Environmental Factors, Employee-Resourcing Strategies And Performance Of Small Restaurant Businesses In South Africa: A Structural Equation Modelling Approach

Small restaurant business sector is applauded for promoting economic growth and employment creation in developing economies. Despite the spirited efforts by developing nations to capacitate the sector to sustainably contribute to economic growth, it is often marred by a disturbing high failure rate, especially in South Africa. The failure rates have been attributed, among many other factors, to the inability of the small restaurant businesses to respond to the environmental uncertainty for increased performance. In addition, small restaurant businesses in developing economies have been found to share common characteristics with small businesses in other sectors, in terms of using ad hoc approaches to employee – resourcing. Yet, the adoption of proper employee-resourcing strategies such as doing workforce planning, formalising recruitment and staff retention are regarded as best human resource practices for optimum business performance. In addition, the contribution of environmental factors such as manager‘s expertise and experience, economic growth, and political stability in leveraging the adoption of effective employee-resourcing strategies and heightening business performance has been reported. There is however a dearth of research that explores the interplay of environmental influences, employee-resourcing strategies and performance of small businesses in a developing context. There is also a paucity of literature that explores whether a convivial relationship exists among environmental factors, employee-resourcing strategies and business performance among in South Africa. Furthermore, empirical evidence on the influence of employee-resourcing strategies on small business performance in the hospitality industry among emerging economies is disappointingly low. It is against this background that this research used the Resource Based View (RBV), the Human Capital Theory, the Flexible Firm Model, Contingency theory and reviewed literature to gain an understanding on whether the internal and external environmental factors inform the adoption of employee-resourcing strategies, culminating in increased business performance. Using Structural Equation Modelling (SEM), the research proposes that the pathway to improved business performance demands small restaurant business owner-managers to adopt systemic and holistic approaches to employee-resourcing strategies that are attuned to the internal and external environmental factors to guarantee increased business performance. The research was informed by the positivist paradigm and a quantitative research approach was adopted to test the proposed conceptual model. A structured questionnaire was administered to 221 owners/managers of small restaurant businesses in Free State Province, South Africa. Convenience sampling was employed to select the respondents. SEM was used to empirically test the hypothesised relationships in the conceptual model. The results showed that the structural model fitted the data satisfactorily and provided reasonable explanations on the nature of relationships among internal and external environmental factors, employee-resourcing strategies and small business performance in South African restaurants. The results established a positive and significant effect of the internal environmental factors on employee-resourcing strategies. Furthermore, the results also revealed a positive and significant effect of the external environment on employee-resourcing strategies. However, contrary to predictions, there were no relationships between internal and external environmental factors, employee-resourcing strategies and small restaurant performanc

Environmental Influences, Employee Resourcing Strategies and Small and Medium-Sized Enterprises Performance: Case of South African Small Restaurants

Published ArticleOrientation: Small businesses’ contribution to economic growth and employment creation cannot be disputed in South Africa, amid operating in an environment that is highly competitive and reports of small and medium-sized enterprise (SME) high failure rates, in general. In view of this, and to our knowledge, no known theoretical study has been conducted in South Africa examining how certain environmental factors might influence the use of appropriate resourcing strategies for improved small businesses’ performance. Research purpose: This theoretical article investigates the relationships between environmental influences, employee resourcing strategies and business performance among South African small restaurants. Motivation for the study: There is a paucity of literature that has explored whether a relationship exists between the three variables among small restaurant businesses in South Africa, justifying the need for such an investigation. Research approach/design and method: This article, which is conceptual in nature, adopted a systematic literature review which entails combining all existing research literature related to the three variables so as to arrive at logical inferences. Main findings: The research contends that a relationship exists between the three variables. Practical/managerial implications: Small businesses need to be aware of the environmental influences that may contribute to business failure so that they attune employee resourcing strategies to the environment to achieve high performance. Contribution/value add: The article contributes to extant literature on the interplay between environmental factors, resourcing strategies and firm performance in small restaurant businesses of emerging economies