Entrepreneurial orientation among small and medium enterprises in selected rural areas of KwaZulu-Natal

Abstract

Small and medium enterprises (SMEs) in rural areas have been recognised on a global scale as a significant employer and the cornerstone of prosperous entrepreneurship, as they substantially boost national income, economic growth, income redistribution, and inequality reduction, as well as commercial innovation of any nation. However, Statistics South Africa reported a 0.2 percent decrease in the country’s GDP in the 2023 third quarter, following a 0.5 percent increase in the second quarter; and an almost 150 percent decrease in just a quarter earlier. This study examined the critical factors of entrepreneurial orientation (EO), and how it influenced the performance of SMEs in selected rural areas of KwaZulu-Natal (KZN). The influence of EO and its dimensional variables of innovativeness, risk- taking, proactiveness, autonomy, and competitive aggressiveness were investigated in detail, in addition to how it assisted SMEs in rural areas of KZN to achieve growth. Of particular importance is the study focus, as this was on both the uni- and multi- dimensional constructs of EO, to determine whether each dimension, as well as the overall entrepreneurial indicator, related effectively to the growth of SMEs operating in the rural areas of KZN. Many researchers have studied the factors that contribute to the smooth running of SMEs in general. These factors include management skills, leadership ability, and access to finance, as well as the availability of resources, the necessary infrastructure, and raw materials, along with the economic climate, and government regulations. However, despite extensive research in this field, a serious gap is left in the body of knowledge, as no studies provide in-depth knowledge of EO among SMEs in rural areas of KZN. EO is known to instigate, develop and promote rural SMEs to prosper. Nonetheless, theoretical models of the factors affecting EO and how they influence SME performance in rural areas of KZN are lacking. This has created a further knowledge gap; therefore, it can be argued this critical area of research has the potential to aid in improving the current position of these SMEs. The high failure rate currently observed in the SME sector, which may be attributed to a number of important issues faced by South African rural SMEs, served as justification for the study. Conducted in selected rural KZN areas, the study employed a quantitative research method. The study population comprised rural SME owners-managers, selected using a non-probability, convenience sampling technique, while the researcher developed a closed-ended questionnaire and used as the primary data collection tool. Inferential and descriptive statistical data analysis was undertaken using the SPSS (version 27.0) computer package. The study found that, a number of issues negatively impacted rural SMEs, such as the fact that most of their staff lacked formal training, they did not use modern facilities to operate their businesses, their investment plans were hindered by a persistent lack of funding, their local market was too small, and their infrastructure was inadequate, making them face significant hurdles that negatively affect their EO and performance. Unsustainable rural KZN SME growth was not only due to the challenges faced but also from their EO, which negatively affected the abilities of the owners-managers to implement innovations that could promote, support and sustain SMME growth. Consequently, the implications of this research will be the innovative growth owners- managers of rural SMEs in KZN will achieve, when provided with a growth framework and model, centred on the EO for sustained SME business continuity, particularly in rural KZN areas. Government officials and other concerned parties will also benefit from the study findings through improved comprehension of the factors influencing the EO for sustainable SME continuity and development in rural KZN areas. The study, therefore, sought to provide key insights into both the theoretical and practical implications of EO among rural SMEs. In addition, a wide range of suggestions and a theoretical framework are proposed for SME owners- managers, public servants, and legislators to comprehend and implement in solving existing rural SME problems, thereby encouraging the EO for rural SME owners- managers. The suggested integrated EO framework comprises key components of an EO that supports sustained rural SME business continuity and development. Consequently, it is critical for owners-managers of rural SMEs to pay attention to these, as well as additional, pertinent theories concerning EO for rural SME survival and growth. These will help and direct them as they navigate a variety of obstacles in their working environments.