Exploration of critical success factors for small and medium enterprise sustainability in post coronavirus pandemic: a performance measurement framework.

Abstract

In the realm of developing countries such as South Africa, the economy depends immensely on small and medium enterprises (SMEs) as they provide employment and foster entrepreneurship. SMEs throughout the country have been negatively impacted by the COVID-19 pandemic, which places their existence and sustainability in jeopardy. Thus, the aim of the study was to determine the critical success factors, both financial and non-financial, that are essential to SME performance in the aftermath of the COVID-19 pandemic and to develop a performance measurement framework with a step-by-step improvement plan to aid SMEs in their planning strategies to mitigate challenges and enhance performance and success. The study targeted SMEs associated with Production South Africa, Durban Chamber of Commerce and Industry, Johannesburg Chamber of Commerce and Industry, and the Centre for Social Enterprise as its target population. The sample size consisted of 348 SMEs, and the questionnaire was distributed to these SMEs via a google link. The qualitative component of the data collection included interviewing six SME owners from various sectors across South Africa. Data analysis was conducted using the Statistical Package for Social Science (SPSS) and structural equation modelling using Smart PLS. The qualitative data was extracted and analysed to generate themes including, business sustainability and factors, impact of COVID-19 pandemic and primary challenges preventing performance and sustainability. The path coefficient (β = 0.227, p = 0.002) indicates that financial planning has a significant and direct impact on SMEs’ performance. However, the impact of non-financial planning on SME performance was related to through the financial planning with a positive and significant partial mediation of 0.150 coefficient, p = 0.003, demonstrating an indirect effect on SME performance through its effects of financial planning. The findings also revealed that the COVID-19 pandemic had a negative impact on performance in South African SMEs with the correlation coefficient (r) of -.637 signifying a strong negative association between the COVID-19 pandemic and SME performance. The study triangulated the results from both sets of data to develop a performance measurement framework and step by step improvement plan. An effective intervention strategy for SMEs requires implementation of the performance measurement framework supported by adequate resources, infrastructure, and government support.