Factors Affecting Performance of Small and Medium Enterprises Assignment

Performance of SMEs Analysis 1
FACTORS THAT AFFECT THE PERFORMANCE OF SMALL AND MEDIUM
ENTERPRISES(SMEs)
By(Name)
Course
Professor
Institution affiliation
Date

Performance of SMEs Analysis 2
Table of Contents
Introduction................................................................................................................ 3
Objectives of the study................................................................................................... 3
Scope of the study......................................................................................................... 3
Literature review.......................................................................................................... 4
Research gap............................................................................................................... 6
Research hypothesis...................................................................................................... 7
Research questions........................................................................................................ 7
i) Primary question.................................................................................................... 7
ii) Secondary questions................................................................................................ 7
Research design and methodology..................................................................................... 8
Reliablity and validity.................................................................................................... 8
Variable specification.................................................................................................... 9
Sampling technique....................................................................................................... 9
Sample size............................................................................................................... 10
Data collection and analysis method................................................................................ 11
Quantitative and qualitative research................................................................................ 11
Research limitations.................................................................................................... 12
Time schedule............................................................................................................ 12
Conclusion................................................................................................................ 13
APPENDIX.............................................................................................................. 14
Reference list............................................................................................................. 15

Performance of SMEs Analysis 3
Factors that affect the performance of small and medium business enterprises (SMEs)
Introduction
Small and medium enterprises contribute in the development of any nation. They are sources of
revenues to the government, source of employment and a means of poverty eradication in a
country. However, these small and medium enterprises are faced with lots of problems and they
sometimes end up failing (Langenberg, 2005).
Factors that has contributed to the failure of the SMEs are both internal factors and external
factors within the business environment. The challenges that they face limit them from surviving
and growth.
The study aims at arriving at a summary of the main factors that contributes to the failure of
these business enterprises and coming up with measures necessary to curb this problem. The
approach in determination of this factors is a quantitative approach that is based of statistical
facts from data collected.
Objectives of the study.
The main objective of this study is to determine the factors that affect the performance of small
and medium business enterprises. These factors under analysis are both internal and external
factors. The specific objectives include application of regression analysis in determination of
these factors and coming up with various measures to help in survival and growth of small and
medium business enterprises.
Scope of the study
The proposed research project aims at determination of internal and external factors that have
resulted in poor performance of the SMEs. The data to be used is both qualitative and
quantitative which will be collected by use of well-structured questionnaire. The study is limited
to only small and medium enterprises.

Performance of SMEs Analysis 4
Literature review
An enterprise is a word that has been used in a range of contexts. In business, the word has been
used to mean a way of creating wealth through risk taking activities (Indarti, 2004). An
enterprise can also be said to be a system that consists of an effector, detector and selector. The
detector detects any information in the business environment which is then sorted out and
selected. The work of the effector is to make use of the selected information about the business
environment.
Firm performance is used to refer how the business behaves in the business environment.
Performance can be negative or positive depending of various factors that affect the business.
These factors may be because of internal or external influence (Lancaster, 2001).
Small and medium enterprises (SMEs) have a definition that varies from one party to another
and each of these definition is subject to any form of critics. SMEs can be classified according to
type of goods produced or services offered, level of production, size of stock or even according
to the profit realized per trading period. All these definitions might be taken to mean one and the
same thing.
Factors affecting the performance of the SMEs.
Various factors have been suggested each one of them has an extent to which it has contributed
to the success or failure of an enterprise. Empirical studies that involved factors that negatively
affect the performance of an SME, showed that the factors can be divided into two groups (Hitt,
2000). It was based on whether they focus on a variable of a limited source or on profiles of the
failed SMEs.
Both case studies and surveys have been used in past empirical studies on factors contributing to
the poor performance of the SMEs. Some compilations of previous studies result such as Storey
(1994) focused on the stages of SMEs starting from birth, the growth and finally the death of
small firms.
Recent studies based on surveys and case studies have come up with the factors that affect the
failure or success of a given small firm in an economy. Maria Langenberge and Narul Indarti
(2005) came up with the key components that are important in the analysis of the business