Prioritization of financial performance determinants in Indian SMEs

Abstract

PurposeThis study aims to quantify and prioritize the financial performance (FP) determinants in Indian small and medium-sized enterprises (SMEs).Design/methodology/approachAnalytic hierarchy process, a multi-criteria decision-making tool, was used. Experts were allowed to express the opinion regarding the relative importance of each factor and sub-factors by making pairwise comparisons through a structured questionnaire based on a nine-point scale.FindingsMarket orientation (0.4529) was perceived as the most important FP determinant followed by the entrepreneurial orientation (0.3382) and corporate social responsibility (0.2089) in SMEs.Research limitations/implicationsThis study can be considered as a pilot study because it is confined to Indian SMEs. Future research studies can incorporate the opinion or insights of other stakeholders and may target the SMEs situated in different geographical areas.Practical implicationsThe inferences drawn in this study would clarify the conceptual and contextual applicability of competitive strategies in SMEs. Indeed, proposed hierarchy and developed framework would guide the SMEs in strategic planning. Moreover, it would help in repositioning and alignment of core strategies duly with business objectives.Originality/valueThe study represents the foremost step and a unique effort in the area of development of hypothetical model (a hierarchal model) with the framework considered to prioritize the FP determinants in SMEs.