Achieving sustainable competitive advantage: the case of small and medium-sized manufacturing enterprises in Botswana.

Abstract

The aim of the study was to investigate factors that impact on sustainable competitive advantage of small and medium-sized manufacturing enterprises (SMEs) in Botswana. In Botswana, manufacturing SMEs have been targeted as a priority sector because of their potential to (1) diversify the country’s economy from diamond mining; (2) create employment thus reducing poverty; and increase the inflow of foreign currency through exports. Despite their potential, manufacturing SMEs are affected by traditional challenges which include – but are not exhaustive – lack of access to finance, lack of access to markets, lack of business acumen, lack of human capital and competition from multinational corporations. Primary data was collected from seven key government informants through face-to-face interviews and 348 manufacturing SME owners/managers using a structured questionnaire. Thematic analysis was used to analyse the data gathered from key government informants. This helped to obtain in-depth information about the phenomenon under observation. The data collected from manufacturing SMEs was analysed using a combination of descriptive and inferential statistics. The main findings revealed that manufacturing enterprises in Botswana are high risk enterprises and financial institutions are reluctant to provide them with funds. These SMEs are also affected by high rentals and high cost of land to use in their operations, high equipment and product quality costs. Manufacturing SMEs which export their products face additional challenges of traceability issues and mileage charges in the countries that they export their products. The study recommends that funding organisations should continue to review issues of collateral in order to increase access to finance by manufacturing SMEs. The Botswana government and tribal authorities issuing land should remove the bottlenecks related to application for land, especially for business purposes. Manufacturing SMEs should also consider SME equity funding as an alternative to funding and offers less risk compared to commercial banks and existing government-sponsored funding agencies. The findings of the study contribute towards the development of a sustainable theoretical framework that can be used by manufacturing SMEs to identify and utilise their internal resources and capabilities to increase their competitiveness, survive and grow.