Factors influencing buyer-supplier commitment and competitive performance among small and medium enterprises in Southern Gauteng

Abstract

The significance of the small and medium enterprise (SME) sector to the growth and development of the South African economy and the general emancipation of her citizens has come to the forefront of the South African Government’s economic agenda. Hence, the continued success of the economy, to a greater extent, is dependent on the success of the SME sector. Guided by the theoretical lens of the social exchange theory (SET), this study examines the influence of communication, product quality, flexibility and buyer-supplier commitments on SMEs competitive performance in southern Gauteng. Using a convenience sampling technique, this study quantitatively analysed the 396 returned questionnaires. Data analysis was conducted using the statistical package for social sciences (SPSS Amos 25.0) for the confirmatory factor analysis and the structural equation modelling (SEM) respectively. The analysis revealed that communication, product quality and flexibility are important variables in predicting buyer-supplier commitment and that the latter is significant in a firm’s effort towards achieving competitive performance. SMEs operational strategies should incorporate flexibility, which is fundamental to firms achieving competitive performance and overcoming market unpredictability. It is recommended that SMEs exhibit greater commitment to building stronger ties with key partners in their given industry.