Factors determining the growth of SMEs: evidence from registered SMEs in Northern Province, Sri Lanka

Lingesiya Kengatharan

doi:10.4038/ijabf.v6i2.69

Abstract

The objectives of this study were to explore the factors determining the growth of SMEs in the Northern Province of Sri Lanka and to examine the influence of those factors on the growth of SMEs. A field survey was conducted to collect the necessary data from the owners/ managers of 189 SMEs which are functioning in the Northern Province of Sri Lanka. Self reported questionnaire was designed to recognize the factors that influence the growth of SMEs. Data were analysed with SPSS 22 and SmartPLS. Exploratory Factor Analysis was performed to identify the factors influencing growth of SMEs. As a result, need for achievement, motivation, location, business environment, accounting and control and network were recognized as factors influencing on the growth of SMEs. PLS - SEM was performed to assess the impact of these factors on the growth of SMEs. The results of the study revealed that need for achievement and business environment had a medium size influence on growth. The rest of the factors had the small effect on growth. Overall, this study has made parametric contributions as identified the factors influencing the growth of SMEs and geographical contribution as investigated the effect of indentified factors on the growth of SMEs of Northern Province in Sri Lanka.

Highlights

Introduction create anSME-friendly business environment, The pursuit of the growth of small and medium- to facilitate the acquisition of modern and sized enterprises has become necessary in the appropriate technology and to foster an current context of the works towards a higher entrepreneurial culture in the country
With an involvement of around three million The Northern Province is located in the north people demonstrates the importance of this of Sri Lanka which is comprised of five sector in Sri Lanka
As per the results presented in the table 7, it can be said that all the factors identified in this study which are need for achievement, motivation, location, business environment, accounting and control and networking together explained 38 % (Adjusted R2 = 0.380) of the growth of the SMEs in the sample

Summary

Introduction

SME-friendly business environment, The pursuit of the growth of small and medium- to facilitate the acquisition of modern and sized enterprises has become necessary in the appropriate technology and to foster an current context of the works towards a higher entrepreneurial culture in the country. The fact that SMEs represent SME sector comprises micro, small and more than 90% of the businesses in the country medium-sized industries. With an involvement of around three million The Northern Province is located in the north people demonstrates the importance of this of Sri Lanka which is comprised of five sector in Sri Lanka. It is estimated that this sector 30 years of civil war, post-war social and provides 45% of employment in the country. It is estimated that this sector 30 years of civil war, post-war social and provides 45% of employment in the country. economic challenges were enormous in terms

Objectives

Methods

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Conclusion