Challenges faced by small, medium and micro enterprises in Gauteng: A case for entrepreneurial leadership as an essential tool for success

Abstract

Background: Traditional approaches to managing and leading in entrepreneurial systems, founded on traditional, reductionist and linear thinking, could have issues coping with the inherent uncertainties, complexity and dynamics of such circumstances. Entrepreneurial leadership is acknowledged as an important competency that entrepreneurs could adopt to enhance their leadership development and competitive and sustainable growth for their businesses.

Aim: This research study sought to evaluate leadership challenges that affect the performance and the Gauteng province’s small, medium and micro enterprises (SMMEs) sustainability.

Setting: This study focuses on SMMEs in the Gauteng province.

Methods: In this qualitative study, a systems dynamics approach was used to explore the impact of the various leadership problems and dynamics influencing the SMME performance in the Gauteng province. Semi-structured interviews were conducted with 46 entrepreneurs, followed by creating causal loop diagrams to understand how system variables and components produce behaviours in interactive patterns within the entrepreneurial system.

Results: Findings of the study revealed that SMMEs consistently suffer from relatively high levels of failures and lower performance levels caused by: (1) a lack of entrepreneurial leadership skills, (2) a lack of financial resources and/or finances, (3) a lack of financial education, (4) infrastructure constraints, (5) a lack of training, (6) a lack of technology and (7) crime and corruption.

Conclusion: This study highlights that the entrepreneurial context in South Africa is dynamic and complex in nature and is limited by entrepreneurial leadership capabilities and a weak understanding of the business environment.

Contribution: This study employs a system dynamics approach that entrepreneurs can use to understand and solve important, complex socio-economic and sustainability problems that they encounter.