Key Success Factors of Small and Medium Scale Enterprises: A Ghanaian Perspective (original) (raw)

2020, The International Journal of Business & Management

Introduction Earlier research documented the role of Small and Medium Enterprises (SMEs) in a country's economy. Schröder and Rodermund (2006) stated that the performance of SMEs is related to the wealth of a nation and growth of economies. SMEs are simpler with centralized decision-making structures with short-term planning as opposed to larger firms (Rohde, 2004). The SME sector determines whether a nation is successful or not with regards to job creation (Wiese, 2014). SMEs play major roles in economic development in emerging countries (Kongolo, 2010). SMEs are of paramount importance all over the world in terms of job creation (Amoah-Mensah, 2013). Eventually, SME sector influences a nation's economic development. Amidst the significance of SMEs, they encounter a number of problems, which are caused by complex and interwoven factors. In Ghana, athird out of five SMEs fail in the first couple of months (Mensah,2004).Empirical studies show that major constraints to SMEs' expansion include the following: lack of access to finance, labour and management, low demand for output, technology, raw materials, infrastructure, marketing and business environment problems (Kayanula and Quartey, 2000). Given the significant role that SMEs play within the national economy as stated by (Nieman, 2006; Schröder and Rodermund, 2006; Wiese, 2014), it is important that the necessary policy attention is given to them to ensure that the sector overcomes the several challenges they are exposed to. Small enterprises are a major source of livelihood for most people in the developing world. Their ability to grow is however, undermined by credit constraints (Domeher et al., 2013). Research on SMEs in Ghana cuts across a wide spectrum, with some researchers for example (Mensah, 2004; Adomako-Ansah, 2012; Nkuah et al, 2013)investigating financing issues whilst others for example(Adom, 2015) have also looked at SMEs from the perspective of gender. Other researchers focused on growth and performance of SMEs for example (Alhassan et al., 2016). Admittedly there are some studies for example (Alimo, 2015) on key success and failure factors on SMEs. Empirical research provides evidence of how previous studies have focused on individual sectors such as construction, tourism and garment industry. The Ghana Banking Survey (GBS, 2016) identified that in Ghana, the services sector including restaurants, hotels, business and transport form the majority of SMEs. The industry part includes electricity, water and sewerage, mining, manufacturing and construction. The services sector remains the largest in terms of contribution to GDP with a GDP increase from (51.95%) in 2014 to (54.4%) in 2015; Industry (25.3%) and agriculture (20.3%) by year end 2015 (GBS, 2016). Generally, the GDP growth rate has fallen consistently from (9.3%) in 2012 to (3.9%) in 2015(GBS, 2016). Infrastructural and capital investment by government instead of consumption and the energy crisis saga resulted in a fall of GDP over the last few years (GBS, 2016).