Abstract:
Although small, micro and medium enterprises (SMMEs), such as hair salons, have harnessed a subtle combination
of private and public funding to bankroll their business operations, literature on the performance of SMMEs in
developing countries that often identifies finance as a major obstacle to the SMMEs’ survival, tends to be uncritical
about the nature and sources of funding. In view of the fragmented nature of the literature that examines the isolated
influences of private and public funding on performance, it becomes difficult to unpack the combined influence of
these different funding sources on the performance of emerging firms. The problem is compounded further by the
existence of limited literature that focuses on the environmental and organisational variables that mediate the fundingperformance
relationship in small emerging firms. This article considers a critical integrated approach that is located
at the intersection of types of funding (private and public funding), mediating organisational and environmental
factors and performance, in explaining the SMME performance, well aware that there is a potential for large firms to
crowd out the growth opportunities of SMMEs and the insufficiency of the “wicked financial problem” in explicating
the performance of such firms. The theoretical study adopts hair salons as a metaphor for an otherwise large, complex
beauty and cosmetological industry in its exploration of the combined influence of private and public funding on the
performance of SMMEs, with organisational and environmental concepts as mediating variables. The study deviates
from mainstream studies that tend to accord significance solely to finance in SMME development and therefore, places
financing, organisational and environmental variables as key variables in explaning successful business performance.
The main contribution of this paper is a conceptual framework that is based on the view that financing-performance
does not occur in vacuum, but is rather mediated by organisational (human resources, technological acquisition, staff
training and education) and environmental (technology acquisition, firm location, competition) variables.
