Share This Article:

Analysis of Factors That Affect the Long-Term Survival of Small Businesses in Pretoria, South Africa

Full-Text HTML Download Download as PDF (Size:239KB) PP. 67-84
DOI: 10.4236/jdaip.2013.14008    4,517 Downloads   9,592 Views   Citations
Author(s)    Leave a comment


The paper is based on a 5-year follow-up study (2007 to 2012) of a random sample of 349 small business enterprises that operate in and around the city of Pretoria in South Africa. Data weregathered from each of the businesses on socio economic factors that were known to affect the long-term survival of small businesses. The objective of the study was to identify and quantify key predictors of viability and long-term survival. Pearson’s chi-square tests of associations, binary logistic regression analysis and the Cox Proportional Hazards Model were used for screening of variables, and for estimating odds ratios and hazard ratios of key predictors of viability and long-term survival. The study found that 188 of the 349 businesses that took part in the study (54%) were not viable, and that the long-term survival and viability of small businesses were adversely affected by lack of entrepreneurial skills, lack of supervisory support to newly established businesses, and inability to operators running newly established businesses to acquire relevant vocational skills.

Cite this paper

Z. Worku, "Analysis of Factors That Affect the Long-Term Survival of Small Businesses in Pretoria, South Africa," Journal of Data Analysis and Information Processing, Vol. 1 No. 4, 2013, pp. 67-84. doi: 10.4236/jdaip.2013.14008.


[1] South African Small Enterprise Development Agency (SEDA), “SAIE Learning Loop: Why the Loop?” 2013.
[2] South African Chamber of Commerce and Industry, “Business Confidence Index-Press Release,” 2013.
[3] South African Department of Trade and Industry, “SMME Development,” 2013.
[4] W. M. Ladzani and G. G. Netswera, “Support for Rural Small Businesses in Pretoria, South Africa,” Development Southern Africa, Vol. 26, No. 2, 2009, pp. 14-21.
[5] E. Saru, “Organizational Learning and HRD: How Appropriate Are They for Small Firms?” Journal of European Industrial Training, Vol. 31, No. 1, 2007, pp. 36-51.
[6] R. A. Swanson, “Analysis for Improving Performance,” Berrett-Koehler Publishers, London, 2007.
[7] C. Zheng, G. O’Neill and M. Morrison, “Enhancing Chinese SME Performance through Innovative HR Practices,” Journal of Personnel Review, Vol. 38, No. 2, 2011, pp. 175-179.
[8] A. L. Friedman, S. Miles and C. Adams, “Small and Medium-Sized Enterprises and the Environment: Evaluation of a Specific Initiative Aimed at All Small and Medium-Sized Enterprises,” Journal of Small Business and Enterprise Development, Vol. 7, No. 4, 2000, pp. 325-342.
[9] G. Nieman, “Training Entrepreneurs and Small Business Enterprise in South Africa: A Situational Analysis,” Journal of Education + Training, Vol. 1, No. 43, 2001, pp. 445-450.
[10] South African Parliament, “Small Enterprise Development Agency Annual Report for 2011/2012,” 2013.
[11] E. B. Wagner, “Small Business Survival Relies on Grit, Perseverance,” American City Business Journals, Vol. 1, No. 1, 2003, pp. 1-4.
[12] M. Useem, “How to Groom Leaders of the Future,” In: Financial Times Mastering Management, Prentice Hall, New York, 2001.
[13] C. J. White, “Research: A Practical Guide,” Inthuthuko Publishing, Cape Town, 2005.
[14] A. A. Lawal, “Management in Focus,” Abdul Industrial Enterprises, Lagos, 2005.
[15] M. I. Joseph, “New Partnership for Micro, Small and Medium Scale Enterprises (MSMSEs),” Journal of Economic and Environmental Issues, Vol. 5, No. 1-2, 2005, pp. 1-14
[16] G. Oboh, “Contemporary Issues on Banking: Issues on Financing Small and Medium Enterprises in Nigeria,” Percept Press Limited, Lagos, 2004.
[17] M. K. Hashim, S. Ahmad and O. L. Leng, “Leadership Style and Job Satisfaction among Employees in SMMEs: Emerging Issues in Small and Medium Enterprises,” Universiti Utara Malaysia Press, Kuala Lumpur, 2006.
[18] B. Clemens, “Economic Incentives and Small Firms: Does It Pay to Be Green?” Journal of Business Research, Vol. 59, No. 4, 2006, pp. 492-500.
[19] S. Chromie, “Assessing Entrepreneurial Inclinations: Some Approaches and Empirical Evidence,” European Journal of Work & Organizational Psychology, Vol. 9, No. 1, 2000, pp. 7-24.
[20] D. R. Cooper and P. S. Schindler, “Business Research Methods,” McGraw-Hill, New York, 2006.
[21] G. Bosworth, “Education, Mobility and Rural Business Development,” Journal of Small Business and Enterprise Development, Vol. 16, No. 4, 2009, pp. 660-677.
[22] M. Chapman, “When the Entrepreneur Sneezes, the Organization Catches Cold: A Practitioner’s Perspective on the State of the Art in Research on the Entrepreneurial Personality and the Entrepreneurial Process,” European Journal of Work and Organizational Psychology, Vol. 9, No. 1, 2000, pp. 97-101.
[23] V. Ratten and Y. Suseno, “Knowledge Development, Social Capital and Alliance Learning,” International Journal of Educational Management, Vol. 20, No. 1, 2006, pp. 60-72.
[24] W. G. Rowe, “Creating Wealth in Organizations: The Role of Strategic Leadership,” Academy of Management Executive, Vol. 15, No. 1, 2001, pp. 81-94.
[25] A. Tarabishy, G. Solomon, J. R. Fernald and M. Sashkin, “The Entrepreneurial Leader’s Impact on the Organization’s Performance in Dynamic Markets,” Journal of Private Equity, Vol. 8, No. 4, 2005, pp. 20-29.
[26] G. Yukl, “Leadership in Organizations,” 3rd Edition, Prentice-Hall, New York, 2002.
[27] J. Abor and N. Biekpe, “Corporate Governance, Ownership Structure and Performance of SMEs in Ghana: Implications for Financing Opportunities,” Corporate Governance, Vol. 7, No. 3, 2007, pp. 288-300.
[28] G. Carmignani, “The Definition of a Standard to Implement a Process Management System,” Business Process Management Journal, Vol. 15, No. 3, 2009, pp. 395-349.
[29] D. A. Coelho and J. C. O. Matias, “Innovation in the Organisation of Management Systems in Portuguese SMEs,” International Journal of Entrepreneurship and Innovation Management, Vol. 11, No. 3, 2010, pp. 324-329.
[30] C. Doom, K. Milis, S. Poelmans and E. Bloemen, “Critical Success Factors for ERP Implementations in Belgian SMEs,” Journal of Enterprise Information Management, Vol. 23, No. 3, 2010, pp. 378-406.
[31] T. Fuller and Y. Tian, “Social and Symbolic Capital and Responsible Entrepreneurship: An Empirical Investigation of SME Narratives,” Journal of Business Ethics, Vol. 67, No. 3, 2006, pp. 287-304.
[32] A. Gilmore, D. Carson and K. Grant, “SME Marketing in Practice,” Journal of Marketing Intelligence & Planning, Vol. 19, No. 1, 2001, pp. 6-11.
[33] D. M. Hussey and P. D. Eagan, “Using Structural Equation Modelling to Test Environmental Performance in Small and Medium-Sized Manufacturers: Can SEM Help SMEs?” Journal of Cleaner Production, Vol. 15, No. 4, 2007, pp. 303-312.
[34] H. Jenkins, “Small Business Champions for Corporate Social Responsibility,” Journal of Business Ethics, Vol. 67, No. 3, 2006, pp. 241-256.
[35] B. Jones, “Entrepreneurial Marketing and the Web 2.0 Interface,” Journal of Research in Marketing and Entrepreneurship, Vol. 12, No. 2, 2010, pp. 143-152.
[36] J. A. G. Van Kleef and N. J. Roome, “Developing Capabilities and Competence for Sustainable Business Management as Innovation: A Research Agenda,” Journal of Cleaner Production, Vol. 15, No. 1, 2007, pp. 38-51.
[37] R. T. Keller, “Transformational Leadership, Initiating Structure & Substitutes for Leadership: A Longitudinal Study of Research & Development Project Team Performance,” Journal of Applied Psychology, Vol. 91, No. 1, 2006, pp. 202-210.
[38] G. Qian, T. A. Khoury, M. W. Peng and Z. M. Qian, “The Performance Implications of Intra- and Inter-Regional Geographic Diversification,” Strategic Management Journal, Vol. 31, No. 9, 2010, pp. 1018-1030.
[39] M. A. Luke and G. R. Maio, “Oh the Humanity! Humanity-Esteem and Its Social Importance,” Journal of Research in Personality, Vol. 43, No. 4, 2009, pp. 586-601.
[40] A. Mehra, B. R. Smith, A. L. Dixon and B. Robertson, “Distributed Leadership in Teams: The Networks of Leadership Perceptions & Team Performance,” The Leadership Quarterly, Vol. 17, No. 3, 2006, pp. 232-245.
[41] G. D. Meyer and K. A. Heppard, “Entrepreneurial Strategies: The Dominant Logic of Entrepreneurship,” Irwin University Books, New York, 2000.
[42] A. Macpherson and R. Holt, “Knowledge, Learning and Small Firm Growth: A Systematic Review of the Evidence,” Research Policy, Vol. 35, No. 2, 2007, pp. 172- 192.
[43] N. O’Regan and A. Ghobadian, “Testing the Homogeneity of SMEs: The Impact of Size on Managerial and Organisational Processes,” European Business Review, Vol. 16, No. 1, 2004, pp. 64-77.
[44] M. Kirchgeorg and M. I. Winn, “Sustainability Marketing for the Poorest of the Poor,” Business Strategy and the Environment, Vol. 15, No. 3, 2006, pp. 171-184.
[45] G. R. McGrath and I. C. Macmillan, “The Entrepreneurial mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty,” Harvard Business School Press Books, Boston, 2000.
[46] J. Lynn, “Business Process Automation: A Gateway to Better Business Management-Focus: BPM,” 2013.
[47] L. J. Mullins, “Management and Organizational Behaviour, 8th edition,” Prentice Hall, New York, 2007.
[48] M. O’Dwyer, A. Gilmore and D. Carson, “Innovative Marketing in SMEs,” European Journal of Marketing, Vol. 43, No. 1-2, 2009, pp. 46-61.
[49] A. O’Donnell, “The Nature of Networking in Small Firms,” Qualitative Market Research: An International Journal, Vol. 7, No. 3, 2004, pp. 206-217.
[50] L. J. Porter and S. J. Tanner, “Assessing Business Excellence,” 2nd Edition, Heinemann, London, 2004.
[51] H. Chen, A. Papazafeiropoulou and Y. K. Dwivedi, “Maturity of Supply Chain Integration within Small and Medium-Sized Enterprises: Lessons from the Taiwan IT Manufacturing Sector,” International Journal of Management and Enterprise Development, Vol. 9, No. 4, 2010, pp. 325-347.
[52] S. K. Chetty and L. M. Stangl, “Internationalization and Innovation in a Network Relationship Context,” European Journal of Marketing, Vol. 44, No. 11-12, 2010, pp. 1725-1743.
[53] E. Bekele and Z. Worku, “Factors that Affect the Long Term Survival of Micro, Small and Medium Enterprises in Ethiopia,” South African Journal of Economics, Vol. 76, No. 3, 2008, pp. 548-568.
[54] W. R. Carroll and T. H. Wagar, “Is There a Relationship between Information Technology Adoption and Human Resource Management?” Journal of Small Business and Enterprise Development, Vol. 17, No. 2, 2010, pp. 218- 229.
[55] J. Abor and K. Adjasi, “Corporate Governance and the Small and Medium Enterprise Sector: Theory and Implication,” Corporate Governance, Vol. 7, No. 2, 2007, pp. 111-122.
[56] M. B. Ingstrup, “The Role of Cluster Facilitators,” Inter- national Journal of Globalisation and Small Business, Vol. 4, No. 1, 2010, pp. 25-40.
[57] R. Isaksson, “Total Quality Management for Sustainable Development: Process Based Systems Model,” Business Process Management Journal, Vol. 12, No. 5, 2006, pp. 632-645.
[58] S. Jack, S. Moult, A. R. Anderson and S. Dodd, “An Entrepreneurial Network Evolving: Patterns of Change,” International Small Business Journal, Vol. 28, No. 4, 2010, pp. 315-337.
[59] Y. I. Jiang and M. W. Peng, “Are Family Ownership and Control in Large Firms Good, Bad, or Irrelevant?” Asia Pacific Journal of Management, Vol. 28, No. 1, 2011, pp. 15-39.
[60] K. Jagoda, B. Maheshwari and R. Lonseth, “Key Issues in Managing Technology Transfer Projects: Experiences from a Canadian SME,” Management Decision, Vol. 48, No. 3, 2010, pp. 366-382.
[61] S. Jonsson and J. Lindbergh, “The Impact of Institutional Impediments and Information and Knowledge Exchange on SMEs’ Investments in International Business Relation- ships,” International Business Review, Vol. 19, No. 6, 2010, pp. 548-561.
[62] E. M. Maine, D. M. Shapiro and A. R. Vining, “The Role of Clustering in the Growth of New Technology-Based firms,” Journal of Small Business Economics, Vol. 34, No. 2, 2010, pp. 127-146.
[63] K. Kozovska, “The Role of Regional Clusters and Firm Size for Firm Efficiency,” International Journal of Globalisation and Small Business, Vol. 4, No. 1, 2010, pp. 41-60.
[64] R. Malhotra and C. Temponi, “Critical Decisions for ERP Integration: Small Business Issues,” International Journal of Information Management, Vol. 30, No. 1, 2010, pp. 28-37.
[65] W. Zhu, I. K. H. Chew and W. D. Spangler, “CEO Transformational Leadership & Organizational Outcomes: The Mediating Role of Human-Capital-Enhancing Human Resource Management,” The Leadership Quarterly, Vol. 16, No. 1, 2005, pp. 39-52.
[66] S. T. Foster, “Managing Quality: Integrating Supply Chain,” Prentice Hall, New Jersey, 2007.
[67] R. Harms, S. Kraus and C. H. Reschke, “Configurations of New Ventures in Entrepreneurship Research: Contributions and Research Gaps,” Management Research News, Vol. 30, No. 9, 2007, pp. 661-673.
[68] T. A. Judge and R. F. Piccolo, “Transformational & Transactional Leadership: A Meta-Analytic Test of Their Relative Validity,” Journal of Applied Psychology, Vol. 89, No. 5, 2004, pp. 755-768.
[69] B. Dawson-Saunders and R. G. Trapp, “Basic Clinical Biostatistics,” 2nd Edition, McGraw-Hill, New York.
[70] D. W. Hosmer and S. Lemeshow, “Applied Logistic Regression Analysis,” 2nd Edition, John Wiley & Sons, New York.
[71] M. Cleves, W. Gould and R. Guitierrez, “An Introduction to Panel Data Analysis Using STATA,” Revised Edition, STATA Press, College Station.
[72] D. Kleinbaum, “Survival Analysis: A Self-Learning Text,” Springer-Verlag, New York.
[73] M. Verbeek, “A Guide to Modern Econometrics,” John Wiley and Sons, New York, 2000.
[74] S. Globerman, M. W. Peng and M. S. Daniel, “Corporate Governance and Asian Companies,” Asia Pacific Journal of Management, Vol. 28, No. 1, 2011, pp. 1-14.
[75] D. Zoogah, R. Vora, O. Richard and M. W. Peng, “Strategic Alliance Team Diversity, Coordination, and Effectiveness,” International Journal of Human Resource Management, Vol. 22, No. 3, 2011, pp. 510-529.
[76] M. W. Peng, S. B. Rabi and C. Sea-Jin, “Asia and Global Business,” Journal of International Business Studies, Vol. 41, No. 1, 2010, pp. 373-376.
[77] S. Daley-Harris, “Microcredit Campaign Strategies and Social Business Movement: What Can the Social Business Movement Learn from the Early Promotion of Microcredit?” The Journal of Social Business, Vol. 1, No. 1, 2011, pp. 46-61.
[78] M. Kumar, J. Antony, C. N. Madu, D. C. Mongomery and S. H. Park, “Common Myths of Six Sigma Demystified,” International Journal of Quality & Reliability Management, Vol. 25, No. 8, 2008, pp. 878-895.
[79] L. Klotz, M. Horman, H. H. Bi and J. Bechtel, “The Impact of Process Mapping on Transparency,” International Journal of Productivity and Performance Management, Vol. 57, No. 8, 2008, pp. 623-636.
[80] S. Dasanayaka and G. D. Sardana, “Development of SMEs Through Clusters: A Comparative Study of India, Pakistan and Sri Lanka,” World Review of Entrepreneurship, Management and Sustainable Development, Vol. 6, No. 1-2, 2010, pp. 50-70.
[81] P. Edwards, S. Sengupta and C. J. Tsai, “The Context- Dependent Nature of Small Firms’ Relations with Support Agencies: A Three-Sector Study in the UK,” International Small Business Journal, Vol. 28, No. 6, 2010, pp. 543-565.
[82] L. Dougherty, “Putting Poverty in Museums: Strategies to Encourage the Creation of the For-Profit Social Business,” Boston College Third World Law Journal, Vol. 29, No. 2, 2009, pp. 357-380.
[83] R. P. Estebanez, E. U. Grande and C. M. Colomina, “Information Technology Implementation: Evidence in Spanish SMEs,” International Journal of Accounting and Information Management, Vol. 18, No. 1, 2010, pp. 39-57.
[84] G. A. Rummler and A. P. Brache, “Business Process Management in US Firms Today,” 2013.
[85] H. Smith and P. Fingar, “Business Process Management, the Third Wave: The Breakthrough That Redefines Competitive Advantage for the Next Fifty Years,” Meghan- Kiffer Press, New York, 2006.
[86] J. Zhang, “The Problems of Using Social Networks in Entrepreneurial Resource Acquisition,” International Small Business Journal, Vol. 28, No. 4, 2010, pp. 338- 361.
[87] K. Wennberg and G. Lindqvist, “The Effect of Clusters on the Survival and Performance of New Firms,” Small Business Economics, Vol. 34, No. 3, 2010, pp. 221-241.
[88] C. M. Van Praag, “Business Survival and Success of Young Small Business Owners,” Brunel Business School, London, 2003.
[89] C. H. Sun and K. E. Liu, “Information Asymmetry and Small Business in Online Auction Market,” Small Business Economics, Vol. 34, No. 4, 2010, pp. 433-444.
[90] B. J. Hicks, S. J. Culley, C. A. McMahon and P. Powell, “Understanding Information Systems Infrastructure in Engineering SMEs: A Case Study,” Journal of Engineering and Technology Management, Vol. 27, No. 1-2, 2010, pp. 52-73.
[91] E. B. Wagner, “Small Business Survival Relies on Grit, Perseverance,” American City Business Journals, Vol. 1, No. 1, 2003, pp. 1-2.
[92] A. Dowla, “In Credit We Trust: Building Social Capital by Grameen Bank in Bangladesh,” Journal of Socio Economics, Vol. 35, No. 1, 2006, pp. 102-122.
[93] L. Harris and A. Rae, “The Online Connection: Trans- forming Marketing Strategy for Small Businesses,” Journal of Business Strategy, Vol. 31, No. 2, 2010, pp. 4-12.
[94] P. Hadaya and R. Pellerin, “Determinants and Performance Outcome of Manufacturing SMEs Use of Internet-Based IOISs to Share Inventory Information,” International Journal of Electronic Business, Vol. 8, No. 6, 2010, pp. 477-504.
[95] R. McAdam, S. Moffett, S. A. Hazlett and M. Shevlin, “Developing a Model of Innovation Implementation for UK SMEs: A Path Analysis and Explanatory Case Analysis,” International Small Business Journal, Vol. 28, No. 3, 2010, pp. 195-214.
[96] J. Curran and R. A. Blackburn, “Researching the Small Enterprise,” Sage Publications, Thousand Oaks, 2001.
[97] A. Smedlund, “The Knowledge System of a Firm: Social Capital for Explicit, Tacit and Potential Knowledge,” Journal of Knowledge Management, Vol. 12, No. 1, 2008, pp. 63-77.

comments powered by Disqus

Copyright © 2018 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.