Entrepreneurial Business Ethics and Good Governance

Entrepreneurial Business Ethics and Good Governance

Jayrusha Ramasamy Gurayah, Jayrusha Ramasamy Gurayah
Copyright: © 2021 |Pages: 21
DOI: 10.4018/978-1-7998-3171-6.ch007
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Abstract

Small medium enterprises (SMEs) have proven and are known to be one of the biggest contributors to the economy of developing countries. Evidence shows that SMEs provide a number of job opportunities, which results in unemployment reduction, poverty eradication, and a bigger boost towards other economic activities. However, most SME entrepreneurs face an array of problems such as access to funding, building up international connections, getting appropriate knowledge and access to adequate technology. These issues are then further intensified by the lack of proper governance and the avoidance of business ethics by most SME entrepreneurs. Over the past years, the number of SMEs has grown drastically in developing countries (Nigeria, Algeria, Brazil, and Vietnam), which has also resulted in an increase in competition within the sector. This has given rise to the need to install the strategies of corporate governance with the aim of strengthening the competitiveness of SMEs.
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Definition Of A Small And Medium Enterprise (Sme) And Small Medium And Micro Enterprise (Smme)

Defining a SME is not a direct and easy directive as it differs from country to country. No single uniform definition exists, and in a broader and holistic understanding, an SME is a business venture that upholds revenue, assets and a limited number of employees below a specific level laid out by a country’s economic structure. (International Leadership Development Programme – ILDP, 2014, p..6). In South Africa, an SME is defined as a formalised business that generates revenue less than R200 000 annually and employs between two to five employees (SME Landscape Report, year?). SMEs are seen as operative and industrious promoters of economic development and growth in South Africa and on an international passage as well. Research has shown that SMEs help South Africa make up close on 91% of formalised businesses, effectively promote and provide employment by up to 60% of the country’s labour force, and in total the economic output accounts for a rough estimate of 34% of the Gross Domestic Product (International Leadership Development Programme – ILDP, 2014, p.7).

SMMEs are often viewed and regarded as a small business that plays an important role in a country’s economy. SMMEs cover a broad range of firms, formally and informally registered, non-VAT registered organisations, and the sizes of these businesses/organisations range from small to medium to broad. SMMEs in any given country have proven to be key drivers of economic innovation and technological developments, job creation and economic growth (Statistics South Africa, Quarter 2, 2015).

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