An empirical investigation into the factors affecting the performance of SMEs in the retail sector in Windhoek, Namibia

Abstract

In developing countries, Small and medium enterprises (SMEs) play a crucial role in fostering socio-economic development. They create employment opportunities, empower communities and make positive contributions towards the gross domestic product. The survival of SMEs is therefore crucial in alleviating poverty and achieving sustainable development. This research aims to investigate the factors that affect the performance of SMEs in the retail sector in Namibia. The research will begin by highlighting the environment in which the SMEs operate currently as well as the state of doing business in Namibia. It was identified that the economic environment in which the SMEs operates its neither good nor bad, and this was supported by the prior studies in Namibia on contrary. Various studies on the factors that adversely affect SMEs performance were reviewed and the theoretical framework was derived from the findings of the studies. Hypotheses were drawn from the theoretical frameworkand each hypothesis was tested separate from other factors. The quantitative and qualitative methods where applied in the gathering of data. A 5 Likert scale was used in the questionnaires whereby conclusion where drawn based on the mean results and the weighting ranking method.Out of the 14 attributions examined, the study found out that resources and finance, external environment, competitions and corruption are the most factors that adversely affect the performance of SMEs in the Namibian retail sector. Guidance was also given on what should be done in order to reduce the risk of failing among the SMEs and also to increase the survival chances of the small and medium enterprises in the market. The study also highlights on the rubrics that could be used to measure the performance of SMEs in the Namibian retail sector. It is up to the SMEs to employ the measurement tool which best fit their business. The rubric would then be employed to establish and isolate the factors that affect the performance of SMEs in the retail sector. The research concluded by giving suggestion on what should be done to improve the performance of SMEs in a dynamic business environment.