and automotive industries, are not considered internationally competitive. This shortcoming is seen in the context of liberalizing and transforming the South African economy, and the threat of foreign competition such as China. This study takes a systems view of the problems that are facing small businesses in South Africa, drawing on historical, theoretical and empirical sources within a proposed framework for small business international learning. The various elements in the framework include international competitiveness challenges facing small businesses, which, the author argues, create tension for survival within small businesses; the limited role of the small business support regime in South Africa; and the role of Foreign Direct Investment through Transnational Corporations (TNCs). Therefore, this study investigates the international learning processes of small businesses and develops a new theoretical model to illustrate and elucidate interventions to strengthen international learning processes of these small businesses. Methodology The manufacturing sector was chosen as the ideal sector for this study since it contributes significantly to the GDP and levels of employment of a country, and is at the receiving end of new production methodologies and technologies and other competition dynamics. This sector, at a small business level, is currently experiencing international competitiveness challenges in South Africa. The methodology followed an initial exploratory, qualitative approach followed by a formal, empirical, quantitative approach. The research questionnaire met the quality criteria as established through content validity, criterion related validity, and reliability criteria. This questionnaire was administered to a sample of 300 out of a population of 800 manufacturing small firms in Durban, using an unrestricted random probability sampling method. A total of 255 completed questionnaires were returned, and the results were expressed at the 95% confidence level with a confidence interval of 0.05. Results and Discussions From the correlation analysis of the level of importance and extent of implementation of international learning processes, four international learning processes, whose implementation can be enhanced by an improvement in the importance of international competitiveness challenges and support, were extracted. These international learning processes include increased learning activities on management, sales and marketing, finance, and also the image of small businesses. Through the consolidation of the results of the correlation analysis, a theoretical model for the identification and development of international learning processes was created. Conclusion From the small business practice and policy point of view, this study s findings suggest that the international learning processes of small businesses confronted by international competitiveness challenges in transforming developing economies can be strengthened by applying the theoretical model developed in this study. From the government, TNCs, and small businesses perspective, this study s findings also suggest that the establishment of linkage programmes and enhancement of learning activities, which revolve around the identified international learning processes as established in the theoretical model, will enable the attainment of international competitiveness of small businesses. This study, therefore, proposes the implementation, in the short-term, of information and linkage support at sector level that addresses the enhancement of the identified international learning processes; and the implementation, in the longterm, of a grand-scale small businesses and TNCs linkage programme in line with the premise provided in the theoretical model.