WHAT PERCEIVED SUCCESS FACTORS ARE IMPORTANT FOR SMALLL BUSINESS OWNERS IN A TRANSITION ECONOMY?

Abstract

This paper examines perceived Critical Success Factors (CSFs) affecting the success of small firms and their relationship with firm and managerial characteristics. The paper also seeks to investigate the interdependence relationship among the perceived CSFs themselves using data reduction techniques. The study tests the number of CSFs on small firm success using primary data that were collected through a questionnaire survey with 256 business start-ups randomly selected from business register kept at Kosovo Business Registration Agency. Principal component analysis (PCA) with Equamax rotation was used to reduce the data and categorize success factors into groups. The findings identified four groups of perceived CSFs affecting the success of business start-ups: (1) Characteristics of individual, social connections and reputation, (2) Management skills, social support and quality of product, (3) Market support, and (4) political involvement. Findings show that factors that are under control of the entrepreneur are more important compared to external environment owners/managers as well as for policy makers aimed at increasing performance of start-ups. Although the paper is based on Kosovo data the findings are applicable to most start-ups in transitional and challenging environments worldwide

Keywords

• Critical success factors, start-ups, Kosovo, performance, transition economies, factor analysis

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