Managerial Competence Impact of Small, Medium and Micro Entrepreneurs on Sustainable Economic Development in eThekwini Municipal Area ()
1. Introduction
From the beginning of sustainable development, the persistent increase of poverty in many communities poses a great concern to the government that aspires to promote its economic condition, while addressing this issue without causing harm to the environment and future generations (Della Croce, Kaminker and Stewart, 2011: 6) [1] . The Republic of South Africa is not excluded from this global issue, therefore, the South African government has proposed to promote the required evolution and reasonable change by using Small, Medium and Micro Entrepreneurial activities (SMMEs) as part of feasible approaches to enhance economic prospects (Worku, 2016: 134) [2] . Sustainable development, however, remains a key concern today, as a trend permeating all aspects “of human endeavor, whether cultural, social, political, economic or environmental” (Omotola, 2010: 107) [3] .
To build a healthier living and promote people’s quality of life, expressly women, young people, as well as the physically disabled, the government has focused more attention on the problems affecting the country (Mulder, Segalas and Ferrer-Balas, 2012: 212) [4] . Examples of these are disparities in economic compositions, lower cost of labor and huge capital investments. The South African government has set out to address challenges confronting people in the country, such as the high poverty -level, unemployment and inequity (Cole, Bailey and New, 2014: E4400) [5] . In an attempt to bolster sustainable development, the government has heeded the call to boost SMME proficiency, since they are recognized as a tool of productive development, as well as creating new jobs (Burns, 2015: 107) [6] . The operational activity of these enterprises is, nevertheless, susceptible to failure and risks “where the competence to drive, establish and grow the business is deficient” (Omotayo, 2015: 11) [7] . Several government initiatives were initiated to enrich SMME operations and their presentations using financial and non-financial establishments, aimed to improve the competence of entrepreneurs and their managers, as well as their responsibilities to certify sustainable goals are accomplished.
Rapatsa (2016: 2) [8] opined even though SMMEs play a predominant role in their lines of operation, they experience difficulties such as lack of managerial competence; lack of capital outlay and inaccessibility to markets; poor infrastructure; and lack of technological skills; as well as excessive costs of the tax. Consequently, government engagement in numerous initiatives was formulated to validate the SMMEs’ development as anticipated. Among the initiatives designed to support SMMEs is the Small Enterprise Development Agency (SEDA), mandated for the enrolment and development of businesses, while providing small businesses with the support that can stimulate their development, from the startup to the maturity stage.
In spite of these initiatives, Nhlumayo (2017: 18) [9] perceived SMME operations suffer a lack of good management skills, evident from their progress commonly affected by issues such as bureaucracy, inadequate standard amenities, an ineffective legal structure, and lack of capital outlay, as well as an unpleasant tax rule. In the environment of eThekwini Municipality, ongoing deep differences and misunderstandings afflict the relationship between workforces and their leaders (Edge on Economic Development and Growth in eThekwini, 2013: 33) [10] . This suggests important qualities of managerial competence are needed not only in big corporations but also in SMMEs.
Foregoing discourse from different authors indicates competence is a core influence that functions as a precursor or basis for entrepreneurial operations to thrive globally. To meaningfully impact the development of the economy entrepreneurs and their subordinates must be equipped with knowledge, skills, abilities, and evaluation capacity, as well as values, attitudes, experience, and behavioral characteristics, together with social networking and professional competence. These factors are analytically clarified to evaluate how they assist the operation of entrepreneurs.
This article is structured in the following manner. After the introduction, the review of the literature to highlight the existing knowledge base gap and the reason for the study are provided, along with the theoretical framework. This is followed by a description of the research methodology, with the results section providing extraction and analysis of data obtained from the 229 surveyed SMMEs, followed by a discussion of the key findings and related future research topics.
2. Conceptual Framework
This study is founded on the theories of knowledge on management and human behavior. White (1959: 298) [11] introduced competence to link the gap between human behavior and psycho-dynamic models to develop Drive’s theory of Reduction. He focuses his exploration on the character, to examine behavioral elements of values, attitudes, personal memories, and social relationships, along with habits, and skills.
D’zurilla and Goldfried (1969: 152) [12] also conducted a study to explore children at risk of psychopathology. The authors initiated a social investigative model, explicating the concept of “social competence” to discourse the followings: a) situational analysis; b) response enumeration; c) response evaluation; d) measurement development; and e) evaluation measurement. Competence, according to the authors, displays how attributes of a person can make use of an idea, thought and experience, to address the incidence or dealings and the manner of relationship, in a way that establishes opinion regarding others in the organization. In the view of D’zurilla and Goldfried (1969) [12] , individuals are unsuccessful in social competence because of their ineptitude to convey themselves, with effects that often sprout from issues such as the sparsity of dignity, anguish and shyness. Entrepreneurs and their subordinates must, therefore, inspire each other if they are to create trust and unity that strengthens their morale.
McClelland’s (1973: 2) [13] opinion expands the idea of competence in his work captioned “Testing for Competence rather than intelligence”. The perspective McClelland (1973) [13] offered shows individuals, corporations, and businesses test for intelligence to discover the best alternative amongst aspirants. A person’s level of education or the qualification such an individual possesses, cannot ensure the proficiency, conduct or comportment of a person. Manager or operative qualities such as skills, abilities, knowledge, and personal dedication to work, as well as talent, will expose their competence or difference from other workers. Where a choice is to be presented in an establishment based on intelligence, McClelland (1973) [13] advised educating not only the current members but also newly recruited workers, thus improving their competence as well as effectiveness at work to provide the preferred outcome.
Such improvement, according to Patro (2012: 19) [14] , is designed to equally stimulate employee morale and ensure their retention, while certifying that their best efforts are paid to the business organization. Additional findings from Odeku and Odeku (2014: 652) [15] confirmed that extending safety for an organization and its staff is an added assurance to inspire the workers to carry on their duty with no distress or reluctance.
Sveiby (1997: 74) [16] approached the term “competence” using knowledge management theory to describe competence from human and intellectual capital. Competence as the author noted, can be applied in a dual approach that involves transmitting and transforming knowledge within and outside of the business. These are human capital and intellectual capital. First, human capital explicitly unravels the intensity of employees and managers to work and handle their practical responsibility with experience, skills, abilities, and education in and out of an organization. Second, conversely, intellectual capital alludes to human capital, along with other virtues such as the structural and social capital essential to support task execution in the work system. Sveiby (1997) [16] further underlined competence as the expertise of a person to use his or her intellectual sources, including knowledge, skills, and experience, amongst others, not intended for personal benefit, but for improvement of the environment.
Considering the above, it is pertinent to use intellectual resources to help secure sustainable economic development to influence the present environment positively. However, the impact of market influences triggered by globalization; rivalry in the business world; technological improvement; and the sudden death of a business, require competence as a means for controlling the profligate use of resources available to develop and sustain the environment (Wuim-Pam, 2014: 49) [17] .
3. Managerial Competence
Krajcovicova, Caganova and Cambal (2012: 1119) [18] viewed managerial competence as a process under which operational events or people’s careers, via knowledge, skills and behavioral character, are needed to “get work done” and make expressive conclusions on which informed decisions can be sited. According to the authors the issues that stimulate competence centre on two elements, namely the nature of work to be performed and the approach implemented to execute tasks. It is the foundation whereby a firm reaches both its dreams and objectives by adding value to the status of an organization and ensuring business sustenance and self-development. Even though resources such as knowledge, skills, ability and experience are crucial elements used by managers and business owners, yet, it is imperative for entrepreneurs and managers to understand how to project their plan according to the followings:
• The ability to understand the business structure and the insight into the ethical code that describes the rules, practices, aspirations and ambitions, as well as the targeted tactical scheme of the organization.
• A good management style fosters the relationship between operatives and consumers, where information to draw judgement for decision-making is elicited.
• Resource control, which focuses on the perception of the present situation and applying the right mechanisms of knowledge, skills, and experience, to formulate strategies on how to take advantage of an opportunity in the work environment.
• Instituting a supportive environment where workers and shoppers can voice their views, and where they anticipate changes to be introduced, according to the informative resources to form opinions.
Managerial competence as explained by Ismail, Domil and Isa (2014: 140) [19] , is a conduct or comportment a person displays for the effective execution of different responsibilities in an organization. From the standpoint of SMMEs, a lack of capital outlay will make an enterprise rely on skills professed as vital to run business. According to Ismail et al. (2014) [19] , the absence of requisite knowledge and experience of managers to administer their functional pursuits is a serious obstacle to the development of SMME undertakings in the country.
Khalid and Bhatti (2015: 598) [20] suggested managerial competence is the capability of management to be effective in articulating the tactical idea for organizing inter-firm affairs. Therefore, an entrepreneur’s conduct must be excellent to enhance many work activities in their business, particularly when instituting product developments; when to capture market; and foster harmony.
SMME managers, as people saddled with different responsibilities in business, must thus have the necessary qualities as reviewed above, including knowledge, skills, abilities, and evaluation capacity, along with values, attitudes, experience, and behavioral characteristics, as well as social networking, and professional competence.
4. Sustainable Development
Peng, Guosheng and Yancai (2011: 922) [21] defined sustainable development as a way of providing for existing needs without the aim of endangering future generations of their needs. For sustainable development to be active, the pylons of sustainable development that must be taken into account are environmental, social and economic factors (Peng et al., 2011: 924) [21] .
Aremu and Adeyemi (2011: 203) [22] viewed sustainable development as a process of achieving economic objectives without impacting the environment. To attain sustainable development, people and corporations must join forces to make set goals accomplishable. In light of this, a helping hand should be offered to SMMEs, thus allowing their firm participation in contributing to economic sustainability, from backers such as the government, monetary institutes, as well as non-monetary organizations.
Khalid and Bhatti (2015: 600) [20] described sustainable development as a practice that could address sustainability of the environment in a way that protects social and economic well-being. Sustainable development, in the view of the authors, is an important element in building capacity. It increases the understanding of world relations between ecological complexities and socio-economic hitches; examples of which are poverty, disparity, war, and the accompanying pressure on individuals and society. Sustainable development requires reflection of a wide-ranging set of ideas, while observing the outcome of a change via a varied series of pointers. This is a good means of connecting local, social, economic and ecological concerns in a manner that caters for the wants of people, business organization and society at large.
5. Methods
This study aimed to identify the precise qualities of managers, in particular, the competence demonstrated when administering their businesses. In unfolding the qualities, a descriptive design was selected for this study as it outlined features of present facts and determined solutions to the issues under investigation (Saunders, Lewis and Thornhill, 2012: 326) [23] . The entire SMME-sector in the eThekwini Municipal Area constituted the target population for this survey. A probability sampling design was used to ensure recognized SMMEs had a known and even opportunity for selection, while simple random sampling was employed to provide every population member a fair chance of assessment (Onyeka, Nlebedim and Izunobi, 2013: 57) [24] . From the initial 250 dispersed questionnaires, 229 replies were collected; this comprised this study’s sample size. The discoveries of the evaluation were extracted from these replies.
The tool for this research was a structured questionnaire with a 5-point Likert scale. The questionnaire was helpful because data from contributors were accumulated cost-effectively. The assembled information was captured and evaluated through the Statistical Package for Social Sciences (SPSS) version 24. Similarly, all relevant quantitative methodical tools were applied to generate descriptive and inferential statistics. Instances of these are frequencies, percentages, and cross-tabulations. Furthermore, measures of central tendency and dispersion were employed to provide the data collected with a broader range of being examined. Regarding inferential statistics, T-tests and analyses of variance (ANOVA) were applied to collect needed evidences in securing outcomes from the information under study.
6. Results and Conclusions
Here, we state and address the outcomes according to the analyses of data retrieved from 229 SMMEs with regard to their knowledge of finances, computer literacy, ability to identify business opportunities and their retort to being conscious of environmental changes, along with their reaction to poverty.
A high number of respondents indicated that knowledge of finances has made a significant contribution to their accomplishments. This knowledge also helps source money to run the business from relevant institutes, mediators, or families, to improve financial strength and be liquid enough to handle monetary issues. However, entrepreneurs “were not discovered to be philanthropic”, which Chiliya and Chikandiwa (2011: 30) [25] described as “a lack of financial muscle for the business processes, profligacy behavior of the entrepreneurs, risk avoidance, unproductive sales, ineffective business IQ and lack of confidence”. Nevertheless, the competence of managers in dealing with their finances has enabled them to sustain updated track records, on which decisions can be drawn for later forecasts. The opposing view of Oppong, Owiredu and Churchill (2014: 85) [26] , expresses that SMMEs, as an instrument of economic development, are yet “to contribute to an enabling environment, owing to the inability of operators, entrepreneurs and managers to manage the financial strength of the business properly”.
Starcek and Trunk (2013: 1445) [27] explained the significance of managers being competent to make informed choices that assist in planning to increase financial wealth, specifically regarding financial goods or services, affirming: “This will help entrepreneurs to properly monitor their business liquidity while imbibing the spirit of self-control to put temporal discordance of wishes into check and give real needs utmost attention”. The replies provided by the respondents showed managers can exploit events of occurrence for their enterprise’s gain, such as using population growth as a means of business development; persistent increase in the price of products and services for income generation purposes; the location of business having perceived the concentration of patrons; and choice of the suitable media of business promotion; besides taking advantage of poor service jobs provided by contenders.
Bernard, Kritzinger and Kruger (2011: 114) [28] suggested business owners should “be aware of price changes as the high increase of goods and services might have an adverse influence on their business”. Furthermore, Gilbert and Sutherland (2013: 2) [29] are of the view that business rivals help the owners of the business to “maximize profit in addition to evaluate their strategic plans to develop several ideas that can produce creativity for business sustainability.” Business growth can be “actualized where an enterprise is established in a location where existing and potential customers, employees and suppliers can have easy access to the business” (Willard, 2012: 20) [30] . Moreover, it is pertinent that managers become acquainted with social networks, to be accessible to far-ranging business coverage of their goods and reach a larger audience. Nevertheless, at this point, a manager or an entrepreneur needs to be careful as erroneous observations of thoughts, data and knowledge could be harmful to the creation, development, maturity and continued existence of their enterprise. Regarding the level of computer literacy of SMME managers in the eThekwini Municipal Area, a large number of respondents assumed they are adequately efficient to infuse the skill of information technology (IT) into their operation for efficacy purposes.
Respondents acknowledged their computer literacy has lessened their tasks; increased their work resourcefully; assisted in keeping work files, histories, and accounts; and connected with both prevailing and intending shoppers using IT (Garrigos-Simon, Alcami and Ribera, 2012: 1880) [31] ; and safeguard from fraud incidences. Though Neves et al. (2014: 135) [32] consented maintaining a computer system can be costly for managers and entrepreneurs, the authors advised investing in IT is vital in boosting working capacity or volume.
Cavico, Orta, Muffler and Mujtaba (2014: 44) [33] suggested it was essential for entrepreneurs and SMME operators to “computerize their work details for easy documentation and retrieval in time of need”.
To ascertain whether SMME managers can perceive changes in the environment that affect their operations, respondents were queried on this matter. The outcomes of the analysis evidenced that the majority of respondents believed they can perceive environmental changes that may negatively impact their business activities. This supports the opinion of Al-Hawamdeh (2002: 6) [34] that SMME managers must be accustomed to their environment as to how factors such as the country’s political situation, economic condition, and technological change affect their business. This knowledge, according to Ismail et al. (2014: 140) [19] is pertinent to boost decision-making by managers and entrepreneurs on how to cope with evolving environmental hurdles, should they wish to thrive in their business and sustain the environment where they serve.
Regarding the attitude of managers and entrepreneurs toward the alleviation of poverty, a large response from the contributors specified poverty as a principal element that promulgates other causes of why society encountered adverse environmental, social, and economic disparities. In addition, from the accumulated facts, it was uncovered that entrepreneurs source workers from their communities to help in the mitigation of poverty. The alleviation of poverty, as suggested by Morikawa (2014: 178) [35] , in today’s present environment calls for the cooperation of both government and Non-Governmental Organizations to unshackle people from this issue and equip them with the knowledge enabling them to be self-sufficient.
It can be concluded that:
1) Gender equality is realized because, at present, the number of female entrepreneurs outstrips that of male entrepreneurs. This resonates with the discoveries by Mandipaka (2014: 1187) [36] , who claimed entrepreneurship has, for several decades, been ruled by male entrepreneurs, where reasons such as illiteracy or lack of education, poverty and famine have lately coaxed more women into SMME businesses.
2) Youth are strongly attracted to SMME business, which in their view is a better approach to eradicate issues of joblessness, corruption, misconduct, as well as other scheming practices. This corroborates results presented by Zulu (2014: 3) [37] that unemployment makes people, typically the youth, women, and the disabled, enter entrepreneurial activities to improve their opportunities of existence.
3) SMMEs have managed to nurture good ties with people of the area where they serve, by buying community goods. Yalegama, Chileshe and Ma (2016: 655) [38] proposed the involvement of individuals, corporate entities, and companies to mutually assist, finance and support in presenting infrastructure that can ensure a favorable environment for progress and viable growth.
4) Education is paramount to entrepreneurs because it enhances their cogent ideas on the knowledge and skills required to oversee their business events. Brijlal, Naicker and Peters (2013: 855) [39] pinpointed part of the reasons resulting in the failure of SMME operations to comprise lack of scholastic resources to manage their functional roles.
5) Managers can identify issues in their business environment such as inflation, and business rules established by the government that unfavorably influence their operations. However, Bernard et al. (2011: 114) [28] highlighted changes in government rules on “tax, especially on goods and services and rent provided by the government has drastically deterred entrepreneurs from functioning as a service provider”.
6) The application of IT has made SMME managers effective. They can save large volumes of business documents, contact a sizable number of clients, join conferences and debates, strengthen business securities and, in general, reduce costs such as operational, administrative, and other fiscally correlated charges, to make a profit. This is in line with Mbonyane and Ladzani (2011: 558) [40] , who asserted that to provide SMMEs with a structure where consumers can “transact business with ease, good patronage and prompt delivery, managers must invest in IT and engage in training, which can bring convenience to their work”.
7) SMME managers take good care of their environment by dumping waste in a reasonable way to abolish the rate of illnesses and infections from air, water, and land pollution. This resonates with discoveries by Palaniappan et al. (2010:34) [41] , who expounded that amongst the approaches to guarantee a good life is “the adoption of environment hygiene which involves the joint effort of individual and organizational sectors”. For instance, proper disposal of industrial sewage, explicitly those enterprises engaged in manufacturing where wastes are removed.
8) Contributions from entrepreneurs at present have started to improve people’s standard of living, through offering employment to people, including the disadvantaged. Chimucheka (2013: 786) [42] perceived SMME commitment to the nation’s economy has positively influenced “the growth and development of the economy through their contribution to job generation; being instruments of talent utilization; and the development of entrepreneurial skills, amongst others”.
9) Entrepreneurs still find it difficult to identify business opportunities around them. Wasdani and Mathew (2014: 4) [43] orated that “opportunity identification is a task that needs greater attention, carefulness and huge sacrifices such as time, energy and money for the prospect of the business establishment to be accomplished”.
7. Recommendations
From the study findings, the following suggestions and potential future study areas are recommended:
Entrepreneurs are suggested to have a vital education that can promote their competence in the entire aspect of business in terms of knowledge, skills, attitude, and behavioral character, as well as evaluation capacity, values, and even professional competence that generate business opportunity. The behavioral element offers “an impression about a person’s behavior on account of an event” (Mullins, 2007: 146) [44] .
According to Chea (2008: 38) [45] , an entrepreneur’s focus is more than establishing boundaries, stating that “spotting and exploiting business opportunity should be one of the cogent factors to put into consideration for task-framework and accomplishments in particular, in areas such as economic, social, cultural and technology where other people have failed to notice”. Beyond proficiency in rational thinking, educational knowledge assists business owners and managers to make key choices on subjects such as risk valuation; problem identification with resolutions; product advertisement; and staff appraisal; along with a delegation of duty; forecasting, and goal setting. Tieguhong et al. (2012: 112) [46] noted lack of a business budgeting plan can decrease the execution of an enterprise’s policies. When this event happens, obstruction can exist to realize financial growth, strategic development and structural development in the enterprise (Eresia-Eke and Raath, 2013: 402) [47] . Future research could examine the state of SA SMMEs with regard to strategic and structural development, as well as enabling resources.
SMME activities include the prominent tools employed by governments to relieve poverty people face globally, therefore, the government of South Africa must undertake measures, through financial and non-financial institutions, to brace prevailing and concealed entrepreneurs on managerial competence and how they can control their functional affairs. The objective is to ease the government of hefty loads placed on job establishment by unwaged residents and hence, restricting barriers to the impartial dispersal of natural resources and gloomy economic prosperity that the masses confront in their respective environments (Zhdanov, Zhuchkov, and Dashhevskiy, 2013) [48] . The closer the business is to the resources it requires, the better. This reduces production costs and prevents interruptions in the supply of vital input resources (Zhdanov et al., 2013: 631) [48] . Future studies should therefore focus on sustainable resource use for the SMME sector in townships across the country in various provinces to determine existing measures and their viability to sustain the country’s township SMME.
Conclusively, the government must propagate regulations in support of SMME undertakings and eliminate some restrictive barriers potentially disadvantageous to the business of entrepreneurs. Examples of these are customs duties; levies; taxes and fines; as well as the deregulation of trade. This is to allow SMME activeness to improve and perform intensely at local and global levels. Research studies should, in the future, attempt to establish the monitoring measures involved and their implementation. When all these conditions can be fulfilled, issues that affect the competence of entrepreneurs and managers will be restrained, if not eradicated, and SMMEs will be in a position to act as agents of sustainable development in the areas where they serve.