Annual Forum Papers

Growth and Exporting of Small and Medium Enterprises in South Africa: Some Thoughts on Policy and Scope for Further Research

  • Year: 2000
  • Author(s): Vusi Gumede

The relationship between the size of an enterprise and other enterprise dynamics seems ambiguous. This paper highlights critical policy and research questions, with specific reference to the links between enterprise size, enterprise growth and the propensity to export. Preliminary findings suggest that the prevalence of some systematic gaps in size-class economic research may lead to a misguided policy framework for supporting small and medium enterprises. The paper articulates that public policy should encompass selective enterprise programs directed at enterprises of different size-classes, informed by a thorough comprehensive appreciation of the factors, systematic and unsystematic, involved in growth and exporting of small and medium enterprises. The tentative finding of this study imply that provision of finance, provision of information and training, ensuring an enabling environment, are the most important variables to take into account when crafting support framework for small and medium enterprises. It is therefore recommended that government should address high interest rates, high inflation, ameliorate access to information and markets, accelerate training of small and medium entrepreneurs, and most significantly embellish coordination and monitoring of units dealing with SME support. It is, however, argued that small enterprises should address certain constraints that are within their control. In addition to the issue of growth and exports of small enterprises, reference to employment and output trends of small enterprises is made, a theoretic model of possible relationships between enterprise export, employment and output is presented. This paper argues for a deeper examination of export processes and export success/ failure of small enterprises. To better understand the intricate dynamics of small enterprises, researchers should undertake comprehensive case studies, longitudinal studies and surveys on SME policy issues.