Academic journal article International Journal of Entrepreneurship

Critical Factors Influencing Innovative Leadership in Attaining Business Innovation: A Case of Manufacturing Smes in Kwazulu-Natal

Academic journal article International Journal of Entrepreneurship

Critical Factors Influencing Innovative Leadership in Attaining Business Innovation: A Case of Manufacturing Smes in Kwazulu-Natal

Article excerpt

INTRODUCTION

In the current complex business environment, the use of a rigid industrial model can mean a slow decline that is ultimately lethal (Legrand & Weiss, 2011). South African share of world manufacturing output has decreased from 0.61% in 1990 to 0.5% in 2010. Further to that, metals and engineering manufacturing sector experienced decelerations to 19.3% in December 2017 on a monthly basis (Van Wyngaardt, 2018). This highlights the drastic need for an improved domestic economy and manufacturing output (Seda, 2012). This also disparagingly highlights that manufacturing SMEs are faced with numerous factors (management skills, financial access, technology adoption, competition barriers, economic and social factors and raw materials) that contribute to innovation, growth and sustainability due to slow transformation and lack of innovation culture to meet the ever-changing business world (Irjayanti & Azis, 2012;

Rungani & Potgieter, 2018). Van de Vrande et al. (2009) argues that most SMEs face challenges related with organisational and cultural issues to deal with the increased external contacts. These challenges include venturing, customer involvement, external networking, research and development outsourcing. These challenges are also amplified by the fact that SMEs have weak ties with other organization and larger incumbents making it harder for them to acquire knowledge for sustainability purposes (Tendai, 2013; Dodourova & Bevis, 2014). This shows the endless challenge and bottlenecks that manufacturing SMEs operate under and have to face on daily basis.

Lack of sustainability efforts in manufacturing SMEs is attributed to characteristics of SMEs since they often lack the awareness, expertise, skills, finance, and human resources to build the required changes for sustainability within the organisation (Singh et al., 2016). These critical challenges have also been noted and reported by the Global Entrepreneurship Monitor (GEM) that between 2001-2010 South African SMEs suffer from poor management skills which is a result of lack of adequate training and education (NCR, 2011). Shockingly, literature also reveals that the failure rate of manufacturing SMEs in South Africa is 63% to 75% in the first two years of trading and is considered as one of the highest failure rate compared to other developing countries (Olawale & Garwe, 2010; I-Net Bridge, 2011; Mthabela, 2015; Leboea, 2017). The reason for such failure is due to poor innovative strategies and management skills (Hogeforster, 2013). Martin and Staines (2008) and Akinwale et al. (2015) argues that lack of managerial experience, skills development, poor marketing and weak entrepreneurial culture and high barriers to market entry (NCR 2011) are the main reasons why new SMEs fail. Arham (2014) therefore, identified leadership behaviour, skills and qualities of leaders as essential factors that influence manufacturing SMEs innovation, survival and growth.

PROBLEM STATEMENT

Lack of innovation and leadership has been indicated as major challenges facing SMEs, in both managerial and technical expertise (Hossain, 2015). This problem is also supported by literature reviews that financial difficulties facing South African innovation incubators contributes to the low innovation strategies of manufacturing SMEs (Buys & Mbewana, 2007; Masutha & Rogerson, 2014; Dubihlela & Van Schaikwyk, 2014). Therefore, because of that, SMEs also cannot be able to have high skilled personnel to improve their products and services (Goldberg et al., 2014). Furthermore, Kongolo (2010) indicates that lack of financial resources, management skills, and inadequate institutional support influence sustainable growth and affects leadership performance in South African SMEs. Management skills (knowledge, competency, behaviours and attitude) are critical factors needed for innovation and for the survival and growth of SMEs (Olawale & Garwe, 2010). …

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