Factors influencing the growth of SMEs: The case of Ghana

• Published date: 01 July 2018
• Author: Guy Thompson Agyapong,Chima Mordi,Frederick Mmieh
• Date: 01 July 2018
• DOI: http://doi.org/10.1002/tie.21945

EMERGING MARKET PERSPECTIVES: AFRICA

Factors influencing the growth of SMEs: The case of Ghana

Guy Thompson Agyapong | Frederick Mmieh | Chima Mordi

Brunel University, London, England

Correspondence

Chima Mordi, Brunel University, Kingston

Lane, London, Uxbridge UB8 3PH.

Email: chima.mordi@brunel.ac.uk

This study examines the factors that affect the growth of small and medium-sized enterprises

(SMEs) in the context of Ghana, using entrepreneurs (or owner/managers) of SMEs as the unit

of analysis. The data draws on in-depth fieldwork undertaken for a period of three months

involving 75 owner-managers that were drawn from the three main sectors of the economy:

agriculture, manufacturing, and services. Thematic technique was employed to analyze audio-

taped interview transcripts. Findings show that several factors, including level of education,

poor energy supply, access to external finance, competition, inflation and government policies

influence the growth of SMEs in Ghana. The study recommends that sustained energy supply,

review of lending and borrowing regulations, favorable fiscal policies, measures to combat

unhealthy competition, provision of adequate training centers to equip entrepreneurs, and reg-

ulation on land acquisition should be government's priority to ensure consistent growth of

SMEs in Ghana.

KEYWORDS

Dating, Ireland, mothers, repartnering, romantic relationships, thematic analysis

1|INTRODUCTION

The increasing interest in the role of small and medium-sized enter-

prises (SMEs) in economic development across the globe particularly

in emerging markets suggest a need to recognize that entrepreneurial

activities do not take place in a vacuum. In fact, entrepreneurship is a

function of a combination of factors that contribute to the growth of

small andedium-sized enterprises (SMEs).

Prior studies have attached importance to sources of finance,

level of technical resources formal plans among others as influential

factors affecting the consistent growth of SMEs (Beck & Demirguc-

Kunt, 2006; Delmar & Shane, 2003; Lee, Kelly, Lee, & Lee, 2012;

Moreno & Casillas, 2007; North & Smallbone, 1995; Porter, 2001;

Sowa, Baah-Nuakoh, Tutu, & Osei, 1992). While research on entre-

preneurial activities has concentrated mainly on developed econo-

mies, far less attention has been devoted to the investigation of this

all-important subject in relation to emerging markets until recently

(Kshetri, 2011; Melvin & Boyes, 2013). Against this background, this

study examines, in addition to existing factors in the literature, other

factors such as cost and supply of energy, government policies, and

sustained inflation, which have scarcely been investigated in the con-

text of an emerging economy like Ghana. These factors invariably

influence the aggregate growth of entrepreneurial activities in SMEs

in the context of Ghana. This study again addresses the long-standing

imbalance in research, which concentrates mainly on larger firms in

spite of the dominance of SMEs in the economic activities in devel-

oping nations (Organization for Economic Cooperation and Develop-

ment [OECD], 2006).

According to the World Bank (2002) report, most SMEs in

sub-Saharan African (SSA) nations justifiably dominate the eco-

nomic activities of these countries, hence the rationale behind the

choice of Ghana for this study. Mmieh and Owusu-Frimpong

(2009) affirm that in 1983, Ghana embarked on a number of policy

interventions to engender the SME sector and ultimately aimed at

growing the Ghanai an economy. Conseq uentially, this sa w the dis-

tressed banks resurrect and evolve to an appreciable level. In spite

of the efforts to boost th e financial system to pr ovide finance to

the SME sector, the World Bank report contends that the small

business sector in eme rging economies is st ill at an embryonic

stage of development (World Bank, 1997). The World Bank study

also suggests that the sector unfortunately lacks financial support

to engender real development of SMEs in SSA. Again, as sug-

gested by Mmieh, Owusu-Frimpong, and Chima (2012), the

domestic economy incidentally continues to revolve around sub-

sistence levels, which constrain sustained economic growth of

SMEs in Ghana.

DOI: 10.1002/tie.21945

Thunderbird Int. Bus. Rev. 2018;60:549–563. wileyonlinelibrary.com/journal/tie © 2017 Wiley Periodicals, Inc. 549