Profitability Of SMEs Research Articles

Digital Transformation as a Catalyst for SMEs Productivity and Profitability in the Digital Era

Digital Transformation as a Catalyst for SMEs Productivity and Profitability in the Digital Era

Can ICT be Driving Force behind the Acceleration of Small and Medium Enterprise Profitability: Evidence from Nepal

Background: SMEs are critical to a country's economic development; researchers are increasingly focusing on their adoption and use of information and communication technology. Previous research has revealed that the contribution of ICT to SMEs performance and profitability is not clear or certain. Objective: This study examines the adoption among SMEs in terms of the advanced stage from technology adoption to post-adoption. The mediating impact of performance on profitability is also being investigated. Method: The exploratory research design was chosen as the primary study model in order to find reality. To examine the data quantitatively, descriptive and inferential statistics were used. A convenience sampling with a sample size of 201 SMEs were chosen for the study based on practical experience and adequate ICT knowledge. Result: The study found that ICT usage and profit have a significant link. However, the performance of SMEs does not play a role in moderating the relationship between ICT usage and profitability because our study finds degree of utilization ICT usage doesn’t play any significant role in performance. Conclusion: ICT is still a new concept in SMEs that deserves to be given more attention. Employees and organizations must use ICT, technology system integration, and finally implementation across all functional areas to increase the profitability of SMEs. This study recommends that government should initiate ICT awareness programs in SMEs, provide subsidies and grants for ICT adaptation and use, education sectors should focus on technology skill manpower, and ICT should be used and integrated across all functional areas of SMEs to increase profit. Paper Type: Research Paper Key words: ICT, Small Medium Enterprise, Profitability, Performance JEL Classification: M41, M15, C88, D91, N95, C38

Supply Chain Finance and profitability of SMEs in China: the moderating and mediating effect of finance constraint and the moderating effect of risk management

This study investigates the influence of SCF on the profitability of SMEs in China, considering the mediating role of financial constraints and the moderating effects of financial constraints and risk management. Through a comprehensive analysis of 86 SMEs, employing multiple regression models and SEM, the research establishes a significant positive relationship between SCF utilization and SME profitability, as measured by ROA. The findings reveal that financial constraints mediate this relationship, suggesting that SCF alleviates financial pressures, thereby enhancing profitability. Additionally, the study demonstrates that both the degree of financial constraints and the capability for risk management exert moderating effects on the SCF-ROA link, indicating that the benefits of SCF are more pronounced under greater financial challenges and with stronger risk management practices. The constructed SEM model validates all hypotheses, illustrating that SCF positively impacts profitability through direct effects and by reducing financial constraints. The model fit indices confirm the high level of model fit, supporting the theoretical and practical implications of the study. The research contributes to the literature by enriching theories related to supply chain finance, SME development, financial constraints, and risk management. It also provides actionable insights for Chinese SMEs in optimizing financing strategies and risk management, and offers a basis for policymakers to improve support policies. The study acknowledges limitations in sample size and scope, suggesting avenues for future research to expand the sample and explore non-financial factors affecting the effectiveness of SCF.

Production costs and their effect on the profitability of the SMES in Latin America

Background The micro, small and medium-sized enterprises (SMEs) play a pivotal role in the Latin America economy, creating jobs, boosting local economic activity and contribute to the socio-economic development of the region. The purpose is to reflect on the current costs management prices, the common challenges faced by SMEs in the region, and effective strategies to improve the profitability and sustainability of these companies. Methods it is addressed as a review study of type reflective, which used the dialectic as a method for the construction of the speech, based on techniques of triangulation of information. Result in order to obtain the results, these study topics were pre-selected: (a) determinants of the costs of production in the SMES, b) strategies for the reduction and control of production costs, and c) impact of production costs on the profitability of SMES. Conclusion the present research article delves into the pivotal factors influencing production costs within microenterprises and small businesses situated in the Latin American context. This study posits that the determinants underpinning these costs encompass a spectrum of elements including but not limited to labor, raw materials and supplies, energy and utilities, infrastructure and logistics, regulatory frameworks, and administrative intricacies. Furthermore, the intricate interplay of technology adoption and innovative capabilities is also recognized as a crucial facet in this cost determination paradigm. The overarching understanding underscores the direct and substantial influence of these multifaceted determinants on the operational expenditure of microenterprises and small businesses.

Capital Rationing and SMEs Profitability in Nigeria

Capital Rationing and SMEs Profitability in Nigeria

Pengaruh Transformasi Digital Pada Produktivitas Dan Profibilitas Perusahaan Kecil dan Menengah (UKM)

This study aims to analyze the effect of digital transformation on productivity and profitability of SMEs in the trading sector in Surabaya City. Data were collected through a survey involving 50 SMEs that have adopted digital technology. The results show that the use of digital technologies, including e-commerce, inventory management systems, and online payments, significantly improves the operational efficiency and profitability of SMEs. Most SMEs reported increased sales and profit margins after adopting digital technologies. However, lack of technological know-how and budget constraints are the main challenges in the digital transformation process. Therefore, support from the government and relevant institutions is needed to provide training and financial assistance to encourage wider adoption of digital technologies. This research provides an in-depth insight into the benefits and challenges of digital transformation for SMEs in Surabaya, and provides recommendations to accelerate the adoption of digital technology among SMEs

ESTRATÉGIA EMPRESARIAL E INOVAÇÃO DE PRODUTOS NAS PMES: O PAPEL MEDIADOR DAS REDES EMPRESARIAIS

ABSTRACT Product innovation is essential for the growth and profitability of SMEs. Existing scientific evidence suggests that firm strategy and participation in business networks could influence this innovation. In turn, participation in networks might influence the configuration and allocation of the organizational resources and capabilities that help shape firm strategy. Hence, this study analyzes business networks as a mediator between firm strategy and product innovation in SMEs. It uses a sample of 205 SMEs from Costa Rica compiled by the Global Competitiveness Project. The proposed mediation is tested using OLS regression equations. The findings show that business networks do indeed play a mediating role in the relationship between firm strategy and product innovation, which has implications for SMEs in terms of the relevance of participating in such networks and also for public policymakers regarding the importance of managing them.

Profitability, effectiveness, operational efficiency, and market growth of SMEs in Albania after piloting data analytics

Profitability, effectiveness, operational efficiency, and market growth of SMEs in Albania after piloting data analytics

Overcoming the Liability of Newness: The Interplay of Debt, Equity, and Profitability in Nascent SMEs

Overcoming the Liability of Newness: The Interplay of Debt, Equity, and Profitability in Nascent SMEs

Profitability, effectiveness, operational efficiency, and market growth of SMEs in Albania after piloting data analytics

Profitability, effectiveness, operational efficiency, and market growth of SMEs in Albania after piloting data analytics

The Significance of Microfinance Establishments on The Growth of Small to Medium Enterprises in Zimbabwe

The study was conducted in the Midlands province of Zimbabwe, focusing on four towns: Kadoma, Kwekwe, Gweru, and Zvishavane. The study examines the establishment of microfinance institutions, which results in the growth of small to medium enterprises. Many SMEs in the Midlands province are finding it difficult to grow their business due to a lack of capital and the ability to access bank loans. The study aimed to determine the significance of microfinance establishments on the growth of small- to medium-sized enterprises in Zimbabwe. A descriptive research design was adopted. The study's sample size was 94 SME owners specialising in agriculture, mining, vending, groceries, beauty salons, auto repairs, transport services, and fast foods in the Midlands province. Data was analysed using Pearson correlation and simple linear regression. The study results showed a strong positive relationship between microfinance loans and Small to Medium Enterprise sales growth, as evidenced by a correlation coefficient 0.989. The results showed that microfinance loans positively affect the profitability of SMEs. The study also found that access to finance, competition, hyperinflation, and high taxes are the challenges affecting SMEs' firm size. The study shows several ways which can be done to improve the growth of SMEs, such as the extension of loan repayment tenure, review of lending policies, and lending SMEs higher packages for accomplishing their projects. The government should implement policies that find ways to reduce inflation, lower tax charges on SMEs, and draft policies that promote the development of SMEs in the country.

Impact of customer-centric marketing on FMCG supply chain efficiency and SME profitability

Impact of customer-centric marketing on FMCG supply chain efficiency and SME profitability

A Review of the Effect of Microfinance Services on the Profitability of SMES in Kenya

Small and medium-scale enterprises (SMEs) are entities of utmost importance in the economic development of a country, as they not only generate job opportunities but also provide goods and services to meet basic human needs. Microfinance institutions (MFIs) are purveyors of financial services such as microcredit, micro savings, and microinsurance, which empower low-income individuals and SMEs to achieve their financial goals. The present study delves into the effects of these microfinance services on the profitability of SMEs in Kenya. The existing empirical literature has shown a significant positive correlation between the utilization of microfinance services and the profitability of SMEs. However, it is imperative to note that gaps exist, including the dearth of localized studies focusing on SMEs in Kenya and the need for more robust methodologies to establish causal relationships. To conclude, SMEs in Kenya can undoubtedly benefit from microfinance services to enhance their profitability. Although existing literature provides valuable insights into this relationship, further research is warranted to address methodological limitations and contextual factors specific to the Kenyan SME landscape.

Entrepreneurial Competence and Small and medium enterprises’ Profitability: A Case of sunflower oil processing enterprises in Tanzania

Determine the influence of entrepreneurial competence on SMEs’ profitability focusing on personal, interpersonal and business competencies on SMEs’ profitability. A cross-sectional research design whereby data were collected at once from 102 randomly selected sunflower oil processing firms in Dodoma region in Tanzania. Structured questionnaires were used to collect data. The study’s findings reveal that personal, interpersonal and business competencies had a positive significant influence on the profitability of SMEs (p<0.05). Integration of personal, interpersonal, and business competence influences profitability of sunflower processing firms. Involvements of personal, interpersonal, and business competencies influence the profitability of SMEs (sunflower processing firms).

Accounting outsourcing and its relationship with financial performance of SMEs: Manager and employee perspectives

There is a gap in the literature related to understanding the relationship between outsourcing of accounting functions and financial performance (productivity and cost efficiency) of SMEs. This study examines the relationship between accounting outsourcing and financial performance in terms of cost efficiency and profitability in SMEs operating in Greater Sydney, Australia. An online survey of employees and managers (N = 80) of Australian SMEs using snowball sampling assessed the demographics, accounting outsourcing, organisational profitability, and cost-effectiveness of these SMEs. Data were analysed using linear regression and correlation analyses. The empirical analysis revealed that the outsourcing of tax services was related to a better financial performance of SMEs in terms of both cost efficiency and profitability. The outsourcing of management accounting functions was beneficial to the productivity of SMEs, whereas the outsourcing of general accounting was not related to higher productivity. Collectively, the findings of this study will assist SMEs in identifying resource gaps and the reasons for turning to external accountancy services to close the gaps and improve their financial performance.

The Impact of Working Capital Management on Profitability of Egyptian SMEs in Egypt

Small and medium-sized businesses contribute significantly to the economic development of any nation and endeavor to enhance the business climate. One of the main areas that affects these small and medium enterprises and their profitability and sustainability in the market is working capital management. The goal of this paper is to analyze the relationship between working capital management and SMEs’ profitability in the Egyptian context. To achieve this goal, this article uses the annual reports of 576 SMEs for the time period 2018 to 2021 as this time period is a rich period that includes many events such as the pandemic of COVID-19 and the economic reform programs undertaken by the Egyptian government. The results of this paper show that there is a significant negative relationship between working capital management as measured by the cash conversion cycle and profitability as measured by ROA and ROE, the paper also select firm size and firm industry as control variables. Given the focus of the Egyptian government on SMEs and their sustainability, the results of this paper can be beneficial for decision makers, banks and investors on how working capital management can significantly affect the financial performance of SMEs in Egypt.

Determinants of SME profitability in the service sector: An empirical investigation from Poland

Determinants of SME profitability in the service sector: An empirical investigation from Poland

THE IMPACT OF WORKING CAPITAL MANAGEMENT ON SME PROFITABILITY – EVIDENCE FROM KOSOVO

The study attempts to show the impact of working capital management on the profitability of ninety-eight Kosovo-based SMEs, primarily in the manufacturing and construction sectors. The data were obtained from the financial statements of these companies for the years 2010 through 2020, and the assumptions were verified using the Ordinary least square (OLS) method. To express SMEs profitability, return on assets (ROA) is taken as a dependent variable, while to express working capital management, independent variables are taken: the inventory turnover period (INTP), receivables collection period (TRCP), trade payable period (TPP), and cash conversion cycle (CCC). In addition, are taken four control variables (size of companies, current ratio, sustainable growth, and leverage), which are not a variable of interest in the study but could influence the outcomes. The results reveal that SMEs increase profitability by decreasing the cash INTP and increasing TRCP, TPP, and CCC. By analyzing the effect of working capital management on profitability in the context of SMEs in Kosovo, this research contributes new knowledge to the existing literature.

The Application of Efficency Improvement Methods in Manufacturing and Service Sectors Through Business Intelligence Systems – A Review

The paper presents the tools for improving efficiency, from its historical beginnings to modern business intelligence systems, furthermore includes good practices and case studies that illustrate both the potential and the benefits of lean methodology. We review the main characteristics of the lean methodology and the most basic components that can be applied by an organizational culture to improve processes. As the case studies show, these methodologies can contribute not only to optimising the operations of manufacturing firms, but also to improving different corporate cultures. The importance of the data analysis tools available through modern technology is also a key focus of the study, and these are increasingly being used in lean methodologies. These software tools are essential to help in collecting and analysing data generated by the application of efficiency improvement methods, as well as in plan-actual comparisons. The study emphasises the importance of continuous improvement of business processes, focusing on the synergies between modern technologies and proven efficiency improvement methodologies. The implementation of these methods is crucial for the operation and increasing the profitability of SMEs at the dawn of the 4th industrial revolution.

Financial Factors Contribution to SMEs’ Profitability

Micro, small, and medium enterprises play a very important role in driving the economy both nationally and internationally. The level of profitability is one indicator of the performance of SMEs. One of the factors that affect profitability is the financial factor. Therefore, this study attempts to analyze the contribution of financial factors (Own Capital, Loan Capital, Assets, Trade Credit, Production Costs, Sales, Average Wages, Taxes, and Lagged Profitability) to the profitability of SMEs. The population consists of all SMEs in the city of Malang. The sampling technique used an iteration formula and obtained a sample of 116 SMEs in Malang that received financing from Islamic financial institutions, banks, and non-banks. Questionnaires and observational interviews collected data. The data analysis technique used Multiple Linear Regression. The result of the determination test on this research model is 0.839 (84%). And based on the results of the partial test, of the nine independent variables in the study, only three variables have a significant positive effect on the profitability of SMEs, namely Own Capital, Loan Capital, and Lagged Profitability. And of the three variables that provide the largest contribution or influence on profitability is Own Capital.