Effect of Budgeting and Financial Awareness on Sustainability of Small and Medium Enterprises in South Africa during the COVID-19 Era
Keywords:
Budgetary control; Investors; financial performance; financial decisions; financial strategies; small businessAbstract
Budgeting is universal and can be implemented in all industries, SMEs inclusive, as it has the sole purpose of meeting corporate targets. The objective of this study is to examine the effect of budgeting and financial awareness on sustainability of small medium enterprises. The quantitative research method was adopted for this study and the purposive sampling technique was chosen to select the participants for this study. The study collected primary data from respondents who are owners of SMEs in the retail, construction, manufacturing sectors, etc and the data was analysed using SPSS. A total of 310 research questionnaires was administered and 304 research questionnaires were returned for analysis (giving a 98% response rate). A regression analysis and Pearson’s correlation analysis were conducted. The outcome of Pearson’s correlation shows moderate correlation (r value is 0.372) between budgeting, financial awareness and sustainable SMEs. There is also a significant effect of budgeting and financial awareness on sustainability as revealed in p-value <0.0005. Budgeting plays an important role in SME sustainability more than financial awareness as budgeting uniquely accounts for the largest proportion of the variance in the regression model. This implies that SMEs should give more attention to budgeting to ensure their sustainability such that more training or awareness is given to forecasting and financial planning.
References
Ajakaiye, O. O., Afolabi, H. A., Akinola, A. O., Okagbue, H. I., Olagunju, O. O., & Adetoro, O. O. (2018). Datasets on factors influencing trading on pedestrian bridges along Ikorodu road, Lagos, Nigeria. Data in brief, 19, 1584-1593.
Akpan, I. J., Udoh, E. A. P., & Adebisi, B. (2020). Small business awareness and adoption of state-of-the-art technologies in emerging and developing markets, and lessons from the COVID-19 pandemic. Journal of Small Business & Entrepreneurship, 1-18.
Álvarez-Franco, P. B., Muñoz-Murillo, M., & Restrepo-Tobón, D. A. (2017). Challenges in assessing the effectiveness of financial education programs: The Colombian case. Cuadernos de Administración, 30(54), 155-180.
Arnold, M., & Artz, M. (2019). The use of a single budget or separate budgets for planning and performance evaluation. Accounting, organizations and society, 73, 50-67.
Atkinson, A. and Messy, F.A., 2012. Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study. Available on: https://www.oecd-ilibrary.org/finance-and-investment/oecd-working-papers-on-insurance-and-private-pensions_19936397, (accessed by 20 June 2020).
Atkinson, A., & Messy, F. A. (2012). Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study.
Chaulagain, R.P., 2017. Relationship between financial literacy and behavior of small borrowers. NRB Economic Review, 29(3): 33-53.
Chepngetich, P. (2016). Effect of financial literacy and performance SMEs. Evidence from Kenya. Evidence from Kenya.
Chepngetich, P. (2016). Effect of financial literacy and performance SMEs. Evidence from Kenya. Evidence from Kenya.
Dalkilic, N., & Kirkbesoglu, E. (2015). The role of financial literacy on the development of insurance awareness. International Journal of Economics and Finance, 7(8), 272-280.
Damayanti, R., Al-shami, S.S.A., Rahim, B., Rahim, A.B., Marwati, F.S. and Malaysia, M., 2018. Factors That Influence Financial Literacy on Small Medium Enterprises: A Literature Review. Opción, 34(86): 1540-1557.
Durst, S., & Gerstlberger, W. (2021). Financing Responsible Small-and Medium-Sized Enterprises: An International Overview of Policies and Support Programmes. Journal of Risk and Financial Management, 14(1), 10.
Duval‐Couetil, N. (2013). Assessing the impact of entrepreneurship education programs: Challenges and approaches. Journal of Small Business Management, 51(3), 394-409.
Eniola, A. A., & Entebang, H. (2017). SME managers and financial literacy. Global Business Review, 18(3), 559-576.
Eniola, A.A. and Entebang, H., 2017. SME managers and financial literacy. Global Business Review, 18(3): 559-576.
Eniola, A.A. and Entebang, H., 2017. SME managers and financial literacy. Global Business Review, 18(3): 559-576.
Esiebugie, U., Richard, A. and Emmanuel, A., 2018. Financial literacy and performance of small and medium scale enterprises in Benue State, Nigeria. International Journal of Economics, Business and Management Research, 2(4): 65-79.
Foley, J. (2018). We really need to talk about owner-managers and financial awareness. Small Enterprise Research, 25(1), 90-98.
Franco, P.B.A., Murillo, A.M.M. and Tobón, D.A.R., 2017. Programas de Educación Financiera en Colombia: Retos para Evaluar su Efectividad. Cuadernos de Administración, 30(54).
Ganiyu, I. O., Derera, E., Atiku, S. O., & Fields, Z. (2020). Measuring the effectiveness of work–life balance strategies in the manufacturing sector. SA Journal of Human Resource Management, 18, 10.
Hadi, N. U., Abdullah, N., & Sentosa, I. (2016). An easy approach to exploratory factor analysis: Marketing perspective. Journal of Educational and Social Research, 6(1), 215.
Henttu-Aho, T. (2018). The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning. Journal of management control, 29(3), 327-360.
Hoaglin, D. C. (2016). Misunderstandings about Q and ‘Cochran's Q test'in meta‐analysis. Statistics in medicine, 35(4), 485-495.
Kaiser, H. F. (1974). An index of factorial simplicity. Psychometrika, 39(1), 31-36.
King, R., Clarkson, P. M., & Wallace, S. (2010). Budgeting practices and performance in small healthcare businesses. Management Accounting Research, 21(1), 40-55.
Kuruvilla, R. R., & Harikumar, P. N. (2018). A study on the financial awareness among women entrepreneurs in Kottayam district. Journal of Management Research and Analysis, 5(3), 331-335.
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of economic literature, 52(1), 5-44.
Massingham, P., & Al Holaibi, M. (2017). Embedding knowledge management into business processes. Knowledge and Process Management, 24(1), 53-71.
Muneer, S., Ahmad, R. A., & Ali, A. (2017). Impact of financial management practices on SMEs profitability with moderating role of agency cost. Information Management and Business Review, 9(1), 23-30.
Naidu, M. K. Financial Literacy awareness among SME’s in Western Division of Fiji Mr. Avineel Avineet Kumar the University of Fiji.
Odoom, R., 2016. Brand-building efforts in high and low performing small and medium-sized enterprises (SMEs). Journal of Small Business and Enterprise Development, 23 (4):1229-1246.
Okeyo, W. O., Gathungu, J., & Peter, K. O. (2014). The effect of business development services on performance of small and medium manufacturing enterprises in Kenya. The Effect of Business Development Services on Performance of Small and Medium Manufacturing Enterprises in Kenya.
Rehman, S. U., Mohamed, R., & Ayoup, H. (2019). The mediating role of organizational capabilities between organizational performance and its determinants. Journal of Global Entrepreneurship Research, 9(1), 30.
Schwab, L., Gold, S., & Reiner, G. (2019). Exploring financial sustainability of SMEs during periods of production growth: A simulation study. International Journal of Production Economics, 212, 8-18.
Septria, D., & Heryanto, H. (2019). Performance Capability Analysis and Regional Budget Evaluation in Implementing Regional Autonomy in Dharmasraya District. Archives of Business Research, 7(7), 180-187.
Suurd, A. (2020). Why you need to budget: business-budgeting. Farmer’s Weekly, 2020(20029), 32-34.
Tuffour, J. K., Amoako, A. A., & Amartey, E. O. (2020). Assessing the effect of financial literacy among managers on the performance of small-scale enterprises. Global Business Review, 0972150919899753.
Warrick, D. D. (2017). What leaders need to know about organizational culture. Business Horizons, 60(3), 395-404.
Woolson, R. F., Bean, J. A., & Rojas, P. B. (1986). Sample size for case-control studies using Cochran's statistic. Biometrics, 927-932.
Xu, N., Shi, J., Rong, Z. and Yuan, Y., 2020. Financial literacy and formal credit accessibility: Evidence from informal businesses in China. Finance Research Letters, 36:101327.
Yogendrarajah,R, Kengatharan,L & Jeyan Suganya, S. (2017).International Journal of Accounting & Business Finance, Financial management practices and performance of SMEs in Sri Lanka: evidence from Jaffna District.(1), pp. 61-72.
Zor, U., Linder, S., & Endenich, C. (2019). CEO characteristics and budgeting practices in emerging market SMEs. Journal of Small Business Management, 57(2), 658-678.
Нургалиева, А. И. (2016). Advantages and disadvantages of small business. In роль инноваций в трансформации современной науки pp. 204-206.
Akpan, I. J., Udoh, E. A. P., & Adebisi, B. (2020). Small business awareness and adoption of state-of-the-art technologies in emerging and developing markets, and lessons from the COVID-19 pandemic. Journal of Small Business & Entrepreneurship, 1-18.
Álvarez-Franco, P. B., Muñoz-Murillo, M., & Restrepo-Tobón, D. A. (2017). Challenges in assessing the effectiveness of financial education programs: The Colombian case. Cuadernos de Administración, 30(54), 155-180.
Arnold, M., & Artz, M. (2019). The use of a single budget or separate budgets for planning and performance evaluation. Accounting, organizations and society, 73, 50-67.
Atkinson, A. and Messy, F.A., 2012. Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study. Available on: https://www.oecd-ilibrary.org/finance-and-investment/oecd-working-papers-on-insurance-and-private-pensions_19936397, (accessed by 20 June 2020).
Atkinson, A., & Messy, F. A. (2012). Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study.
Chaulagain, R.P., 2017. Relationship between financial literacy and behavior of small borrowers. NRB Economic Review, 29(3): 33-53.
Chepngetich, P. (2016). Effect of financial literacy and performance SMEs. Evidence from Kenya. Evidence from Kenya.
Chepngetich, P. (2016). Effect of financial literacy and performance SMEs. Evidence from Kenya. Evidence from Kenya.
Dalkilic, N., & Kirkbesoglu, E. (2015). The role of financial literacy on the development of insurance awareness. International Journal of Economics and Finance, 7(8), 272-280.
Damayanti, R., Al-shami, S.S.A., Rahim, B., Rahim, A.B., Marwati, F.S. and Malaysia, M., 2018. Factors That Influence Financial Literacy on Small Medium Enterprises: A Literature Review. Opción, 34(86): 1540-1557.
Durst, S., & Gerstlberger, W. (2021). Financing Responsible Small-and Medium-Sized Enterprises: An International Overview of Policies and Support Programmes. Journal of Risk and Financial Management, 14(1), 10.
Duval‐Couetil, N. (2013). Assessing the impact of entrepreneurship education programs: Challenges and approaches. Journal of Small Business Management, 51(3), 394-409.
Eniola, A. A., & Entebang, H. (2017). SME managers and financial literacy. Global Business Review, 18(3), 559-576.
Eniola, A.A. and Entebang, H., 2017. SME managers and financial literacy. Global Business Review, 18(3): 559-576.
Eniola, A.A. and Entebang, H., 2017. SME managers and financial literacy. Global Business Review, 18(3): 559-576.
Esiebugie, U., Richard, A. and Emmanuel, A., 2018. Financial literacy and performance of small and medium scale enterprises in Benue State, Nigeria. International Journal of Economics, Business and Management Research, 2(4): 65-79.
Foley, J. (2018). We really need to talk about owner-managers and financial awareness. Small Enterprise Research, 25(1), 90-98.
Franco, P.B.A., Murillo, A.M.M. and Tobón, D.A.R., 2017. Programas de Educación Financiera en Colombia: Retos para Evaluar su Efectividad. Cuadernos de Administración, 30(54).
Ganiyu, I. O., Derera, E., Atiku, S. O., & Fields, Z. (2020). Measuring the effectiveness of work–life balance strategies in the manufacturing sector. SA Journal of Human Resource Management, 18, 10.
Hadi, N. U., Abdullah, N., & Sentosa, I. (2016). An easy approach to exploratory factor analysis: Marketing perspective. Journal of Educational and Social Research, 6(1), 215.
Henttu-Aho, T. (2018). The role of rolling forecasting in budgetary control systems: reactive and proactive types of planning. Journal of management control, 29(3), 327-360.
Hoaglin, D. C. (2016). Misunderstandings about Q and ‘Cochran's Q test'in meta‐analysis. Statistics in medicine, 35(4), 485-495.
Kaiser, H. F. (1974). An index of factorial simplicity. Psychometrika, 39(1), 31-36.
King, R., Clarkson, P. M., & Wallace, S. (2010). Budgeting practices and performance in small healthcare businesses. Management Accounting Research, 21(1), 40-55.
Kuruvilla, R. R., & Harikumar, P. N. (2018). A study on the financial awareness among women entrepreneurs in Kottayam district. Journal of Management Research and Analysis, 5(3), 331-335.
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of economic literature, 52(1), 5-44.
Massingham, P., & Al Holaibi, M. (2017). Embedding knowledge management into business processes. Knowledge and Process Management, 24(1), 53-71.
Muneer, S., Ahmad, R. A., & Ali, A. (2017). Impact of financial management practices on SMEs profitability with moderating role of agency cost. Information Management and Business Review, 9(1), 23-30.
Naidu, M. K. Financial Literacy awareness among SME’s in Western Division of Fiji Mr. Avineel Avineet Kumar the University of Fiji.
Odoom, R., 2016. Brand-building efforts in high and low performing small and medium-sized enterprises (SMEs). Journal of Small Business and Enterprise Development, 23 (4):1229-1246.
Okeyo, W. O., Gathungu, J., & Peter, K. O. (2014). The effect of business development services on performance of small and medium manufacturing enterprises in Kenya. The Effect of Business Development Services on Performance of Small and Medium Manufacturing Enterprises in Kenya.
Rehman, S. U., Mohamed, R., & Ayoup, H. (2019). The mediating role of organizational capabilities between organizational performance and its determinants. Journal of Global Entrepreneurship Research, 9(1), 30.
Schwab, L., Gold, S., & Reiner, G. (2019). Exploring financial sustainability of SMEs during periods of production growth: A simulation study. International Journal of Production Economics, 212, 8-18.
Septria, D., & Heryanto, H. (2019). Performance Capability Analysis and Regional Budget Evaluation in Implementing Regional Autonomy in Dharmasraya District. Archives of Business Research, 7(7), 180-187.
Suurd, A. (2020). Why you need to budget: business-budgeting. Farmer’s Weekly, 2020(20029), 32-34.
Tuffour, J. K., Amoako, A. A., & Amartey, E. O. (2020). Assessing the effect of financial literacy among managers on the performance of small-scale enterprises. Global Business Review, 0972150919899753.
Warrick, D. D. (2017). What leaders need to know about organizational culture. Business Horizons, 60(3), 395-404.
Woolson, R. F., Bean, J. A., & Rojas, P. B. (1986). Sample size for case-control studies using Cochran's statistic. Biometrics, 927-932.
Xu, N., Shi, J., Rong, Z. and Yuan, Y., 2020. Financial literacy and formal credit accessibility: Evidence from informal businesses in China. Finance Research Letters, 36:101327.
Yogendrarajah,R, Kengatharan,L & Jeyan Suganya, S. (2017).International Journal of Accounting & Business Finance, Financial management practices and performance of SMEs in Sri Lanka: evidence from Jaffna District.(1), pp. 61-72.
Zor, U., Linder, S., & Endenich, C. (2019). CEO characteristics and budgeting practices in emerging market SMEs. Journal of Small Business Management, 57(2), 658-678.
Нургалиева, А. И. (2016). Advantages and disadvantages of small business. In роль инноваций в трансформации современной науки pp. 204-206.
Published
2021-09-27
How to Cite
Olarewaju, O., & Msomi, T. (2021). Effect of Budgeting and Financial Awareness on Sustainability of Small and Medium Enterprises in South Africa during the COVID-19 Era: Array. The Journal of Accounting and Management, 11(3). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/1202
Issue
Section
Articles
License
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
