The sustainability of South African construction small, medium and micro enterprises

The construction industry is one of the strategic sectors that drive the economic sustainability and competitiveness of any nation. However, the chronic business failure amongst the start-ups and Small, Medium and Micro Enterprises (SMMEs) in the construction industry globally is of great concern to economic prosperity for both developed and developing countries. This challenge is significantly high in the South African construction industry, where SMMEs account for 95% of the business entities, of which about 80% are most likely to exit from the market within their first five years of operation. Previous studies in this field centred on the factors that lead to construction-business failure. However, the actual operational elements of surviving SMMEs have rarely been addressed and are little understood. Thus, this research aimed to explore the strategic drivers that offer significant solutions to the challenges facing start-up contractors in the South African construction industry. The review of the related literature revealed the strategic drivers and business survival characteristics that foster SMME economic sustainability and competitiveness in the construction market. The qualitative research approach that is rooted in the phenomenological paradigm was adopted for this study. Port Elizabeth, located in the Eastern Cape Province of South Africa was the selected geographical scope for this research. Thirty-four (34) construction organisations were purposively selected from the Port Elizabeth construction industry development board (cidb) register of contractors in grades 4-6. The purposive sampling technique was adopted in selecting respondents based on the snowball approach. The research data were collected through in-depth interviewing. It was found that the SMME contractors who succeeded in their first 5 years of operation possessed the following qualities: “fundamental educational qualifications”; “experience and knowledge of construction works”; “a clear understanding of competitive business strategies and characteristics”; “critical skills and multi-skills (functional project teams)”; and “rely on strategic resources, competencies and capabilities”. Also, the significant factors contributing to the SMME contractors’ competitiveness were: “entrepreneurship skills”; “innovation and technological skills”; “leadership skills”; “education, skills training, and investment in Research and Development (R&D)”; as well as “strategic-alliance advantage”. Moreover, globalisation and internationalisation, and government support have significant potential to impact on the success and sustainability of SMME contractors. Unfortunately, these factors are under-utilised or un-strategically adopted by most of the South African SMME contractors. The research has also developed a conceptual model for sustainable performance of SMMEs based on the results and informed by the theoretical framework. The research has also developed a business-survival strategy and model for SMME contractors in the South African construction industry. The study has achieved its aim of identifying the strategic business practices, models and concepts that the surviving and active SMME contractors employed to thrive within and beyond the first five years in the industry. Based on these findings, the study recommends that the start-ups and SMME contractors should gain an insightful and strategic business knowledge on how to develop and grow a competitive and economically sustainable organisation in the industry. This should form part of their competitive business strategic models, their business review plans; and set the benchmark for performance evaluation