This study tests the interaction effect of government financial support for small businesses in the relationship between business revenue and the grant-approved amount in the post-financial support scheme in South Africa. Pre- and post-internal administrative datasets of the beneficiary firm were collected from the scheme between 2011 – 2018. The regression estimation procedure was based on the Pooled OLS regression and the GLS Random Effects (RE) model based on the Breusch-Pagan Lagrangian multiplier test. The theoretical approach in the study is based on the capital-revenue framework of firm output, represented by firms’ revenue performance level post-financial assistance, which serves as a marker of the beneficiary firm's revenue performance. Findings show, grant-approved amount had a statistically significant and positive effect on the revenue growth of grant beneficiary firms. The indication is for every 1 per cent increase in grant amount received by firms led to about a one per cent increase in revenue growth. The finding has useful implications to help strengthen the provision of government grants to small enterprises and provide a new framework for future studies on small business performance looking at the small enterprise support ecosystem which can be helpful to come up with planning for the working capital business models

Aluko, Timothy Olaniyi; Bayai, Innocent

This study tests the interaction effect of government financial support for small businesses in the relationship between business revenue and the grant-approved amount in the post-financial support scheme in South Africa. Pre- and post-internal administrative datasets of the beneficiary firm were collected from the scheme between 2011 – 2018. The regression estimation procedure was based on the Pooled OLS regression and the GLS Random Effects (RE) model based on the Breusch-Pagan Lagrangian multiplier test. The theoretical approach in the study is based on the capital-revenue framework of firm output, represented by firms’ revenue performance level post-financial assistance, which serves as a marker of the beneficiary firm's revenue performance. Findings show, grant-approved amount had a statistically significant and positive effect on the revenue growth of grant beneficiary firms. The indication is for every 1 per cent increase in grant amount received by firms led to about a one per cent increase in revenue growth. The finding has useful implications to help strengthen the provision of government grants to small enterprises and provide a new framework for future studies on small business performance looking at the small enterprise support ecosystem which can be helpful to come up with planning for the working capital business models

Timothy Olaniyi Aluko () and Innocent Bayai ()
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Timothy Olaniyi Aluko: University of South Africa, South Africa
Innocent Bayai: University of South Africa, South Africa

Eurasian Journal of Business and Management, 2023, vol. 11, issue 1, 46-57

Keywords: Effects; Grant; Small Business; Government Financial Support; Firm Revenue Performance (search for similar items in EconPapers)
Date: 2023
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