Culture, Management Practices, and the Entrepreneurial Performance of Small and Medium Enterprises: Applications and Empirical Study in the Middle East

Abstract

The role of small- and medium-size enterprises (SMEs) in the Middle East is crucial in the economy and the labor market. Many studies were conducted on the success factors of small business, but they have not taken the entire cycle to explore the success of the enterprise beyond its launch and growth phase, into its longterm sustainability. The present paper proposes a theoretical framework on SME managerial practices then tests it empirically using data collected from 173 entities. The six factors were represented by independent variables and studied in relation with SME performance as the dependent variable in a linear regression analysis. The analysis showed that (1), (3), (4) and (6) were positively and significantly correlated with business performance, while (2) and (5) were found insignificant. The first four findings are consistent with preliminary results from the exploratory research phase. The finding that succession planning and equity in compensation are insignificant in relation to performance requires further research. However, this finding is partially explained in focus interviews that respondents expect successors to be selected on grounds that include several factors besides performance. Compensation is affected by job markets where professionals may accept pay levels below their merit and not necessarily reflecting internal equity.

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