Analyzing the Effect of Business Intelligence on Small, Medium, and Micro Enterprises’ Corporate Governance in the eThekwini Municipal Area ()
1. Introduction
The value of corporate governance is increasing its significance in today’s market-driven economy. Corporate governance is expected to ensure transparency that serves the welfare of all stakeholders, irrespective of whether they are big or small (Van Belle and Dawson 2013) [1] . Governance, as described by Van Meerkerk and Edelenbos (2014) [2] , comprises the guidelines, rules, procedures, and decisions established to influence corporate conduct. Governance decrees that each person in an establishment adheres strictly to the appropriate and transparent decision-making progressions and that the welfare of people such as owners, managers, workers, dealers, and clients is secure.
In the business context, Majeed, Aziz and Saleem (2015) [3] state that corporate governance is the basis of directions, practices, and procedures through which corporations are overseen. The standard set by any corporation or business ensures that the rights and duties of individuals are delivered appropriately. A corporate system with ethical governance requires that the management of an established act in the best interests of all. Good corporate governance assists businesses in forming trust with shareholders and the environment. It also supports the promotion of economic practicability by generating a long-term venture prospect for market members (buyers and sellers). Dissolute corporate governance, on the other hand, can bring distrust to a company’s trustworthiness or commitment to business owners, all of which can have severe downsides for the business’s financial vigour (Majeed, Aziz and Saleem 2015) [3] .
Mainela, Puhakka and Sipola (2018) [4] note that to subsist in today’s environment, organizations and individuals need intelligence to follow the principles that direct their style of living, behaviour, and existence. Just as the need for intelligence applies to individuals, likewise, it applies to corporate establishments. Having business intelligence helps organizations and entrepreneurs to realize long-term corporate success and economic growth. According to Mainela, Puhakka and Sipola (2018) [4] , business intelligence gives direction to the owners and managers, particularly on how the goals and strategies of the company can be implemented, how to instill control, how to lower wastages, reduce scandal and risks of failure, and mismanagement of available resources. It displays an organization’s level of integrity and the pathways of doing things. Vibrant corporate governance also permits an establishment to make the right choices that profit all its stakeholders in so doing, letting a business place itself as a striking choice of stakeholders if its financial values are sound. Debauched corporate governance results in the failure of a business and in insolvency. For entrepreneurs to move their businesses forward and acclimatize swiftly to varying corporate and market environments, it is important that they display proficient intelligence so that they can sustain their operations and thus enable themselves to make quantifiable decisions that promote their businesses to remain relevant in the competitive business environment.
The purpose of this study is to evaluate the extent to which entrepreneurs in the eThekwini Municipality recognize business intelligence as a tool that guarantees successful corporate governance in the area where they serve. Our objectives are to:
・ Ascertain whether SMME operators can make better business decisions.
・ Examine the level at which managers can handle business pressures.
・ Analyze whether SMMEs operators understand how to satisfy the needs of their clients.
・ Assess the managers’ ability to engage in practices that allow the analytical workforce.
・ Establish the flexibility of SMME operators in the environment and their ability to observe business trends.
2. Conceptual Framework
Intelligence, according to Brackett, Rivers and Salovey (2011) [5] , is fundamental to everybody. People use intelligence to sort out many great deals such as to recognize events of reality, make a creative change or good transformation and embark on meaningful ways of living amongst others. Brackett, Rivers and Salovey (2011) [5] state that intelligence is the mental representation of instinct, self-consciousness, empathy, expressive rationality, analysis, planning, creativity, intense reasoning, and problem-solving. Additionally, intelligence reveals the fervour of individuals to learn, be inventive and be flexible enough to cope with the environmental needs, challenges or situations that emerge in society. Intelligence according to Brackett, Rivers and Salovey (2011) [5] , can offer users the chance to assess opinions on which to devise plans and strategies to make the right decisions, hence, with an advanced level of intelligence as a quality, a leader can exhibit a greater amount of transformational leadership style. This implies that entities with a high level of intelligence can direct and control more realistically in culturally diverse environments.
Emmerling and Boyatzis (2012) [6] refer to intelligence to signify competency in a person, or an individual’s perception, knowledge and skills employed to understand and coordinate situational occurrences or put actions into performance. The roles presented by intelligence include self-alertness, behavioural management, public enlightenment, and relationship regulation. Intelligence, as acknowledged by the authors, assists in developing a person’s abilities, assists teamwork, sustains effective leadership, reduces stress, and improves creativity as well as innovation.
Keung and Rockinson-Szapkiw (2013) [7] state that an individual’s competence to act and act excellently in innumerable settings can be described as intelligence. The classes of intelligence in a person, as observed by the authors, are metacognitive, cognitive, motivational, and behavioural forms. Metacognitive intelligence supports an individual in understanding and being receptive to the public. Cognitive intelligence equips the person possessing it with informative knowledge and understanding, regarding how they are comparable and dissimilar. The nature of motivational intelligence is the type that shows the level of energy implemented by an individual to learn about management in any cross-cultural position. Behavioural intelligence is the skill often used to perform applicable oral and unwritten behaviours under a different state. The outcome of the study proved that a dynamic, optimistic relationship subsists between cultural intelligence factors and transformational leadership in international college heads, hence, to select leaders and train them in such a way that they can impart knowledge and control others, the leaders must be ready to embrace social intelligence as a vital factor in making change.
Njoroge and Yazdanifard (2014) [8] see intelligence as the logical aptitudes of knowledge and skills required to adapt to a situation and make decisions in any geographical setting. These individuals are extremely intelligent beings because they bank on their intellectual abilities for survival. The intelligence of man is what makes him remarkably exceptional and thrive. The intelligence in the persons possessing it discloses his or her behavioural capacity and experience on job performance. With a high level of intelligence, a person can positively organize actions and impart these gifts to good effect without having reservations about his or her decision.
Businesses, according to Allameh et al. (2015: 84) [9] , have engrossed the thoughts and impressed the hearts of their clients through the combination of shared and emotive intelligence. Shared and emotive intelligence prepares leaders and their subordinates with experiences to transform weaknesses into positives. This intelligence in employees, managers and entrepreneurs helps them to operate and build a community of practice without discrimination. It allows for a stronger relationship to be built among individuals in workplaces and society. Moreover, people can turn their intentions into action using intelligence to accomplish multifarious goals.
From the above, demonstrating business intelligence is important in attaining the corporate desires of a vision and mission statement for business. To perform meaningfully as a service provider and ensure market retention, SMMEs must have a good spirit of planning, organizing, coordinating, controlling, creativity, using team spirit and decision making.
3. Business Intelligence
Istart, Stanisavijev and Markoski (2015) [10] study business intelligence (BI) as reflected in systematic practices, presentation, and the use of technology to gather information to sound business decision making. It is the branch of knowledge management that enables decisive choices to be made, although no doubt making cogent decisions falls within the confines of management in an organization. However, making decisions in an organization can be quite challenging, the effect of which may have either a favorable or adverse effect on profit generation, the position of the company in the market or the company’s corporate brand identity. For this reason, careful planning in selecting the best alternative course of action must ensure effective performance is guaranteed. It is important that managers have vast knowledge and be innovative and creative to make good personal decisions and ensure effective teamwork decisions, organizational decision making, and meta-organizational decisions. The study’s findings showed that modern decision process modelling heavily incorporated business intelligence (Istart, Stanisavijev and Markoski 2015) [10] .
Business intelligence, according to Pääkkönen (2015) [11] is a branch of knowledge management that concentrates on both the explicit and tacit dimensions. It is meant to assemble and analyze data to engage in planning on which to make effective decisions using technology. It is a concept that allows for the eliciting of information from the widest range of indicators, especially in monitoring performance on products and services and to the competitive advantage of the enterprise. Business intelligence can also be used to gain insights into consumer behaviour, improve visibility, turn action into actionable information, improve productivity or work efficiency, gain a sale and mfarket intelligence and gain competitive intelligence. The author found that technological capability directly impacts business intelligence success regardless of the decision of the environment.
Pavkov, Poščić and Jakšić (2016) [12] conclude that without the application of business intelligence in an organization, business is unthinkable. Managers and their co-workers must have a good understanding and adapt to business conditions if they are to be problem solvers. Business executives in different organizations practice intelligence to ascertain the market trend, improve operations, forecast, and direct the affairs of the business through the information ascertained from various business and public sources. Business analysis and marketing, according to the authors, are essential to making strategic decisions in a timely and high-quality manner. Moreover, especially where competition is aggressive, businesses must exercise control over information.
The above discussion demonstrates that business intelligence is fundamental to attaining the corporate desires of any vision and mission statement. The importance of intelligence in business allows for the flexibility of schemes and procedures to amass, evaluate, incorporate, and execute relevant business information. The whole aim of business intelligence is to sustain, simplify and improve corporate decisions. BI permits corporations’ access to intelligence that is essential to the accomplishment of copious parts of the organization such as sales, finance, marketing, and a range of other areas and departments. Efficaciously swinging intelligence into the business can stimulate success with improved actionable information. This can present entrepreneurs with the excellent intelligence needed to thrive in the industry and enable a more tactically geared decision-making standard. To operate exceptionally as a service provider and to ensure market retention, SMMEs must have knowledge and intelligence to cope with managing the affairs of the business.
4. Corporate Governance
From the earlier section, the significance of Business Intelligence in a corporate establishment is to assist and enable better decisions. BI allows organizations access to understanding that is essential to effective corporate governance.
Corporate governance, according to Lekhanya (2015) [13] , is an approach that reflects the rules, practices, and processes by which the operations management of an enterprise is administered. It is an approach that aims to see that the stakeholder’s interest is protected. Examples of people in these categories are customers, shareholders, government, financiers, and suppliers, amongst others. The author maintains that to demonstrate good corporate citizenship that avoids the massive disaster of corporate scandals, fraud and civil liability, managers and operators must inculcate and value conduct reflecting transparency, accountability, reliability, and tolerance.
Rahman and Bremer (2016) [14] agree that corporate governance examines the institutions and policy framework for evolution in entrepreneurship through their governance structures. Good governance is all about the proper conduct of the affairs of the business with the responsibility of achieving business excellence through fairness and transparency as well as enhancing a shareholder’s value without neglecting the interest of the shareholder.
Hove-Sibanda, Sibanda and Pooe (2017) [15] explain that corporate governance is a pathway to success that changes the status of an individual, business entity or society, regardless of the size. In the instance of small businesses, it is an influencer that allows the “transposition of circumstances” to solve problems from point to point. In South Africa, what motivates the adoption of corporate governance is the contribution made by SMMEs toward alleviating poverty in the community. Despite the investment of the government in stimulating the growth of SMMEs, the failure rate keeps increasing especially during the early stage of business. The causal effect is associated with the non-existence of good corporate governance. The effect of this limits their access to the financial resources needed for their growth. The findings of the above study however, revealed that entrepreneurs did not always perceive corporate governance as a means of attaining business success.
To build a unique corporate culture on corporate governance where the performance of SMMEs is enhanced, entrepreneurs must display the vital traits of transparency, accountability, reliability, fairness; risk-taking and problem-solving as distinctive capabilities to create a competitive advantage and improve performance.
5. Methods
5.1. Research Design
The research design for this study was descriptive and quantitative type because the information was elicited from the respondents by using a structured questionnaire in which the participants logged their ideas. A descriptive strategy was chosen for this study’s evaluation since it detailed characteristics of present facts and identified solutions to the problems being investigated (Wiid and Diggines 2013) [16] . It was quantitative in form because the information and the acquired data were evaluated using a variety of analytical implements that were quantitative in nature. To guarantee that recognized SMMEs had a known and equal opportunity for selection, a probability sampling design was utilized, while simple random sampling was employed to provide every population member a fair chance of assessment (Thomas, Nelson and Silverman 2015) [17] .
5.2. Target Population
Smith and Albaum (2012) [18] note that a target population is the total number of observed elements that form the universe of the study such as a group of people or objects. In this study, the eThekwini Municipal Area’s whole SMME operators served as the survey’s target population.
5.3. Sample
Thomas, Nelson and Silverman (2015) [17] describe sample as the fractional part of the elements that make up the universe or population. The sample selection from the universe was chosen from the list of registered SMMEs in the eThekwini Municipal area. A sample size of 200 was selected to enable a fair assessment of the constructs under study.
5.4. Data Collection
To acquire sufficient data about business intelligence used by the SMME managers and operators who were in the eThekwini Municipal area, a structured questionnaire was utilized as a research instrument.
5.4.1. The Research Instrument
The instrument for data collection was a structured questionnaire with a 5-point Likert scale. The reason for the chosen questionnaire was to allow a large amount of information to be drawn from the participants in a comparatively effective manner (Zucker 2009) [19] . The questionnaire, however, comprised of strongly disagree, disagree, uncertain, agree and strongly agree to make information easy to quantify using the SPSS version 25.0. In addition, the participants were addressed in simple plain English or language that was understandable so as to enable them to supply information to the questions of the study without being biased (Walliman 2011) [20] . The questionnaire was emailed to the owners of SMMEs, if email address were available. In the event of an email address of the SMMEs operators’ not being found, a questionnaire was distributed in person and retrieved in the same manner.
5.4.2. Administration of the Questionnaire
From the initial 250 dispersed questionnaires, 200 replies were collected; this comprised this study’s sample size. The discoveries of the evaluation were extracted from these replies. A structured questionnaire with a 5-point Likert scale served as the research instrument. The questionnaire was helpful because data from contributors were accumulated cost-effectively. The questionnaire was directly dispersed to SMME managers and operators. A letter seeking the participant’s permission based on the rationale for which the study was conducted was attached. The letter also said that the participants could withdraw from partaking in the study if they felt uneasy. In addition, they were told that the evidence provided by them would be preserved in the strictest confidence. Names did not appear on the retrieved questionnaires. The questionnaire was retrieved in the way through which it was circulated and placed in a box to prevent modification or interfere.
5.4.3. Data Analysis
Data were taken and evaluated by means of the Statistical Package for Social Sciences version for 25 (SPSS 25). Similarly, the appropriate quantitative analytical tools were used to generate descriptive statistics. Examples of these include cross-tabulations, frequencies, and percentages. Additionally, central tendency and dispersion measurements were used to give the data acquired a wider scope of analysis. T-tests and analyses of variance (ANOVA) were used in inferential statistics to gather the data required to ascertain results from the information under study.
6. Results and Discussion
6.1. Results
Here, we state and address the outcomes according to the analyses of data retrieved from 200 SMMEs about their abilities to engage in proper planning, organizing, coordinating, controlling, creativity, using team spirit and engaging in good decision making. The outcome of this research revealed that SMMEs in the eThekwini Municipal area rely on business intelligence and have made an overwhelming impact on the advancement of the region which should be maintained.
The chat above implied that most respondents were female (54%). (Table 1 and Figure 1) This revealed that women have started to participate more actively in business ventures than their male counterparts. This high number could be attributed to as being the high increase in the level of poverty as well as joblessness in the economy and insecurity.
Based upon the above findings, a large number of entrepreneurs who made their contribution to this study were within the age bracket of 41 - 50 years of age. (Table 2 and Figure 2) Tshikovhi and Shambare (2015) [21] attributed this to a high rate of unemployment, job loss and redundancy as well as social disparities. The effect of this represents the reasons for which people within the age boundary are drawn to small businesses.
The results above demonstrate that 48.5% of those surveyed have obtained diplomas. (Table 3 and Figure 3) This is followed by 19.5% of participants who have a degree, and entrepreneurs having postgraduate degree and who comprised 14.5% of the participants. This implies that those who have tertiary education are more inclined to be drawn to entrepreneurship. Trieu (2017) [22] believes that education plays a key role in the various facets of entrepreneurial activities since it acts as a catalyst in executing management responsibilities. Similarly, it presents an opportunity under which to refine entrepreneurial competences and experience in business.
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Table 3. Educational qualification.
6.2. Discussion
According to the results in Table 4, many respondents were inclined to strongly agree with the assertions about decision making because the whole mean score (M = 1.55) was lower than 2.4. The results therefore implied that SMME owners were proficient and made intelligent decisions that benefited their businesses.
As shown in Table 5, most respondents strongly agreed with the statements about Handling pressure, as reflected in the overall mean score (M = 1.58) which was lower than 2.4. The findings concluded that the majority of SMME owners were well grounded and able to handle stress intelligently.
According to the findings in Table 6, nearly all respondents strongly agreed with the views about customer satisfaction because the overall mean (M = 1.52) score was below 2.4. The above results demonstrate that managers can adopt business intelligence to satisfy the needs of their clients.
Table 7 indicated that most of the respondents agreed with the statements measuring Analytical Workforce (M = 1.53) because of the mean point being below 2.5. In conclusion, the general results of the analytical workforce presented support the view that SMME managers were capable of impacting business practice that allowed the analytical workforce.
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Table 4. Descriptive (decision-making).
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Table 5. Descriptive (Handling of pressure).
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Table 6. Descriptive (customer’s satisfaction).
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Table 7. Descriptive (Analytical workforce).
Table 8 exemplifies the view that large number of respondents could perceive business movements that affected their operations and adapt to them. However, Environmental Flexibility indicated a mean of (M = 1.48) which was below a 2.5 score.
7. Conclusions
Important findings in this study are as follows:
a) Gender equivalence is correlated as women have also ventured into entrepreneurial businesses and their performance is very encouraging.
b) Facts from this study showed that the youth were enthusiastically absorbed into entrepreneurial ventures which can help to eliminate joblessness, criminality, and other unscrupulous conduct as there is a correlation between the latter elements and lack of business ventures.
c) According to the respondents, education is now crucial for entrepreneurs since it stimulates managers’ and entrepreneurs’ intellectual thinking about the knowledge and abilities needed to manage their job ambitions.
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Table 8. Descriptive (Environmental flexibility).
d) The entrepreneurs believed that they had established congenial relationships with the community and acceded to their clients’ requests speedily. The idea emanating from their clients as well as the innovative ideas of entrepreneurs contributed to community upliftment.
e) Entrepreneurs and their subordinates could now perceive issues that troubled their environment as well as the threat that impeded their growth.
f) Having knowledge of information technology and how to use it simplified the tasks of entrepreneurs as they were able to deal with a variety of things. Examples are participating in meetings and interviews, establishing safety measures and, primarily, curtailing expenses such as overheads, administrative expenses as well as other monetarily associated expenses with the purpose of generating revenue. Above and beyond this, the use of information technology provided the opportunity for wider coverage to reach out to larger numbers of people.
g) The efforts of SMMEs can now be felt as their contribution has enhanced the lives of employees who are able to feed their families.
h) The entrepreneurs were still not always able to adapt to the environment where they served.
8. Recommendations
The entrepreneurs are given suggestions based on the research’s findings. To deal with the emerging problems arising from the effect of environmental uncertainty, SMME managers and entrepreneurs are advised to be cognizant of the domain where they serve. Doing this will provide them with information on how to deal with their clients, especially in meeting their needs and surviving environmental threats or waves that may likely hinder their efforts in realizing their business dreams. In addition, to realize business opportunities in the environment, entrepreneurs must keep their actions, activities, conduct and performance in check and concentrate on communicating positive elements of knowledge, skills, attitude, values, and competence to mitigate social problems and make gains. Based on the above, they will be able to plan, be creative, organize, coordinate, and control their activities utilizing team spirit and making effective decisions. If all these requirements can be met, understanding the environment and people’s needs will not only provide entrepreneurs with the business intelligence needed to contribute positively to their area of service but will make a remarkable impact on the economic development at the local level, provincial level as well as national level.