Analysis of the Effects of Government Support for the Survival of Small and Medium Businesses in South Africa

SME businesses in South Africa contribute 32% of the gross domestic product and 90% of formal employment. The South African government introduced the National Development plan aiming to reduce the high unemployment rates, through the SME sector and the SMEs would assist in the alleviation of poverty and inequalities in the country. Problem statement is that the SMEs fail at very high rates in South Africa, which is of great concern. The research intended to investigate and understand the reasons of the high failures of SMEs in South Africa and how Support from the South African Government affects the failure or success of the SMEs. The research used mixed methods research using the grounded theory approach based on Resource-Based View and Institutional Theory to investigate what are the reasons for failure of SMEs in South Africa. Mixed methods study affords the understanding of complex issues with triangulation and convergence of findings which is essential for reliability and trustworthiness of research. SMEs crash because of different reasons such as lack of finance, including delayed payments, absence of management principles, not receiving enough support from the government and corruption. The findings of the research were converging and provided recommendations that included government to enable support and access of information to SMEs, reduction of corruption, facilitation for the training and development of SMEs and other recommendations for future research were provided.