Small business critical success/failure factors in developing countries: some evidences from Botswana

Abstract

Although the discovery of diamonds has propelled Botswana from one of poorest countries in 1966 to its current economic status as a middle-income country, the country still face the problem of economic diversification, employment creation, income generation and distribution, and poverty alleviation. Governmental and non-governmental organisations have put many efforts on the developments of small and medium enterprises (SMEs)to diversify away the economy from mining, to create jobs, generate income and alleviate poverty. However, the pace of development of SMEs, after 30 years, is slow. The small business failure rate is currently estimated to be over 80 percent. There is a general consensus among policy makers, politicians, and researchers in Botswana that this trend should not be allowed to continue indefinitely. The purpose of this paper is to investigate the perceived critical success/factors (PCSFSs) affecting the development of SMEs by collecting primary data from 203 SMEs in 3 cities in the Republic of Botswana through questionnaire. Both descriptive and inferential statistics were employed to present the empirical data. The findings showed that ten PCSFs (human resource development, organizational development, managerial background, managerial leadership and competitive strategy) affect the performance of SMEs. The PCSFs are strongly related among themselves, indicating the need for a holistic and systematic approach in addressing them. Important relationships were also found between the PCSFs and firm-specific demographic variables such as ownership status, experience and operating period. Recommendations and implications for policy and research are also forwarded.