An Investigation Into SME Existence and the Reduction of Unemployment in South Africa: Impact of the Macro Environment

Abstract

Small and medium enterprise (SME) existence in South Africa is very low while the unemployment rate is extremely high. This has been a long-term trend. The primary objective of this study was to investigate the influence of macro environment factors on SME existence (establishment, growth and sustainability) and its eventual impact on employment growth. A questionnaire comprising of closed-ended questions was administered to SME owners, managers or owner managers in the Eastern Cape province of South Africa. Respondents were selected using a simple random sampling method. Responses were measured using a five-point Likert scale. Data were analysed using SMART Partial Least Square (PLS) software. The results indicate that macro environment factors have an influence on SME existence. The findings revealed a significant relationship between SMEs in the establishment and the growth stage and employment growth while SMEs in the sustainability stage show no significant relationship with employment growth. The impact of macro environment factors on SMEs thus vary with the specific stage of SME existence.