Abstract:
This study sought to determine the influence of four critical barriers (access to
procurement contracts, access to funding, regulatory frameworks, and access to market
information) on the market expansion of small and medium enterprises (SMEs) in a setting
that includes both private and public institutions instead of only public institutions. To that
end, the resource-based view of a firm (RBV) theory and institutional theory were adopted
as main theories for the study on the premise that SMEs have limited internal resources,
and the influence of resources on SMEs' performance is dependent on the institutional
environment.
A survey research method consisting of structured questions and statements administered
through a web-based questionnaire was used for collecting data. To ensure quality results,
the data collected from 178 managers of formal manufacturing SMEs was reduced to 79
through a rigorous data cleaning process.
The multiple linear regression test results suggest that South African SMEs are still
experiencing challenges regarding access to markets or procurement contracts, access to
funding, access to market information, and an unfavourable regulatory environment. Given
these facts, government must design and implement a public policy to facilitate the
creation of business networks in a value chain between SMEs and large private firms with
the aim of ensuring that SMEs have access to sufficient private funding, all necessary
market information, and private procurement contracts. Furthermore, government together
with relevant stakeholders must create a favourable regulatory environment through
policies and regulations, through which large private firms would be encouraged to
develop SMEs through supply chain or procurement development initiatives.
