The influence of strategic planning on the growth posture of small and medium-sized enterprises (SMEs) within the infrastructure sector in eThekwini, KwaZulu-Natal

Abstract

The purpose of the research was to examine whether there is a correlation between the use of strategic planning and the sustainable growth of Small and medium-sized enterprises (SMEs). The purpose was achieved through an empirical investigation that was based on a quantitative study and used a cross-sectional survey design to collect data from owners of 239 SMEs in the infrastructure sector. SMEs are a key factor in improving the growth posture of the South African economy. However, despite their significant socio-economic contribution, the failure rate among SMEs in South Africa remains significantly high. The challenges that are facing the SME sector cannot be ignored by any country that takes economic growth seriously, since SMEs are proven to be key in improving the growth posture of the country’s economy. The strategic planning process, which leads to the formation of a company's strategy, was one of the aspects examined in the study. The Study assesses the impact of strategic planning on the growth posture of small and medium-sized enterprises in the infrastructure sector in South Africa, eThekwini Municipality. The process of developing a strategic plan has been controversial in the literature due to the several perspectives offered by scholars. The main debate concerning the nature of the strategic planning process is about how the process should be approached, which stems from conflicting views concerning the strategic planning process, even though strategic planning is a widely adopted process in many organisations, as it is viewed as the activity that leads to the strategy’s success. The study’s findings prove that most small companies do not follow a strategic process to develop their strategies and for those which do not follow a structured strategic process experience low levels of business growth compared with those that follow a strategic process. These findings have an enormous potential to theoretically contribute to the research body while making practical contributions to governmental policymakers, future researchers, and small business owners. The managerial implications are that a strategic process for developing a firm strategy had a considerable favourable impact on the growth posture of such a firm regardless of business size or resources.