This chapter addresses factors influencing productivity in manufacturing small and medium-sized enterprises (SMEs), and these factors are internal and external in nature. Internal factors, in this chapter, involve physical capital, technological capital, and management in the manufacturing process. Factors influencing manufacturing SMEs outside their businesses include competitiveness and government involvement. Physical capital factors are comprised of components such as human resources, material, machinery, building (environment/ergonomics), location, and finance as well as technological capital components such as tangible assets and intangible assets. Technological factors, meanwhile, are made up of tangible assets and intangible assets.

Tangible assets used by manufacturing SMEs comprise equipment such as trackers, hardware, and telephones. Intangible assets used in these enterprises include computer software, information and communication technology systems, employees’ innovative skills (acquired through research and development); and networking and employee knowledge, which allows information to be easily conveyed within the enterprise from top to bottom and among employees horizontally as well as outside the business. Lastly, South African case studies regarding effectiveness and efficiency are introduced to show how employees are employed and machinery utilized during the work activities.