Networking as a growth initiative for small and medium enterprises in South Africa

Abstract

Small and Medium Enterprises (SMEs) make a tremendous contribution to worldwide economies. SMEs are especially important for the South African economy, as they are expected to address the high unemployment and poverty rate the country is experiencing. It is thus critical to study factors that can enhance the growth of the SME sector. This study investigates the role which networks play on the growth of SMEs. The study mainly focuses on four types of networks namely: social, general business, managerial and ethnic networks and how these networks can help SMEs enhance their growth. The study used a descriptive-quantitative research design. Data was collected from local and foreign SME owners in the Mangaung Metropolitan Municipality, Free State Province of South Africa using stratified random sampling and snowball sampling methods. A self-administered questionnaire was used to collect data. The data was then analysed by using Statistical Package for the Social Science (SPSS) Software. The results revealed that networking had a positive impact on SME growth. The study further identified that managerial networks and ethnic networks were significantly related to locally-owned SMEs and foreign-owned SMEs, respectively.