Drivers of SME performance: a holistic and multivariate approach

Abstract

To examine the drivers of small-and medium-sized enterprise (SME) growth, we adopt a holistic multivariate modelling approach, integrating macroeconomic determinants with the internal (firm characteristics and firm strategy) drivers more commonly investigated in firm growth studies. Utilising such an extended set of variables addresses a gap in the extant firm growth literature in relation to external growth factors, offering novel insights on the seeming randomness of firm growth. Our system generalised method of moments estimation results indicate that the macroeconomic environment influences firm growth both directly and indirectly. Based on the study of manufacturing SME growth in Ireland, our findings provide evidence on the integrated effects of macroeconomic conditions, firm characteristics and firm strategy for SME growth. They also highlight, from a theoretical perspective, the need to acknowledge the multidimensional nature of SME growth.

Firm employment growth in China: The role of marketization and regional economic factors

“…This work provides new evidence on the fact that differences across regions are crucial determinants of firms’ performance and growth (as suggested by Barbosa & Eiriz, ; Ipinnaiye, Dineen, et al, ; Ipinnaiye, Lenihan, et al, , for other countries), and particularly so in countries, such as China, experiencing structural changes and moving towards a market economy. Indeed, the Chinese regions where the institutional and economic environments are more advanced appear also characterized by firms whose employment grows faster, even controlling for the individual firms differences.…”

“…This work provides new evidence on the fact that differences across regions are crucial determinants of firms' performance and growth (as suggested by Barbosa & Eiriz, 2011;Ipinnaiye, Dineen, et al, 2017; regions where the institutional and economic environments are more advanced appear also characterized by firms whose employment grows faster, even controlling for the individual firms differences. From a policy perspective, these findings imply that reforms and policy interventions designed to enhance regional investment and improve the degree of marketization tend to produce higher employment growth in the incumbent firms, besides fostering greater economic dynamism.…”

“…Exploiting the variation across Portuguese regions, Barbosa and Eiriz (2011) find evidence that region-specific characteristics (e.g., industrial diversity, entrepreneurship potential and workforce qualities) impact remarkably on the way individual firms grow. More recently, Ipinnaiye, Lenihan, and Doran (2017) explore the role of regional market conditions, innovation and human capital to account for heterogeneity in firm growth in Ireland, whereas Ipinnaiye, Dineen, and Lenihan (2017) investigate the impact of macroeconomic conditions (such as unemployment, inflation, real effective exchange rate and credit conditions) on small and medium-sized enterprise growth. 4 Looking more closely to the case of China, numerous empirical works have studied the underlying determinants of the heterogeneous growth across regions in the post-reform era.…”

Determinants of SMEs’ performance: evidence from European countries

“…Thus, Ipinnaiye, Dineen, and Lenihan (2016) consider that both SMEs' performance determinants originated in their internal environment (company characteristics and strategy) as well as macroeconomic determinants (unemployment rate [UR], inflation rate, national competitiveness, real effective exchange rate, and domestic credit to the private sector). Gupta and Batra (2016) analysing survey data collected from 198 manufacturing Indian SMEs found a strong positive relationship between entrepreneurial orientation (EO) and firm performance, while environmental contingencies (demand growth and competitive intensity) were found to have a moderating influence on the EO-performance relationship.…”

Optimising SME Potential in Modern Healthcare Systems: Challenges, Opportunities and Policy Recommendations

“…A recent study estimates that a 1% increase in R&D spending can grow the economy by 0.61% [23]. Whilst innovation constantly re-shapes the global economy, new markets emerge -as illustrated by the eco-innovation market, for instance, which amounts to EUR 225 billion [24].…”