What Factors Determine SMEs Business Success? A Case Study in Riau Province

Abstract

Small and Medium Enterprises (SMEs) play an important and strategic role in economic development. In Indonesia's economy, SMEs are the largest business group in number. Although the number of the SMEs initiators keeps growing exponentially, in the reality, it is not easy to develop those SMEs. Hence, this research is aimed at figuring out a solution to make SMEs successful in the business, so that the growth and the development keep increasing. The research was done by taking 227 SMEs in Riau Province as the sample. The data collection was done through observations, interviews, and questionnaires. The data were analyzed by using path analysis. The results show that the technology innovation rate, leadership style, and family involvement have a significant influence on the business success either in a direct or indirect way of the business capability. To attain business success, an SME entrepreneur should establish some innovations, exhibit an effective leadership style, improve family involvement in a positive way, and improve business ability, both financial and production capabilities.