Critical success factors of small and medium-sized enterprises in Palestine

Abstract

Purpose The purpose of this paper is to investigate the success of small and medium enterprises (SMEs) in Palestine, and thus to contribute to the existing knowledge on the critical success factors (CSFs) of SMEs in the Palestinian context, especially in the West Bank. Design/methodology/approach The study is comprised a survey of a convenience sample of 370 SMEs operating in the West Bank, Palestine. It uses a multiple regression analysis to examine the effect of a set of CSFs, namely, reputation of the brand, excellence of customer services, reliable delivery and product innovation on the success of SMEs. Findings The results show that brand reputation, excellence of customer of services and reliable delivery strongly influence SME success, while innovation is weakly associated with SME success. These results imply that success is tied to customers and competition more than to production, structures or finance. That is, reputable brands, excellent customer service and reliable delivery are means to success according to the results of this research. Practical implications The study emphasizes the need for Palestinian SMEs to maintain and develop their brand reputation, institutionalize customer service and develop its logistical systems and practices. Generally, the study suggests that there are specific investment areas for SMEs that can contribute to achieving success. Specifically, excellence in customer service was found to be the factor most linked to the success of SMEs, followed by reliable delivery and then by brand reputation and innovation. Originality/value While plenty of research has been done on what contributes to the failure or success of SMEs, research on CSFs for SMEs is limited. The study combines four CSFs not previously used in combination to model the successful performance of SMEs in general and in the Palestinian context in particular. Only some specific factors are critical to the success of SMEs and should be the focal point of SMEs’ efforts as long as they are consistent with their nature as small economic entities competing with big companies in small markets. Thus, instead of using general factors of SME success, the study explains how success becomes more possible through specifying areas for decision-making or activities for the entrepreneurs to undertake, keeping in mind that there is a mechanism by which these factors work together toward the success of the SME.