Factors impacting innovative capacity of small- and medium-sized enterprises in Cape Town

Abstract

In emerging economies, Small and Medium-sized Enterprises (SMEs) play a leading role in the sustenance of the economy. In South Africa, as a result of the volatile economic environment, no more than 50 percent of SMEs survive the first five years from commencement. Surviving firms are those that have the capability for sustainable innovation, which is the cornerstone for bolstering competitive advantage and growth. This article seeks to explore factors that impact on the innovative capacity of Small and Medium-sized Enterprises in Cape Town. This research study undertook a phenomenological purposive approach, using a semi-structured interview as the research instrument. The sampling strategy was a mixture of critical case and convenience sampling techniques. Subsequent analysis of the resultant phenomenological data revealed innumerable challenges ranging from poor management skills among SME leaders, constraining legislation, limited or inaccessibility to funding, to the turbulent economic and business environment, as the factors impacting innovative capacity among SMEs. A general display of the incremental level of innovation across the SME sector in Cape Town was also noted. Radicalism is employed by a few firms, as slight changes or improvements to existing products or services is a preferable strategy for greater SME populace in Cape Town.

To cite: Furawo, T. & Scheepers, Ch.A. (2018). Factors impacting innovative capacity of small- and medium-sized enterprises in Cape Town. Journal of Management & Administration (2018/2), 31–59. https://hdl.handle.net/10520/EJC-128da38a5e