The Model of Sustainable Performance of Small and Medium-sized Enterprise

Abstract

An enterprise as a core of any economic system has a great impact on sustainable development of a state or region. Small and medium-sized enterprises (SMEs) are socially and economically important for their national economies, since they represent about 99 per cent of all active enterprises in the European Union. The importance of SMEs to the EU economy indicates the need to assess their performance in order to find appropriate performance measurement and management tools. These issues become very topical during the period of global economic recession.

Making profit is most often mentioned as an integral goal of any enterprise. However, it should be emphasized that profit is the result of a comprehensive process of the creation of added value. This process can be managed by using a system approach. It means that the value maximization opportunities depend on harmonious and purposeful interactions between enterprise separate processes or functional units.

Development of any enterprise is related to the future opportunities, risks and uncertainty. Therefore, profit making ability of an enterprise depends on managers’ skills to apply modern business management methods and tools. The more mature are the business activities, the higher is the probability of an enterprise to face failure. Long-term existence of an enterprise depends on its ability to utilize resources efficiently and to create profit, taking into consideration the influence of business environment and its related factors. While measuring the performance of an enterprise, the company’s life cycle concept should be considered as well.

The problems within an enterprise arise from improper activities, incompetence or even negligence. Performance measurement system can significantly influence and support SMEs’ organizational development. Effectiveness and efficiency shall be manifested in all business processes of an enterprise. Performance evaluation should be based on the criteria associated to the field of activities of a particular enterprise and particular manufacturing technology. The system should be comprised of measures, related not only to operations, but also to organization and management of the enterprise.

The goal of the research is, studying the performance of SMEs and the factors affecting performance achieving, to propose performance measurement concept encouraging the sustainable development of SMEs and to suggest performance evaluation approach.

http://dx.doi.org/10.5755/j01.ee.22.5.968