Towards a framework for the long-term survival of South African SMEs through organisational ambidexterity : a qualitative study

Abstract

For over a decade, a quarter of the South African population has remained unemployed giving rise to gross income inequality, social tension and economic distress. The National Development Plan (NDP) seeks to address this crisis by targeting the creation of 11 million new jobs by the year 2030. As much as 90% of these new jobs are expected to come from small to medium-sized enterprises (SMEs), thereby drawing academic interest towards understanding how new business start-up success might be promoted within the South African context. However, the long-term failure rate of South African SMEs is found to be almost as high as that of new start-ups, and the consequences of long-term failure more damaging to national employment rates. At an individual firm level, maturing SMEs are found to create more employment opportunities than SME start-ups, suggesting that the long-term survival of these businesses is critical to the NDP objective of creating large-scale, lasting employment. However, little research exists on understanding how the longevity of South African SMEs may be promoted to reduce the high failure rate. The following research project found that the lack of entrepreneurial capability and effective innovation outputs are the leading internal cause of long-term SME failure in South Africa. The combination of these two deficiencies prevents mature firms from maintaining the attractiveness of current value propositions, or from developing new business opportunities to counter declining demand of ageing value propositions, ultimately leading to firm obsolescence and economic failure. This thesis proposes a conceptual framework to overcome these challenges by creating so-called ÔambidexterityÕ (namely, the ability of an organisation to optimise the current business form whilst simultaneously developing a future business form. Ambidexterity within the organisation and draws on specific relationship structures with internal and external resources to facilitate innovation effectiveness. The framework has been further developed and refined through a qualitative study conducted by interviewing owners or senior managers within long-surviving South African SMEs, to understand how these organisations have achieved longevity. The objective of this framework is to provide a generic model of best practices for South African SMEs transitioning from the start-up phase into the maturing phase which can be used to formulate a strategy towards sustained organisational survival