SME Performance

SME Performance

Separating Myth from Reality

John Watson

The performance of Small and Medium-sized Enterprises (SMEs) has been a subject of continual interest to both researchers and practitioners. This enlightening book investigates the pitfalls which have affected the assessment of SME performance in much of the past research.

Chapter 11: Conclusions, Implications and Areas for Future Research

John Watson

Subjects: business and management, entrepreneurship, economics and finance, international accounting


INTRODUCTION When I agreed to write this book I had two primary motivations. First, was to summarize the key findings from the research I have been involved with over the past 20 years. Second, drawing on those findings and the work of other scholars, to try and dispel a number of myths that have been allowed to perpetuate in ‘the absence of good statistical evidence’ (Scott and Lewis 1984, p.49). Without such evidence, there is the risk that these myths will get ‘reported by the media, perpetuated by spokespeople for the industry and subsequently accepted by the wider public’ (Stanworth 1995, p.59). Further, policy decisions by governments and others with an interest in SMEs are likely to be suspect if they are based on such misperceptions. For instance, the assumed high risk of failure within the SME sector has been cited as justification for the high rates of return demanded from this sector by bankers and venture capitalists (Phillips and Kirchoff 1989). 11.1 SUMMARY OF KEY FINDINGS Having provided a brief introduction to the book in Part I (Chapter 1), Part II (Chapters 2 and 3) then focused on SME performance. Chapter 2 examined five definitions of failure that have been suggested or used by SME researchers. The definitions include: bankruptcy; discontinuance (sale or closure) of a business; business closure (that is, excluding businesses that are sold); termination of a business to prevent further losses; and failure to ‘make a go of it’. While each of these definitions might have...

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