The scalability of small and medium enterprises in South Africa

It has long been recognised that small and medium enterprises (SMEs) account for an overwhelming part of businesses worldwide and that they contribute considerably to private sector Gross Domestic Product (GDP), growth and are the source for most new employment opportunities. It may therefore be postulated that scaling and growing SMEs are of notable importance to the economic wealth of the country and to this extent it eliminates economic stagnation. This treatise argues the significant impact that entrepreneurship exerts on the South African economy. This would allow the role players to identify the strategic interventions necessary to grow and scale SMEs. A literature review was conducted to develop insights on the factors that affect the scalability of SMEs. The aforementioned section expounds on the concept of SMEs. Secondly, the emergence of SMEs across developed and emerging economies is discussed by exploring the United States of America, Europe and the BRICS economies respectively. Thirdly, SMEs in the South African context are explored. Fourthly, the requirements and challenges of SMEs in the South African economy are highlighted. The primary data for this study were collected from the sample by means of an online questionnaire and through fieldworkers who were deployed to collect responses from the sample group. A representative sample of n = 295 responses were received. Descriptive statistics were used to summarize the data in a way to simplify the interpretation of the data. Inferential statistics were used to authenticate conclusions made from the data. The model was developed and identified the following factors as exerting influence on the scalability of SMEs: Access to Finance, Access to Markets and Access to Human Capital, Entrepreneurial Intention, Regulatory Framework, Business Support and Networks. The average mean values of the factors were then used to establish their position or ranking as determined from the responses received. All factors ranked above a mean value of 3 which indicates that SMEs have a neutral to positive opinion of the factors identified in the model. According to a one-tailed t-test from the sample of SMEs it was shown that two of the nine factors had a large effect size in the factors of Human Capital and Entrepreneurial Intention. The Scalability of SMEs’ model developed in this study specified the factors that influence the growth of SMEs