Effects of External and Internal success factors on SMEs performance in emerging economies: Evidence from Saudi Arabia

Abstract

Abstract Purpose -The aim of this study's to examine the influence of external and internal factors that are claimed by the literature to affect Small and Medium Enterprises SMEs' performance. The literature is relatively rich in this regard with several published researches, but the contribution of the current study is primarily related to the emerging economies context in general and the Saudi Arabian SMEs sector in particular. Methodology / design / approach – The study uses a quantitative approach based on a structured questionnaire that is administered to a convenient sample consisting of 142 SMEs. Findings – The findings revealed that all of the six proposed factors (independent variables) are significantly influencing the SMEs performance (dependent variable). Legal & Administrative Factors (LAF)is found to have the strongest relationship with performance. Research Limitation / future research recommendations –The study is applied in Saudi Arabia, therefore the results generalisation should be treated with caution. Arab, Muslim, and other conservative societies are likely to generalise the findings of this study to their own context. Future studies are encouraged to extend this study to other countries, use qualitative research methods to induce knowledge, and/or examine the mediating / moderating effect of other variables. Practical implications –Several implications for practitioners and entrepreneurs emerge. The study elects a group of success factors that the literature suggests and puts them to empirical examination to assess their validity. The study is conducted in Saudi Arabia, taking into consideration the aspects that influence small enterprises' success. Originality / value – Numerous studies have contributed to the development of SMEs conceptualisation, and many studies have examined the success and failure factors that affect SMEs. Having said that, noticeable scarcity of studies examining SMEs' success factors in developing countries and in Saudi Arabia in particular elaborates the contribution and value of the study.