Catalysing Inclusive Growth: A Framework for SME-Large Firm Linkage Development in South Africa

The persistent dualism in the South African economy, characterised by a concentrated formal sector and a fragmented small and medium enterprise (SME) base, constrains inclusive growth. Effective business linkages between large corporations and local SMEs are widely advocated as a catalyst for development but remain underdeveloped due to systemic barriers. This paper develops a structured framework to diagnose and enhance SME-large firm linkages. It aims to identify the critical success factors and systemic constraints from both corporate and SME perspectives, moving beyond generic policy advocacy to actionable mechanisms. The research employs a multi-method design, integrating a systematic literature review with thematic analysis of semi-structured interviews conducted with procurement executives from large firms and owners of linked and non-linked SMEs. Analysis identified a dominant theme of asymmetric risk perception, where large firms' stringent compliance requirements act as a primary barrier. A specific finding is that over 70% of interviewed SME owners cited the complexity of vendor accreditation, rather than lack of capability, as the major impediment to forming a linkage. The study concludes that linkage development is hindered less by a lack of SME competence and more by institutional and procedural misalignment within large firms' procurement ecosystems. A transactional approach undermines the strategic partnership potential of linkages. Large firms should adopt segmented supplier development programmes with graduated compliance pathways. Policymakers must incentivise anchor firms to reform procurement practices through targeted scorecards within existing Broad-Based Black Economic Empowerment (B-BBEE) codes. business linkages, inclusive procurement, SME development, supplier development, institutional voids, South Africa This paper provides a novel diagnostic framework that disaggregates linkage constraints into operational, relational, and institutional tiers, offering a structured tool for both corporate strategy and policy design.