Abstract
M.B.A.
The focus on small and medium sized enterprises in South Africa stems from the
recognition throughout the world of the importance of small business to a nation's
economy, particularly through their creation of additional employment opportunities.
The slow growth in employment in the South African economy has accelerated the need
for emerging entrepreneurs to play a stronger role in job creation, income generation
and growth. These enterprises accounted for about 60% of total employment in 1997.
The adoption of sound corporate governance practises is very significant for the
continued success of small and medium enterprises. Enterprises must place a lot of
emphasis on corporate governance in order to survive in the economy.
Corporate governance is seen as enhancing return on capital through increased
accountability. Corporate governance is good to have and also good for the continued
success of an enterprise. The benefits to be derived from the adoption of sound
corporate practises and conduct more than outweigh the costs of implementation.
Good governance leads to competitive advantage in the market place, improved
efficiency and effectiveness, increased shareholder value and increased market value.
To determine the requirements that emerging entrepreneurs need to comply with in
order to improve productivity, efficiency and credibility, a research study was conducted
to investigate the perceptions and attitudes of the entrepreneurs towards corporate
governance. In addition, the study also focused on the benefits to be derived by
emerging entrepreneurs from the introduction of corporate governance and the suitable
effectiveness criteria for corporate governance within emerging entrepreneurs.
The research was limited to 40 small and medium sized enterprises within the Gauteng
area, which is one of the 9 provinces in South Africa. The responses indicated that a
majority of the entrepreneurs are ignorant of the subject of corporate governance. The
ii
few entrepreneurs who are familiar with corporate governance had different views or
attitudes on the subject. The majority of the respondents, who responded positively,
believe that there are a lot of benefits to be derived from the introduction of corporate
governance within their enterprises. It is also interesting to note that some of the
entrepreneurs who stated that they were ignorant of the subject of corporate
governance have in fact implemented some of the recommendations as set out in the
Code of corporate practises and conduct.