Introducing the composite business success index: Enhancing small and medium enterprise competitiveness in South Africa

Abstract

Orientation: This study explored the composite business success index (CBSI), a novel framework designed to enhance small and medium enterprise (SME) competitiveness in South Africa by integrating financial and cultural metrics.

Research purpose: The aim was to introduce CBSI as a tool for assessing small and medium enterprise performance, combining financial indicators like the cash conversion cycle (CCC) and Altman Z-score with cultural metrics such as the Configurational Accuracy Score for a more holistic evaluation.

Motivation for the study: Small and medium enterprises in South Africa face significant challenges, including financial instability and misalignment of organisational culture. Existing performance models often fail to address these non-financial factors, which CBSI integrates into one evaluative tool to improve both financial health and cultural alignment.

Research design, approach and method: A pragmatist research approach integrated quantitative and qualitative methodologies, including financial data from small and medium enterprise statements, semi-structured interviews with small and medium enterprise owners and experts and questionnaires to collect cultural data for insight into the role of culture in small and medium enterprise success.

Main findings: Composite Business Success Index proved effective in predicting small and medium enterprise performance. Higher CBSI scores (> 0.65) were associated with successful small and medium enterprises, while lower scores (< 0.50) indicated areas for improvement, highlighting the link between financial stability and organisational alignment.

Practical/managerial implications: The CBSI offers small and medium enterprise leaders actionable insights for enhancing financial performance and organisational culture, boosting competitiveness and long-term sustainability.

Contribution/value-add: By integrating both financial and cultural metrics into a single framework, the CBSI provides a novel tool for assessing and developing small and medium enterprise performance for the small and medium enterprise managers.