BUSINESS ENVIRONMENT FACTORS AND BUSINESS PERFORMANCE: THE CASE OF MACEDONIA – A DEVELOPING ECONOMY

Abstract

One of the key elements of economic development is the private business sector i.e. entrepreneurs with strong and durable competitive advantage. Entrepreneurs are being recognized as the driving force of higher employment rates, improved standard of living, production of value-added products and services, increased innovation, and in general, as the creator of strong economies. The main goal of this analysis is to prove that some specific factors of the internal (customer orientation degree through consumer analysis and response to consumer demands, as a part of the companies’ market orientation and strategy), micro (bargaining power of suppliers and consumers, possibility of new entrants, intensity of competition) and macro (changes in technology, market turbulence, demand growth) environment directly affect the market share and profitability of the companies in a developing economy and thus, enable the companies to focus on the ones of importance, which will allow more efficient allocation of scarce business resources. The study is based on the hypothesis of linear dependence of business performance of the specific environment factors. The analysis is conducted on the base of parametric statistics and the tests of Pearson correlation and linear regression. The methodology included both quantitative and qualitative research methods, comprising of the techniques of structured survey and semi-structured interviews with managers of domestic companies. The descriptive statistics shows that: the domestic companies have on average low to medium levels of consumer orientation; the factors of the micro environment make the market a highly competitive one; the macro environment on the domestic market is defined through high market turbulence, frequent changes in technology and medium demand growth. The deductive statistics shows that the strongest influence on the business performance comes from internal environment factors i.e. customer orientation. Additionally, significant inter-correlation has been found between factors of the macro environment i.e. changes in technology and demand growth, which also affect business performance i.e. market share. The conclusion states that in a developing economy, where the intensity of competition and market turbulence is high, companies can evolve to the stage of growth, development, better business performance and stronger market position through changes in internal factors regarding strategy and market orientation, i.e. consumer / customer orientation. KEYWORDS: business environment, key factors, business performance, entrepreneurship