Small Business Critical Success/Failure Factors In Developing Economies: Some Evidences From Botswana

Abstract

Although the discovery of diamond has propelled Botswana from one of the poorest countries in 1966 to its current economic status as a middle-income country, the country still faces the problems of economic diversification, employment creation, income generation and distribution and poverty alleviation. Governmental and non- Governmental organizations have put many efforts on the development of small and medium Enterprises (SMEs) to diversify the economy away from mining, to create jobs, generate income and alleviate poverty. However, the pace of development of SMEs, after 30 years, is very slow. The small business failure rate is currently estimated to be over 80%. 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/Failure factors (PCSFs) affecting the development of SMEs by collecting primary data from 203 SMEs in 3 cities in the republic of Botswana through a questionnaire. Both descriptive and inferential statistics were employed to present the empirical data. The findings showed that ten PCSFs (human resources 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 operation period. Recommendations and implications for the policy and research are also forwarded.