A study of factors leading to growth in small firms. An examination of factors that impact on growth of small manufacturing in least developed countries: The case of Ghana.

摘要

The focus of this study is to examine the factors that lead to growth inudsmall firms in a Least Developed Country (LDC). The research isudbased on the manufacturing sector in Ghana. The main objectives ofudthe research are to identify the key variables that lead to small firms'udgrowth and to ascertain the critical barriers that impede growth.udA research model which is developed out of an initial exploratoryudresearch and existing literature focuses on how the characteristics ofudthe owner/manager, the characteristics of the firm and the businessudstrategy variables interact to affect growth in employment. In additionudfactors that are perceived to have constrained the growth of the smalludfirms during the study period are ascertained and discussed.udTo properly test the hypotheses developed a face to face interviewudsurvey involving 122 owner/managers of small manufacturing firms isudconducted. This resulted in a range of variables that allowed for theudconstruction of a comprehensive multivariate model of small firmudgrowth.udA resulting regression model provides about 68 percent of theudexplanation for the growth of the small firms sampled. It also indicatesudthat the owner/manager characteristics variables offer the mostudpowerful explanation to small firm growth. We find that theudowner/manager's growth aspiration is the most influential factor inudachieving growth. The other owner/manager characteristics variablesudthat have positive influence on growth are level of education, priorudindustry experience and entrepreneurial family background.udOwner/managers with local experience and/or with other businessudinterests are less likely to achieve faster growth. Foreignudowned/managed firms grow faster.udYounger and smaller firms appear to grow faster. While firms withudmultiple ownerships tend to grow at a slower rate than firms owned andudmanaged by one person.udBusiness planning, marketing and export have positive and significantudimpacts on growth. Other business strategies such as innovations andudstaff training also have direct relationships with growth but notudsignificant. Some of the main constraining factors to growth are cost of borrowing,udlack of access to credit, high cost of inputs, lack of trust within theudbusiness community, high bureaucracy, late payments and lack ofudefficient support system. While the external environment playsudimportant role in small firm growth and development, the behaviours,udresponse and strategies pursued by individual owner/manager areudsignificant factors that determine the rate at which a firm will grow.