Abstract:
Small and medium sized enterprises (SMEs) are recognised across the world as having the ability to drive the economy and greatly contribute towards its growth, more so in emerging economies. However, the growth and performance of firms has further been directly linked to the critical development and investment towards its human capital. Even though there is a known importance of human capital development for business growth and competence, little is known about how much SMEs themselves attribute it to the success of their own firm’s performance. As such, this study responds to this gap by exploring the perceptions that SMEs hold regarding human capital as a concept and its developmental role in their business success. Establishing which component of human capital is perceived to be important in the founding of the businesses, during its emergent years and for future growth will enable SMEs to better understand the key human capital components and features to harness at the different stages of their business and in the pursuit for competitive advantage. The study will better equip policy makers in their development of interventions they embark on to promote SME competitiveness. The study followed a qualitative research methodology which used in-depth one-on-one interviews with participants in the petroleum industry of South Africa. The study focused on one segment of the petroleum value chain, while still using several subgroups for data triangulation. The results of the study indicated that SMEs perceive knowledge as the most important factor of human capital and rely on it in the founding of their businesses. The study further revealed that SMEs rely predominantly on intangible resources to gain competitive advantage, but are negative affected by institutional constraints to effectively compete. The study generated a framework that can be used by both SMEs and policy makers to enable the development of human capital and promote SME competitiveness.
