Small enterprise growth: The critical role of the owner-manager a case study of the construction sector in Gauteng, South Africa

Small and Medium Enterprises (SMEs) and the role that they play in the economy have been widely studied. SMEs are of particular interest because they are seen as greatly contributing to innovation, economic competitiveness, equity and redistribution, employment creation. Given the positive role that they are seen as playing in the economy, the growth and transformation of small enterprises into medium enterprises is welcomed. It is seen as increasing the benefits of the SMEs to the economy and society in general. The research sought to analyze and draw insights on the growth of enterprises from small to medium size. This issue has been widely studied but as late as 2007, reviewing the state of knowledge about growth in small businesses, Dobbs and Hamilton (2007, p. 296) observed that despite the growing volume of applied research, our knowledge base still lacks a body of theory capable of explaining the growth of small businesses. This research therefore responds to this call by Dobbs and Hamilton (2007) for new theoretical perspectives and alternative types of research. It does so by focusing on the practical role that the entrepreneur plays in facilitating or hindering growth. It also responds to this call by using a methodological approach that has not been widely used in this field to date. In addition, not sufficient attention has been paid to the role of the entrepreneur as the dynamic element in the growth and transformation process, neither globally but even less so in the Southern African case in general but even less so in the South African construction setting specifically and in Gauteng in particular. The lack of sufficient attention to the role of the entrepreneur in facilitating or hindering the growth and transformation process is very pronounced in the context of the Southern Africa region. This thesis therefore seeks to address this gap. This thesis takes as its departure, the decisiveness of the entrepreneur in the business system. It places the entrepreneur at the centre of the enterprise and analyses the role that the entrepreneur plays in facilitating or hindering the growth of the enterprise from small to medium size. Freel (2000: p. 321) observed that more significantly, the internal dynamics of firm growth have remained something of a 'black box'. Focusing on growth, this research seeks to identify the key drivers of why some firms grow and others do not. It seeks to unravel the "black box" of small enterprise growth in the context of South Africa. In this process, the research sought to focus on the role of the entrepreneur in facilitating or inhibiting growth. The main question that this research sought to answer is: Is the entrepreneur the main driver of small enterprise growth and graduation, and what role does he or she play and how does he or she facilitate the growth and graduation of small into medium enterprises in South Africa?Building on the main and sub research questions the research sought and successfully proved the following Propositions:Proposition One (P 1):The entrepreneur is the key driver of small enterprise growth and graduation in South Africa. Proposition Two (P 11):The entrepreneur is the main inhibitor of small enterprise growth and graduation in non- growth small enterprises in South Africa. Proposition Three (P 111):Macro - economic environmental factors are a key but not the decisive driver for growth and transformation of SMEs. Proposition Four (P 1 V):The growth and competitiveness of the industrial sub sector is a key but not decisive driver of growth and competitiveness of SMEs. This research was undertaken within the framework of qualitative research. It was undertaken in four phases, namely:Phase One: Sector and SME SelectionPhase Two: Individual InterviewPhase Three: Document AnalysisPhase Four: Case Study Development focusing on the role of the Entrepreneur in the Growth ProcessThe data analysis was driven by the model of the drivers of SME growth and transformation already outlined above. It sought to apportion qualitative weightings to key already identified driv rs of growth and transformation: macro-economic environment, industry sub sector, access to finance, technology, and BDS and the entrepreneur's motivation and skills. The data analysis delved deeper into the last category of drivers, entrepreneur's motivation and skills. It dissected the role that the entrepreneur's skill played in the overall growth and transformation of the enterprise. The data gathered from the three methods, namely individual interviews, follow up telephonic interviews and the document analysis were analyzed to arrive at the role that the entrepreneur's skills played in the growth and transformation process. Qualitative analysis of the entrepreneur's responses was undertaken to apportion the weighting given to the key drivers of the growth and transformation process. The data analysis also sought to unravel the key constituents of the entrepreneur's skills. It identified what constitutes the entrepreneur's skills that are crucial to the growth and transformation process. Focus was on the technical, managerial or leadership aspects. Findings from the data analysis assist in the conclusions and recommendations. This study was limited to Gauteng province of South Africa. It is hoped that this province will represent the best construction macro-economic environment in South Africa. This study concentrated on the sectors that were selected from the sector selection process. The study interviewed entrepreneurs and enterprises that are exclusively in the selected sector. The study was limited to medium sized enterprises that grew out of small enterprises that were formal - registered, licensed and operating within the framework of the law. The medium enterprises that this study focused on were not subsidiaries of larger conglomerates. This study also did not focus on medium enterprises that were created as medium enterprises and did not grow in size.