An Integrative Sales Growth Model for Small Manufacturing Enterprises in Sri Lanka: Path Analysis Approach

Abstract

enterprises are increasingly playing an important role in Sri Lanka. However, little is known about the determinants of small enterprise growth in this context. The purpose of this study is to gain an understanding of the factors in different dimensions influencing small enterprise growth in Sri Lanka. Based on an analysis of data from 97 owner-managers of small manufacturing enterprises located in Colombo district, the researcher developed an integrative sales growth model that suggests how human capital, social capital, access to external resources and internal capabilities & business structure directly and/ or indirectly influence the sales growth of small enterprises. Results of path analysis suggested that three human capital variables namely: training with work experience in same field, technical and professional education and education with experience in government sector indirectly affect small enterprises sales growth through other intermediate variables. Three social capital variables namely: organizational network with network maintenance and resources sharing with SEs and supportive network with financial institutes have significant direct positive effect on sales growth. The direct and indirect effects of access to external resources variables on sales growth are not so strong. Only one variable in internal capabilities & business structure dimension, namely innovation and imitation has positive direct effects on sales growth.