Economics and Business
ISSN 2775-9237 (Online)
Published: 23 September 2019
Inter-Sectoral Key Success Factors of Small and Medium Scale Enterprises in Ghana
University of Education, Winneba, Ghana
Download Full-Text Pdf
Keywords: SMEs, Sector, Agriculture, Hospitality, Manufacturing, Trading, Regression
SMEs are a major source of livelihood for most people in the developing world, but most of them fail within a very short period. Several studies have been conducted on SME success, but the focus is usually on one section of SMEs, with no study yet on a cross-section of SMEs to allow inter-sectoral comparisons. This study, therefore, set out to conduct an inter-sectoral study amongst 600 SMEs with 150 SMEs each from the agriculture, hospitality, manufacturing and trading sectors in Ghana. There may be inherent differences between the success factors for the various SME sectors and as such, the need for a study that cuts across four sectors to better inform policy and investment decisions. The study employed a survey strategy to obtain quantitative data through the random distribution of questionnaires. The data were then coded into NCSS 19 software. Multiple regression was used to analyze data, and generalizations were made based on these analyses. From the findings, there is no key success factor common to all four factors. However, number of employees affect three sectors, namely: agriculture, manufacturing, and trading sectors. Infrastructure and education affect the agriculture and manufacturing sectors. Cost control and access to finance affect both the hospitality and manufacturing sectors. Some factors are peculiar to specific sectors, for example, tax and business plan for the hospitality sector, leverage, and inflation for the manufacturing sector while work experience, training, and marital status affect the trading sector. The study makes recommendations based on the findings of the study.
- Abdullahi, M., Ghazali, P., Awang, Z., Izah Mohd Tahir,I., & Mat, N. Z.(2015).The effect of finance, infrastructure and training on the performance of small and medium scale enterprises (SMEs) in Nigeria. International Journal of Business and Technopreneurship 5(1), 421–52.
- Abor, J. (2007). Debt policy and performance of SMEs: evidence from Ghanaian and South African firms. Journal of Risk Finance, 8(4), 364-379.
- Abor, J., & Biekpe, N. (2006). Small business financing initiatives in Ghana. Problems and Perspectives in Management, 4(3), 69-77.
- Abor, J., & Quartey, P. (2010). Issues in SME development in Ghana and South Africa. International Research Journal of Finance and Economics, 39(1), 218-228.
- Agyapong, D., Agyapong, G. K. Q., & Darfor, K. N. (2010). Criteria for assessing Small and Medium Enterprises’ borrowers in Ghana. International Business Research, 4(1), 132-138.
- Alimo, M. T. (2015). The experiences of successful small business owners in Ghana. (Doctoral Dissertation).Walden University.
- Aminu, M., & Shariff, M. N. M. (2015).Determinants of SMEs performance in Nigeria: A pilot study. Mediterranean Journal of Social Sciences, 6(1).
- Arnold, J., (2008). Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries. OECD Working Papers. No. 643, Economics Department.
- Asikhia, O. U., & Rensburg, M. J. V. (2015). SMEs wealth creation model: A conceptual framework. African Journal of Hospitality, Tourism and Leisure,4(1).
- Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Small vs. young firms across the world: Contribution to employment, job creation and growth. World Bank Policy Research, Working Paper 5631, April 2011.
- Bouri, A., Breij, M., Diop, M., Kempner, R., Klinger, B., & Stevenson, K. (2011). Report on support to SMEs in developing countries through financial intermediaries. Geneva: Dalberg Global Development Advisors (pp. 2–48) 2011.
- Bozkurt, C. (2014). Money, inflation and growth relationship: The Turkish case. International Journal of Economics and Financial Issues, 4 (2), 309-322.
- Brock, W. A., & Evans, D. S. (1986). Small Business Economics. Small Business Economics 1 (1), 7-20.
- Chell, E. (2001). Entrepreneurship: Globalization, innovation and development. London: Thomson Learning.
- Chong, W. Y. ( 2012). Critical success factors for Small and Medium Enterprises: perceptions of entrepreneurs in urban Malaysia. Journal of Business and Policy Research. 7 (4), 204-215.
- Donkor, S. (2011). Determinants of business failure: the perspective of SMEs building contractors in the Ghanaian construction industry. (Masters Thesis) Kwame Nkrumah University Of Science And Technology, Kumasi.
- Drucker, P. F. (1985). Introduction, innovation and entrepreneurship. Harper & Row Publishers, New York, 1–17.
- Foley, P., & Green, H. (1989). Small Business Success. London, England : Paul Chapman Publishing.
- Ghatak, S. (2010). Micro, Small and Medium Enterprises (MSMEs) in India: An appraisal. Journal of Technology Management and Innovation, 6(1), 66-76.
- GBS (2016). Ghana Banking Survey report on How to win in an era of mobile money. [Online] Available: http://www.pwc.com/gh/en/assets/ (Retrieved on February 2019).
- Gibb, A. A., & Scott, M. (1985). Strategic Awareness, personal commitment and the process of palling in the small business. Journal of Management Studies, 22 (6), 597-631.
- Gibrat, R. (1931). Les inegalites economiques; aux inegalite’s des richesses, a la concentration des entreprises, aux populations des villes, aux statistiquesdes familles, etc., d’une loi nouvelle, la loi de l’effect proportionnel, Librairie du Recueil Sirey
- GSS (2012). Ghana Statistical Service report on Population and Housing Census. [Online] Available:http://www.statsghana.gov.gh/docfiles/2010phc/ (2010).
- Hawawini, G., Subramanian V., & Verdin, P. (2003). Is performance driven by industry or firm-specific factors? A new look at the evidence. Strategic Management Journal 24(1), 1-16.
- Hove, P., & Tarisai, C. (2013). Internal factors affecting the successful growth and survival of Small and Micro agri-business firms in Alice communal area. Journal of Economics, 4(1), 57-67.
- Jovanovic, B. (1982). Selection and the evolution of industry. The Econometric Society. 50 (3), 649-670.
- Kantor, P. (2001). Promoting women's entrepreneurship development based on good practice programmes: Some experiences from the North to the South. International Labour Organization Working Paper No. 9. ILO, Geneva.
- Khawaja, I., & Musleh-ud, D. (2007). Determinants of Interest spread in Pakistan. PIDE-Working Papers 2007:22, Pakistan Institute of Economics.
- Kongolo, M. (2010). Job creation versus job shedding and the role of SMEs in economic development. African Journal of Business Management Vol. 4(11), 2288-2295.
- Krasniqi, B. A. (2007). Barriers to entrepreneurship and SME growth in transition: the case of Kosova. Journal of Developmental Entrepreneurship, 12(1), 71–94.
- Lampadarios, E., Kyriakidou, N., & Smith, G. (2017). Towards a new framework for SMEs success: A literature review. International Journal of Business and Globalization 18(1),194–232.
- Lee, J. (2001). Education for technology readiness: prospects for developing countries. Journal of Human Development, 2(1), 115–151.
- Liedholm, C, & Mead, D.C. (1999). Small enterprises and economic development: the dynamics of micro and small enterprises. Psychology Press, 1999. Business & Economics, 130 pages.
- Lim, K. G. (2004). The impact of employees’ training programme on the performance of Small Medium Enterprises in northern Malaysia. (Masters Dissertation). Universiti Sains Malaysia.
- Lucas, R. (1978). On the size distribution of business firms. Bell Journal of Economics, 9(2), 508-523.
- Marshall, C., & Rossman, G. B. (2010). Designing qualitative research. (5th ed.). SAGE Publications 2010-Social Science-321 pages.
- Martey, E., Annin, K.., Attoh, C., Wiredu, A. N., Etwire, P. M., & Al-Hassan, R. M. (2013). Performance and constraints of Small Scale Enterprises in the Accra Metropolitan Area of Ghana. European Journal of Business and Management, 5(4), 83-93.
- Mensah, S. (2004). A review of SME financing schemes in Ghana. In UNIDO Regional Workshop on Financing Small and Medium Scale Enterprises, 15-16, 1-19.
- Modebe, N. J., & Ezeaku, H. C. (2016). Dynamics of inflation and manufacturing sector performance on Nigeria : Analysis of effect and causality. International Journal of Economics and Financial Issues, 6 (4), 1400-1406.
- Mohd Shariff, M. N., Peou, C., & Ali, J. (2010). Moderating effect of government policy on entrepreneurship and growth performance of Small Medium Enterprises in Cambodia. International Journal of Business and Management Science, 3(1), 57.
- Morse, E. A., Fowler, S. W., & Lawrence, T. B. (2007). The impact of virtual embedness on new venture survival: Overcoming the liabilities of newness. Entrepreneurship Theory & Practice, 139-159.
- O'Farrell, P. N.,& Hitchens, D.M.W.N. (1988). Alternative theories of small firm growth: Aa critical review. Environment and planning A, 20(10), 1365-1383.
- Penrose, E. (1959). The theory of the growth of the firm.(Revised edition). England: Oxford University Press (2009)
- Perez, E. H., & Canino, R. M. (2009). The importance of the entrepreneur’s perception of success. Review of international comparative management, 10(5), 990-1010.
- Perren, L. (2000). Factors in the growth of Micro-Enterprises (part 2): Exploring the implication. Journal of Small Business and Enterprise Development, 6 (4), 366-385.
- Robson, C. (2002). Real world research : A resource for social scientists and practitioner-researchers (2nded.). Oxford: Blackwell Publishers Ltd.
- Samuelson, P. A. (1945). The effects of interest rate increases on Banking Systems. The American Economic Review, 35(1),16-27.
- Sandberg, K., Vinberg, S., & Pan, Y. (2002). An exploratory study of women in micro-enterprise: owner perceptions of economic policy in a rural municipality: gender-related differences. CD-proceedings of 12th Nordic Conference on Small Business Research.
- Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business student. (5th ed.). London: Pearson Hall Limited.
- Schröder, E., & Rodermund, E. S. (2006). Crystallizing enterprising interests among adolescents through a career development. Journal of Vocational Behavior, 69 (3), 494-509.
- Sefiani, Y. (2013). Factors for success in SMEs: A perspective from Tangier. (Doctoral Dissertation). University of Gloucestershire.
- Sergii, P. (2009). Inflation and economic growth : The non-linear relationship evidence from CIS Countries. (Masters Thesis). Kyiv School of Economics.
- Shah, S. F. H., Nazir, T., Zaman, K., & Shabir, M. (2013). Factors affecting the growth of enterprises: A survey of the literature from the perspective of small- and medium-sized enterprises. Journal of Enterprise Transformation, 3(1), 53-75.
- Stephanou, C., & Rodriguez, C. (2008). Bank financing to Small and Medium-Sized Enterprises (SMEs) in Colombia. Policy Research Working Paper No. 4481, Washington D. C.
- Storey, D. J. (1994). Understanding the Small Business Sector. London: International Thomson Business Press.
- Sulemana, I. (2014). Factors influencing the performance of Small Scale Entrepreneurs in the garment industry of the Tamale metropolis of Ghana. (Masters Thesis). University of Ghana.
- Uddin, M. R., & Bose, T. K. (2013). Factors that affect the success of SME in Bangladesh: Evidence from Khulna City. Journal of Management and Sustainability, 3(3).
- Widmalm, F. (2001). Tax structure and growth : Are some taxes better than others?. Public Choice, 107 (3-4), 199-219.
- Wiese, J. S. (2014). Factors determining the sustainability of selected Small and Medium-sized enterprises . (Master’s Thesis). North-West University.
- Zindiye, S., Roberts-Lombard, M., & Herbst, G. (2008). An empirical investigation into the factors affecting the performance of SMEs in the manufacturing sector of Harare, Zimbabwe (Doctoral Dissertation).