Abstract
Manufacturing small and medium enterprises (MSMEs) are considered to contribute to the growth of the economy and create job opportunities resulting in the improvement of the standard of living worldwide. MSMEs are at present faced with physical and technological capital challenges negatively impacting the growth of MSMEs. South Africa’s SMEs, especially in manufacturing, are susceptible to slow growth, are operating at very low efficiencies. Though South Africa has one of the highest budgets in improving skills on all levels of education, skills in operation or manufacturing management amongst MSMEs are limited. South Africa is ranked 119 out of 141 countries in terms of competition on business growth worldwide, which is a serious battle facing MSMEs.
The primary objective of this study based on the literature studied and gaps identified was to develop the physical and technological capital mix model focusing on efficiency to promote the growth of MSMEs in the Gauteng Region. The model uncovered the main indicators or tools that could significantly contribute to the improved growth of manufacturing SMEs and these indicators involved manufacturing systematic planning, work study, standardization, and inventory management.
Explanatory sequential mixed methods research design was used to conduct the study and was grouped into two distinct interactive phases involving quantitative and qualitative phases of the study. Initially, a quantitative study was conducted, whereby the data was collected and then analysed. This was followed by the qualitative study to follow up on the results of the quantitative phase as well as explain the unexpected results. During the quantitative phase, the questionnaire was distributed to the specific participants of the selected MSMEs using emails and face-to-face methods. These participants were categorised into very small, small and medium enterprises (See Appendix G- the research questionnaire distributed to the participants). Out of 303 questionnaires distributed, only 194 participants responded. Data collected were analysed using the IBM Statistical Package for the Social Sciences (SPSS) version 27, including Amos Version 27. This analysis included frequencies, custom tables, means, standard deviations, exploratory factor analysis, reliability analysis, correlation analysis, and structural equation modelling.
Based on exploratory factor analysis, efficiency was found to be the contributing factor in physical and technological capital for the growth of MSMEs. The values on the Cronbach’s alpha coefficient for efficiency tools, input resource factors (physical capital and technological capital) and MSMEs growth were all found above the acceptable value of 0.7, suggesting that the study measurement scales were all reliable. Pearson correlation was also used to measure the relationship between efficiency tools, input resource factors and growth of MSMEs. It was evident from the study that there was a statistically significant (p-value < 0.05), weak to moderate positive relationship between efficiency tools, input resource factors and MSMEs growth. With the structural equation model, out of 14 paths, six (6) paths were statistically significant.
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For the qualitative study, interviews and case study observation were conducted respectively (see Appendix H as the interview guide distributed to the participants). From the data analysed there was a lack of efficient use of input resource factors in measuring growth by MSMEs due to unclear and detailed understanding of the growth features, lack of experience, failure of readiness to use the recent technology and a general lack of business acumen.
Based on the comparison between quantitative and qualitative analysis, most of the owners and managers involved in the study showed the lowest proportion of mass production and continuous process; lacked the mechanism to bring to light the importance of work study in improving work methods, reducing ineffective time and waste for the growth of MSMEs. Furthermore, these MSMEs lacked the readiness to incorporate efficiency tools to 3.0 and industry 4.0 systems as well as failed to manage inventory for smart manufacturing to prompt growth of their business. Though there were similarities in terms of quantitative and qualitative analysis regarding how efficiency had an impact in physical and technological capital for the growth of MSMEs, a distinction was made from qualitative analysis as compared to quantitative analysis. With quantitative analysis only standardization and work study had the highest impact on the optimal manufacturing operations of MSMEs. Standardisation was the highest importance level to influence MSMEs growth than work study. In contrast, work study was found to be influential on the performance of MSMEs more than standardisation. From the of interviews conducted was that the study managed to clarify the in-depth information on the personal experience of the participants to respond to the shortcomings of the quantitative results. A distinction made from Interviews and quantitative study conducted was that with the case study observation method, the study documented evidence of operations taking place amongst MSMEs across the board that could be overlooked regarding the impact of efficiency in physical and technological capital for the growth of MSMEs. Considering the analysis of the results, similarities and differences identified, with an integration of both qualitative and quantitative method used, a deduction is made that a physical and technological matrix mix model using efficiency be developed for the growth of MSMEs.
The contributions of this research study were presented. This study provided a useful insight into the empirical interrelationships found between Efficiency, physical and technological factors, and growth of manufacturing SMEs. Furthermore, this research encouraged the development of the optimal physical and technological matrix mix model that could improve operational manufacturing processes leading to sustainable growth in the manufacturing SMEs. The study identified an integration of manufacturing systematic planning, work study, standardisation, and inventory management as adding value to the growth of MSMEs in South Africa in particular the Gauteng Region. The integration of these efficiency tool incorporated into industry 3.0 and 4.0 systems introducing contemporary digital systems should be considered in improving the operational processes for smart manufacturing in the workplace for the growth of MSMEs. One other major contribution is that this research contributes to theory and literature in an area that has scarce literature and research activities. Finally, the study recommends that the government support be considered on training, financial access, appropriate location structure for the businesses and other business acumen.
Key Terms
Efficiency, Effectiveness, Manufacturing Systematic Planning, Work Study, Standardisation, Inventory Management, Physical Capital, Technological Capital, Tangible Assets, Intangible Assets, Operations Management Capabilities, Value-Adding Drivers, Business Growth, Manufacturing SMEs.