Strategic decision-making in small and medium enterprises in South Africa

Abstract

Background: Effective strategic decision-making (SDM) is a key element to ensure the sustainability and continuous business performance in any business. This is especially true in large organisations. Limited research has been conducted to understand SDM processes in small and medium enterprises (SMEs) in South Africa.

Aim: To determine whether SMEs apply SDM in their businesses and if benchmark methodologies and process can be defined for SMEs in a South African context.

Setting: Participants in this research study were managers and/or owners of South African SMEs.

Methods: This study employed a qualitative approach, implementing the Delphi technique. Open-ended questions were used in round one and thematic analyses assisted to identify themes. In round two, rating scales were used with the aim to reach consensus. Consensus was reached after the second round. A total of 20 SME owners and/or managers participated in round one and 10 in round two (50% drop-out rate).

Results: The study reveals a benchmark SDM process, highlighting and/or validating unique activities, such as internal reasons for SDM, analysing financial information, developing alternatives, choosing an alternative that preserves the entity in terms of cost, gathering non-financial information, communication and lastly, reviewing the effectiveness of the strategic decision.

Conclusion: The findings will allow SME managers and/or owners to gain insight into SDM. Such knowledge can lead to comprehensiveness in SDM, consistency in SDM activities and, ultimately, improved SDM.

Contribution: The theoretical contribution includes a benchmark process for SDM in SMEs, adding to the SMEs’ SDM body of knowledge.