Performance Indicators for Township Smes in the Informal Economy: A Qualitative Study

Informal township small and medium enterprises (SMEs) in South Africa face challenges because of the limited use of performance indicators in their progression through the organizational life cycle. This study explores preferred indicators within the Results and Determinants Framework that may contribute positively toward the growth of informal SMEs. Using semi-structured interviews, qualitative data were obtained from 14 informal SMEs to explore the framework and key indicators. The results show that preferred indicators include leveraging social media for competitiveness, maintaining financial records for improved financial performance, a customer-centric approach to enhance service quality and fostering innovation through new ideas. A novice finding is the redefinition of growth for township businesses, which is unconventional and different from that of larger enterprise. The results suggest that informal SMEs can elevate their performance by using a tailored framework with strategic support from government institutions. Theoretical and practical implications are discussed.