Measuring Small and Medium Enterprises Growth

Measuring SMEs’ Growth Generally, the term “business growth” is used to refer to various things, such as increase in total sales volume, increase in production capacity, increase in employment, increase in production volume, increase in the use of raw material and power.

These factors indicate growth, but do not provide a specific meaning of growth. Business growth is typically defined and measured using absolute or relative changes in sales, assets, employment, productivity, profits, and profit margins. Delmar, Davidson, and Gartner (2003) posited that various scholars use growth indicators such as assets, market share, physical output and profits to measure business performance.

In the last decade or so, different authors argue that SMEs differ from larger enterprises, because they do have dissimilar growth possibilities. They intimated that large firms witness expansion during recessions and recoveries, while SME’s often seems to grow in booms.

According to Huynh and Petrunia (2010), firms with a growth objective tend to have higher debt levels than firms that have lower growth inclination. The desire for business growth is the only medium through which SMEs can become larger organizations; business growth is closely linked to employment creation (Davidsson, Achtenhagen & Naldi, 2010). With regards to the factors influencing SME growth, Levratto, Tessier and Zouikri (2010) identified factors such as the firm’s resources, human capital (age, experience), environmental and market characteristics as key influences on SME growth.


Conceptual Framework for Small & Medium Enterprises Business Growth