The internal predictors of business performance in small firms: A logistic regression analysis

Abstract

Purpose

In order to provide a deeper understanding of small business performance the study aims to analyse data from a national survey into small firms in the events sector.

Design/methodology/approach

The analysis used logistic regression to determine a model which best predicts the performance of these firms. The data used were part of a larger scale and previously published survey into the business activities of small events firms in the UK. The resulting model identifies those organisational variables which greatly influence performance as well as identifying the business activities which have little or no effect on performance.

Findings

The greater influencing factors were found to be related to the age of the business, the variety of promotional methods used and the sources of finance employed. The more significant factors appeared to be those of a shorter term more operational nature whereas those factors having little effect were those that related more closely to areas of strategic planning.

Practical implications

The findings suggest that small firms in the event sector are likely to perform better if they use a variety of promotional methods, make use of quality tools, and use grants rather than family and friends for funding. The use of marketing planning and research and investment in training is unlikely to improve performance, although this may be only in the short term.

Originality/value

The paper highlights the areas of business operations which can significantly affect performance and is, therefore, of practical use for smaller firms operating in this industry. The analysis also uncovers aspects where further research is required if a more comprehensive understanding of small firm performance determinants is to be gained.

Citation

Wood, E.H. (2006), "The internal predictors of business performance in small firms: A logistic regression analysis", Journal of Small Business and Enterprise Development, Vol. 13 No. 3, pp. 441-453. https://doi.org/10.1108/14626000610680299