The effect of social capital on the performance of Small, Medium and Micro Enterprises (SMMES) in Makana Municipality

The small, medium and micro-enterprises (SMMEs) are essential drivers to the social and economic growth. These enterprises have an essential role in employment creation and eradication of poverty in South Africa. SMMEs in South Africa are comprised of heterogeneous groups of businesses in various sectors including services, manufacturing and agriculture. This study investigated the effect of social capital on the performance of SMMEs. Thus, the primary objective of the study was is to investigate the impact of social capital on the performance of SMMEs in Makana Municipality, and the secondary objectives were to determine the effect of bonding social capital on the performance of SMMEs and determine the effect of bridging social capital on the performance of SMMEs. This study discovered that all three forms of social capital, namely: bonding, bridging and linking social capital have a positive effect on the performance of SMMEs. In order to collect data, the researcher distributed questionnaires to the sampled SMMEs in the towns within the Makana Municipality. All the questionnaires were completed by the respondents. The researcher did not interfere in this process but helped where necessary. Prior to the distribution of questionnaires, validity and reliability were ensured in order to eliminate problems in the questionnaires. A total of 126 questionnaires were distributed. To scale the responses in the questionnaires, Likert scale was used in this study. The sections in questionnaires were measuring the extent to which social capital contributes to the performance of SMMEs. Of the 126 questionnaires that were distributed, only 98 questionnaires were returned and used in this study. Thus, the response rate was 71% which is high. Because social capital affects the performance of SMMEs, this proves further the need for government to support these businesses. This study made a theoretical contribution to the literature on social capital and its important on the performance of SMMEs. The researcher recommends that all SMMEs across the world consider the effect of social capital on their performance. Given the importance of successful SMMEs in the growth of the country’s economy and, also the role they play in addressing the unemployment problem, it is recommended that all SMMEs consider the positive impact of social capital in their growth