Internal constraints to business performance in black-owned small to medium enterprises in the construction industry

Abstract

Introduction and background to the studyAfter the attainment of democracy in 1994, the South African government developed black empowerment policies that were intended to address the racial and economic inequalities which dominated the apartheid era (Department of Trade and Industry 2014). Black Economic Empowerment (BEE) and its successor known as Broad-Based Black Economic Empowerment (BBBEE) are some of the legislative mechanisms developed to economically empower previously marginalised groups (Department of Small Business Development 2010). Also, to assist blackowned businesses in improving their competitiveness and sustainability through a cost-sharing grant for equipment, tools, machinery and business development, the Black Business Supplier Development Programme (BBSDP) was launched in 2000 (Kruger 2011). To this extent, many companies within the construction sector in South Africa are black-owned, which denotes that they fall under the BBBEE category and have benefited through the BBSDP programme. However, despite benefiting from the available government-initiated support mechanisms, most of such businesses face various constraints that limit their performance. Constraints are factors that act as bottlenecks or restrictions to the attainment of specific objectives and goals (Gupta, Sahib & Chahal 2013). Some of these constraints are internal to each company, while some emanate from the external environment (Choi, Mogyoro & Pehrsson 2011).The construction industry in South Africa is composed of large companies, such as Murray & Roberts and Group Five, which are registered on the Johannesburg Stock Exchange (JSE), and smaller participants, such as small and medium black-owned enterprises. This industry is diverse and involved in projects that span from the development of civil infrastructure to the development of residential and non-residential properties (Du Toit 2008). However, the industry faces challenges that Background: There has been an upsurge of black-owned small to medium enterprises (SMEs) in the construction industry in South Africa. However, many of them continue to face various challenges, which adversely affect their business performance.Aim: This article investigated the internal constraints influencing business performance in black-owned SMEs in the South African construction industry. Setting:The study was conducted using a purposive sample of 13 professionals employed by five black-owned SMEs operating in the construction industry in Gauteng Province, South Africa.Design, methodology and approach: A qualitative approach was followed involving semistructured in-depth interviews with the selected participants. The collected data were analysed using content analysis.Results: After the content analysis, five constraints to business performance emerged: occupational health and safety, human resources, leadership style, workplace communication and resource allocation. Conclusion:The study offers insights on issues affecting the performance of black-owned SMEs in the construction industry in Sou...

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