Internal drivers of innovation and sustainability in South African manufacturing small and medium enterprises

Abstract

The study aimed to analyse the relationship between internal management systems, innovativeness, and the sustainability of Small and Medium Enterprises (SMEs) within the South African manufacturing sector. Most of the studies in this regard were mainly focusing on large and well-established companies, and the focus would be found to be aligned to only one variable. Studies with reference to SMEs where a linkage amongst the variables is clearly established are limited, thereby providing an impetus to conduct this study. As a result of the changes taking place daily in technology and business operational policies, SMEs typically have to revisit their internal management systems, level of innovativeness, and sustainable measures. Such methods are intended to promote their existence, survival, and growth into the unforeseeable future. A quantitative method based on a positivistic research paradigm was adopted in undertaking the study. The sample consisted of 500 respondents, who were owners, managers, and employees of SMEs in Gauteng Province. The collected data were tested using descriptive and inferential statistics, including Exploratory Factor Analysis, Pearson Correlations and Regression Analysis. Application of factor analysis led to the extraction of two additional SME sustainability factors, namely Employee Training Outcomes and Corporate Compliance to Policy. Of the three internal management systems, only two factors, namely infrastructure development and employee training outcomes, exerted a significant positive influence on innovation. In turn, innovation exerted a significant positive influence on two SME sustainability factors, namely the nature of the product and social sustainability. The study has several implications. Theoretically, the study provides information on how internal management systems relate to innovation. As indicated in the results, only infrastructure development and employee training outcomes exert an influence on innovation and should thus be prioritised when attempting to improve the extent of innovation within SMEs. Likewise, innovation in SMEs results in benefits in terms of the nature of the product and social sustainability only. Practically, the study recommends that there is a need by the South African government through the Small and Medium Enterprise Development Department to review their approach on SMEs so that they can obtain adequate resources to enhance their business success. Additionally, there is a need for both governmental and non-governmental organisations to develop initiatives where SMEs go through the incubation process. During this process, training and business advisory services will be offered for free to equip owner-managers with the relevant business skills. Areas of further research, as well as limitations, were also discussed.