MANAGEMENT’S PERCEPTION OF THE DETERMINANTS THAT INFLUENCE SMEs PERFORMANCE: EVIDENCE FROM KOSOVO

Abstract

Small and medium-sized enterprises (SMEs) are now unquestionable contributors to economic development on the one side and employment creation on the other. To promote sustained growth, SMEs must meet specific prerequisites, particularly the leadership structures of this segment. Therefore, this research aims to investigate and identify the determinants that affect SMEs performance. The research employs a qualitative technique, using questionnaires containing 52 questions. The study surveyed 336 SMEs owners or managers from March to April 2022. The Multinomial Logistic Regression (MLR) empirical technique explored the influence of education level, previous experience, training attendance, business plan, consultation services, and employees' insufficient competency in SMEs performance. The research has revealed that the level of education and consultancy services positively impact SMEs performance. In contrast, neglect of training and employees' insufficient competence harm SMEs performance. The study encourages SMEs owners and managers to take advantage of professional training opportunities and to invest in existing personnel through training to acquire acceptable competence, which will be reflected in management performance. From the perspective of the contribution, it provides the most recent evidence in the context of Kosovo's economy, employing the logistic regression analysis.

Examining the owners and manager's perceptions of the determinants that influence the effectiveness of SME: Evidence from Kosovo

“…This approach involves the examination of various financial indicators, such as fluctuations in sales over time, profitability metrics, production levels, liquidity levels, production costs, and other relevant factors (Anggadwita & Mustafid, 2014;Cicea, Popa, Marinescu, & Cătălina Ștefan, 2019;Zimon, 2018). The second group, which mostly promotes the qualitative approach, evaluates the effectiveness of SMEs by using a range of resources, including organizational effectiveness, management styles, education, work experience, training, marketing skills, management capacity, business plan, and some other factors Gopang, Nebhwani, Khatri, & Marri, 2017;Gupta, Guha, & Krishnaswami, 2013;S. Krasniqi et al, 2022;Kunoviku-Demiri, Tmava, & Durguti, 2021).…”

“…Other important research performed in recent years by Krasniqi et al (2020) investigating SMEs in Kosovo during the year 2020 through 536 questionnaires and the adaptation of Ordinary Least Square (OLS) has argued that the level of education, business plan, and prior experience has vital significant and positive effects on the context of Kosovo. In a similar context, Krasniqi et al (2022) investigated whether education and prior experience, training, and business plan, as well as certain other characteristics, influenced the effectiveness of SMEs in Kosovo by employing a binary approach through the multinomial regression model. This investigation's findings validate the conclusions from the apostrophized research and indicate that these two characteristics are particularly more important in measuring the effectiveness of SMEs.…”

“…However, it is important to highlight that many studies suggest using quantitative methods of measurement or evaluation, and there are numerous academicians who support this approach (Anggadwita & Mustafid, 2014;Ben Jabeur, 2017;Gupta & Batra, 2016;Valaskova, Tomas, Lucia, & Peter, 2018;Zimon, 2018). Conversely, the other group reinforces their results using a qualitative technique that examines characteristics like managers'/owners' perceptions, leadership styles, education, business strategy, R&D, and inventions (E. Durguti et al, 2020;Expósito & Sanchis-Llopis, 2019;Krasniqi et al, 2020;Krasniqi et al, 2022;Kunoviku-Demiri et al, 2021). As a result of this paradigm, our study is directed toward the qualitative approach as determined by the logistic model and the data we have collected.…”

“…The econometric paradigm applied in this research is derived from the model inspired by Durguti and Arifi (2021) and Krasniqi et al (2022). Therefore, as a consequence, relying on the equations explained previously and the approach utilized by other scholars, particularly as emphasized in the previous paragraph, the final equation before presenting the study's hypotheses is:…”

“…This contributes to three directions: increasing economic development, minimizing the unemployment rate, and attempting to promote a green economy. (Gancarczyk & Gancarczyk, 2018;Krasniqi, Jashari Goga, & Mehmeti, 2022;Muller et al, 2015). Even though, SMEs have the flexibility and adaptability to easily adapt or generate innovative products or services utilizing advanced technologies to overcome challenges that might have a serious influence (Alexander & Van Knippenberg, 2017;Pisani, Caldart, & Hopma, 2017;Wu, Lin, & Perng, 2022).…”