Sustainability of SMEs and the effect of technology adoption on SMEs' business performance in the King Cetshwayo District Municipality
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Date
2025
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University of Zululand
Abstract
Small and medium-sized enterprises (SMEs) are vital for economic development, providing significant employment and contributing to sustainable growth. However, to remain competitive, SMEs must enhance their efficiency and performance, and adopting information technology (IT) systems can improve coordination, decision-making, customer satisfaction and overall organisational efficiency.
This study aims to investigate the impact of technology adoption, precisely information and communication technology (ICT) and financial technology (Fintech), on the business performance of SMEs in semi-rural regions such as the King Cetshwayo District Municipality (KCDM). A positivist paradigm is employed to achieve this goal, involving a quantitative approach incorporating a survey design and correlational analysis. “A unified framework is proposed that captures the antecedents of technology adoption, technology adoption intensity, and business performance outcomes. Data was obtained through questionnaires from senior managers and business owners across various industries in the district. 800 questionnaires were administered, and 604 valid questionnaires were analysed.
A multinomial logistic regression was used to analyse the sustainability/viability of the SMEs and their innovative capacity. SMEs’ sustainability was measured by the level of their turnover, whereas the extent of their adoption of financial technology accounts for their innovative capacity. The results indicated that higher education and better adaptability to ICT are positively correlated with SMEs advancing in their innovative capacity. In addition, SMEs' sustainability is influenced by the socio-demographic and economic factors of the entrepreneur. To explain the impact of technology adoption on SME business performance, Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to conduct empirical analyses on the survey data. The results indicate that enhancing technology intensity positively impacts SMEs' business performance, including efficiency and sales.
From the study, it can be reasonably argued that technology enhances the performance of SMEs in the King Cetshwayo District Municipality (KCDM); this was achieved by switching from the customary labour-intensive ways of production and doing business. Some of the recommendations of this study included that owners of SMEs in semi-rural regions like the KCDM should prioritise and develop organisational learning abilities through research into practices for more productive ways of adopting emerging technologies. In addition, SMEs in the district should consider the trade-off between labour use and emerging technologies, as this will reduce the cost of production and enhance the efficiency of production processes. Regarding policy implications, the government should create an enabling environment by providing ICT infrastructures that allow small business owners in rural and semi-rural regions to leverage emerging technology to thrive. In addition, depending on the level and stages of technology adoption during the production process, government and SME stakeholders should develop ways of offsetting potential job losses that may arise from adopting technology.
Description
A dissertation submitted to the Faculty of Commerce, Administration and Law in fulfilment of the requirements for the Degree of Doctor of Commerce in Economics in the Department of Economics at the University of Zululand, South Africa [2025].