Small business performance: business, strategy and owner‐manager characteristics

Abstract

Purpose: This paper aims to contribute to the understanding of the factors that influence small to medium‐sized enterprise (SME) performance and particularly, growth. Design/methodology/approach: This paper utilises an original data set of 360 SMEs employing 5‐249 people to run logit regression models of employment growth, turnover growth and profitability. The models include characteristics of the businesses, the owner‐managers and their strategies. Findings: The results suggest that size and age of enterprise dominate performance and are more important than strategy and the entrepreneurial characteristics of the owner. Having a business plan was also found to be important. Research limitations/implications: The results contribute to the development of theoretical and knowledge bases, as well as offering results that will be of interest to research and policy communities. The results are limited to a single survey, using cross‐sectional data. Practical implications: The findings have a bearing on business growth strategy for policy makers. The results suggest that policy measures that promote the take‐up of business plans and are targeted at younger, larger‐sized businesses may have the greatest impact in terms of helping to facilitate business growth. Originality/value: A novel feature of the models is the incorporation of entrepreneurial traits and whether there were any collaborative joint venture arrangements.