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

Abstract

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 performance