The influence of environmental and individual factors on the growth intentions of SMMEs in the Free State
Benedict, Ekaete Elsie
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Growth intentions are the entrepreneur’s goals or aspirations for the growth path she or he would like the venture to follow. However, an entrepreneur’s intention to grow his or her business is shaped and influenced by two main forces: internal factors, such as an individual’s behaviour and attitudes, and the external environment. These two main forces can either facilitate or hinder the growth intentions of SMMEs. Given the importance of growth in SMMEs, it is crucial that entrepreneurs have an intention to grow their businesses. The intention to grow is viewed as a commendable attribute in SMMEs and should therefore be encouraged. Yet, despite the gains of growth to an SMME, some entrepreneurs do not want to grow their businesses, thus defeating the goals of job creation and poverty alleviation in South Africa. Thus, it becomes crucial to investigate the influence of the environment and the influence of the entrepreneur’s individual characteristics on the growth intentions of SMMEs. This research study seeks to investigate the influence of environmental and individual factors on the growth intentions of SMME entrepreneurs in the Free State Province of South Africa. This study was an empirical survey via a quantitative research method. Data were obtained by means of a structured questionnaire distributed to the selected sample within the target population. Data were collected in two municipalities of the Free State: the Mangaung Metro Municipality, and the Thabo Mofutsanyana District Municipality. A purposive and snowball sampling method was used to distribute the questionnaires and 354 entrepreneurs completed the questionnaires. The quantitative data were analysed with IBM SPSS version 25 and SmartPLS version 3.2.8, in line with the objectives of the study. The statistical analyses included descriptive and inferential statistics, as well as partial least-square structural equation modelling (PLS-SEM). The main findings of the study were that none of the chosen environmental factors influenced growth intentions and only one individual factor – locus of control – influenced growth intentions significantly (0.112; p=0.023 [one-tailed]; 95% BBCI [0.023 to 0.207]). In addition, the theory of planned behaviour was found to be a good predictor of the growth intentions of SMME entrepreneurs as its antecedents, namely attitude towards growth, subjective norms, and perceived behavioural control were all statistically significant and influential towards growth intentions. Furthermore, the main reason why SMME entrepreneurs choose to grow their venture is excitement (0.382; p= 0.000 [one-tailed]; 95% BBCI [0.281 to 0.473]); while the main reasons why they would not want to grow their business was lack of market demand (-0.076, p =0.048 [one-tailed]; 95% BBCI [-0.154 to -0.008]), and not my strategic choice to grow the business (-0.169, p= 0.001 [one-tailed]; 95% BBCI [-0.261 to -0.087]). The study concluded that both environmental (no market demand, subjective norms) and individual factors (locus of control, excitement, not my strategic choice, attitude and perceived behavioural control) greatly influence the growth intentions of SMME entrepreneurs in the Free State. It was recommended that the government, state-owned enterprises, policymakers and educational institutions focus on assisting SMME entrepreneurs to access relevant markets via online platforms, preferential procurement and trade fairs. In addition, the government, via the Department of Small Business Development, should educate entrepreneurs about the provincial and national benefits of pursuing growth in their ventures. In summary, this study made vital contributions to the development of SMMEs in the Free State Province.