Financial and Strategic Factors Associated with the Profitability and Growth of SME in Portugal

Journal article


Research Areas

No matching items found.

Publication Details

Author list: Silva, A., & Machado-Santos, C.
Publisher: Canadian Center of Science and Education (CCSE)
Publication year: 2012
Journal: International Journal of Economics and Finance (1916-971X)
Volume number: 4
Issue number: 3
Start page: 46
End page: 60
Number of pages: 15
ISSN: 1916-971X
Languages: English-Great Britain (EN-GB)


Drawing on literature from finance and strategic management, eight likely factors associated with the profitability
and growth of unquoted, small and medium-sized enterprises (SMEs) are identified and evaluated. These factors are:
leverage, liquidity, education, industry performance, low cost, differentiation, product focus and customer focus.
The sample comprises 134 unquoted SMEs aged five years or more, operating in different sectors throughout the
main districts of Portugal. Data are collected through face-to-face interviews and these are supplemented with
secondary sources. Twenty-one independent variables are identified and LISREL is used to produce measurement
equations relating the variables to factors. Hypotheses concerning the factors’ impact on profit and growth are tested
through structural equation modelling using LISREL. The results show that low debt, effective liquidity
management, operation in a profitable sector, differentiation, the avoidance of low cost and customer focus favour
SMEs’ profitability. For high growth, although effective liquidity management and differentiation remain as key
factors, they are joined by a product focus. These results carry a number of important implications for SME strategy
most notably that there may not be one set of strategies that maximise both profitability and growth.


Economics, Management, Portugal, SMEs


No matching items found.

Last updated on 2019-10-08 at 00:30