Abstract
Background: Within the conceptual paradigm that the business environment of South Africa
could significantly impact on small and medium-sized enterprises, (SMEs) management of
trade credit, the need exists for internal and external business environmental factors to be
constructed, in order to understand how SMEs rate these factors.
Aim: The research purpose was to identify and construct relevant internal and external
business environmental factors and obtain SME ratings for these factors to statistically test the
validity and reliability of the measurement instrument.
Setting: This study was conducted by administering an online questionnaire.
Method: Quantitative research design with purposive sampling as the sampling method,
administrated to 10 450 SMEs within South Africa.
Results: A descriptive statistical analysis revealed that the highest quality internal and external
business environmental components were managerial competencies and ethics, respectively.
Factor analysis resulted in the formulation of five internal and six external business
environmental factors. In addition, SMEs do not rate internal and external business
environmental factors equally. Managerial competencies obtained the highest overall mean
score for all business environmental factors, including the highest for internal factors. Small
and medium-sized enterprise and debtor ethical performance obtained the highest means
score for external factors.
Conclusion: The formulation of newly constructed internal and external business
environmental factors relevant to SMEs’ management of trade credit.