Modelling key predictors that stimulate the entrepreneurial performance of small and medium-sized enterprises (SMEs) and poverty reduction: Perspectives from SME managers in an emerging economy

Abstract

Orientation: In this ever-changing business milieu, poverty alleviation has turned into an important issue after the publication of the 2015 United Nations Sustainable Development Goals, which aim at eradicating poverty in all its forms and dimensions by 2030.

Research purpose: This study investigates the effect of entrepreneurship education, budgeting financial literacy and access to credit facilities on entrepreneurial performance and poverty reduction.

Motivation for the study: There is a lack of literature that studies the effect of entrepreneurship education, budgeting financial literacy and access to credit facilities on entrepreneurial performance and poverty reduction in an emerging economy, such as South Africa.

Research design, approach and method: The study adopted a quantitative approach. The examination was completed in the Vhembe District of Limpopo province, South Africa, where many people live in poverty. A structured questionnaire was used to collect data from 150 managers of rural small and medium-sized enterprises (SMEs). To test the hypothesised model, structural equation modelling (SEM) analysis was employed using the Smart partial least squares (PLS) software.

Main findings: The findings uncovered that entrepreneurship education, budgeting financial literacy and access to credit facilities positively impact entrepreneurial performance of SMEs and reduce poverty.

Practical/managerial implications: The present research provides theoretical implications for academics in the field of entrepreneurship, precisely, by enhancing an understanding of the link between entrepreneurship education, budgeting financial literacy, access to credit facilities, entrepreneurship performance and poverty reduction. On the practitioners’ side, this work offers avenues for SME managers to improve entrepreneurial ventures and eventually eliminate household poverty. Moreover, this study also offers policy implications. Existing policies, for example, can be updated, with the goal of improving entrepreneurial performance of SMEs and reducing poverty.

Contribution/value-add: This article provides useful insights into and suggestions on the way forward. Furthermore, it contributes to the existing knowledge base in the field of entrepreneurship. As such, this research is important for SME managers because most of them endeavour to enhance entrepreneurial performance and alleviate poverty in their communities.