Período Paco Moncayo

This study identified a number of issues that have a bearing on policies for small businesses and economic development in Africa. First, it has been revealed that BSR’s role in the economics of SMMEs cannot be discounted. In more mature economies, where competition in the business environment tends to be keener than it is in developing economies, SMMEs need to devise innovative ways to gain competitive advantage. Similarly, in an increasingly globalised world, SMMEs in less mature economies that form part of the global supply chains of firms in more mature economies have to conform to the standards that these supply chains impose on them to remain competitive. This, though, depends on the extent to which they are integrated into the global economy. Comparing the results of the Ghana sample (less mature economy) and the South Africa sample (more mature economy), this study has revealed that BSR has more potential to positively influence sales and profit growth in a more mature economy than it does in a less mature economy. The need for SMMEs in less mature economies to adopt BSR practices to conform to global supply chain requirements does not appear to apply to SMMEs in Ghana yet, perhaps because they are not sufficiently integrated into global supply chains. This may explain why BSR influences sales and profit growth in the South Africa sample but with no correlation in the Ghana sample.

Secondly, the role of SMMEs in the environment dimension of BSR may be more prominent than some researchers claim (e.g., Rowe & Hollingsworth, 1996; Lee, 2000; Dzansi, 2004; Dzansi & Pretorius, 2009). This study revealed that environment issues are second to community issues in both Ghana and South Africa based on the overall indices developed in Tables 5.16, 5.18, 5.20, and 5.22 in Chapter 5. Perhaps the searchlight on environmental practices should not be limited to large corporate firms only. Although the individual impacts of SMMEs on the environment may appear small, their collective impact can be high because of their preponderance in both developed and developing

economies (Gadenne et al. 2008:45). Therefore, the searchlight on SMME BSR should focus on the hardly visible practices that cumulatively affect the environment in a big way, e.g., the way in which they dispose of their waste, use energy and water, keep their surroundings clean, and whether they engage in recycling (Evans & Sawyer, 2010:444). According to Young (2010), these seemingly little practices enable SMMEs to reduce costs, build their reputations, increase their market shares, and increase their profits. He further adds that SMMEs are able to function in global markets as supply chain partners of multinational companies if these practices become part of their mind-set.

Lastly, the study revealed a lower entrepreneurial participation rate in South Africa than in Ghana. Theoretically and empirically, this makes sense given that entrepreneurial participation rates tend to be higher in factor-driven economies (e.g., Ghana) than in efficiency-driven economies (e.g., South Africa) (Carre et al. 2002; Wennekers et al. 2005; Amoros & Bosma, 2013). However, the wide income disparities in the South African economy requires that the lower participation rate not be swept under the carpet of efficiency-driven economy, given the important role that entrepreneurship plays in lifting people out of poverty. In light of the forgoing implications for policy makers, the following recommendations are made.

6.4.1 Public Policy for SMMEs BSR

Given that BSR can be a source of competitive advantage for SMMEs in an increasingly competitive business environment, it is recommended that a formal policy and legislation be instituted to regulate SMME BSR in both countries. This is in spite of the argument that BSR should be based on volition rather than compulsion (European Commission, 2002; Dhaliwal et al. 2011; Dzansi & Hoeyi, 2013). According to Williamson, Lynch-Wood, and Ramsay (2006), regulation leads to better BSR procedures and practices. Further, Tilley (1999) suggests that SMME owners or managers see legislation as valuable and fair in that it clearly states what is required of them and provides penalties for non- compliance. Thus, regulation raises awareness and provides clear guidelines for action.

To make any such regulation effective, the small business development agencies of both countries—(SEDA for South Africa) and (NBSSI for Ghana)—can help SMMEs to integrate BSR matters into their strategies right from the beginning. Thus, the agencies themselves need to develop BSR expertise in order to support the SMMEs in considering the costs and benefits of BSR as they are developing their business plans. Doing so will make SMMEs understand what benefits—social or economic—they stand to derive when they undertake BSR for either altruistic or economic reasons and when they can expect the benefits. According to Gadenne et al. (2008:47), the reason some SMME owners or managers shy away from BSR is that they do not fully understand the cost-benefit dynamics involved. Therefore, the involvement of the small business development agencies will go a long way to curb this problem.

While the small business development agencies are tasked with supporting SMMEs in integrating BSR into their business plans, the municipal authorities can have authority to enforce the legislation and ensure compliance. This will create a division of labour and efficiency in regulation with the small business developing agencies focusing on facilitation while municipalities concentrate on enforcement. The enforcement process can be linked to the business licensing procedures of the municipalities to make it easy for them to extract penalties from non-complying firms because, where non-compliance goes unpunished, room is given for complying SMMEs to also start breaking the law.

6.4.2 Environmental Management in SMMEs

The empirical findings of this study have revealed that environment issues is second in importance only to community issues in both South Africa and Ghana in terms of SMME BSR. This means that SMMEs may be playing a more important part in environmental matters than originally thought (e.g., Rowe & Hollingsworth, 1996; Lee, 2000; Dzansi, 2004; Dzansi & Pretorius, 2009). This means that any public policy on BSR will have to

consider the environmental practices of SMMEs also. On an individual level, the impact of SMME activities on the environment might appear negligible, but collectively, it could be substantially significant. Thus, environmental practices should be made an integral part of any public policy on SMME BSR.

6.4.3 Entrepreneurship and Poverty Reduction

This study revealed a higher entrepreneurial participation rate in Ghana than in South Africa. In other words, people in Ghana (especially the youth) tend to see entrepreneurship more as a route to self-realisation than people do in South Africa. Under normal circumstances this finding is not surprising because of the U-shaped relationship between economic development and entrepreneurial tendencies. However, the historical antecedents of South Africa require that this low participation rate be examined closely. The wide socio-economic disparities (Hakizimana & Geyer, 2014; Leubolt, 2014) show how far this efficiency-driven economy must go to achieve equity for its citizens. It is known that the apartheid policy of South Africa’s past introduced wide socio-economic disparities among the majority black, coloured, and Indian population on the one hand and the minority white population on the other, with the former rooted at the bottom of the socio-economic ladder (see, e.g., Lundahl & Petersson, 2009; Noble & Wright, 2012). In this light, entrepreneurship, which is known to offer a route to economic emancipation and development, presents an opportunity for these disparities to be closed. Young people adopt a less enthusiastic stance towards entrepreneurship in an efficiency-driven

economy because of the many “high” standards of business operation and competition

compared to a factor-driven economy. Therefore, it is recommended that public policy in South Africa take a holistic view of how it can help young people to satisfy the standards and requirements surrounding business start-up, operation, and competition. Even though these standards and requirements (e.g., capital requirements) in themselves might be efficiency enhancers, they appear to act as barriers for people from previously disadvantaged segments of the South African population.