EXAMINING THE ROLE OF FIRM SIZE IN COMMITMENT - SMALL FIRM PERFORMANCE RELATIONSHIP AMONG SOUTHEAST EUROPEAN SMES

Abstract

Studies on the effect of the firm size and commitment on small firm performance indicators are inconclusive, especially in the geographic area of Southeast Europe. This study examines the role of firm size in the relationship between commitment and firm sales growth, operating profit and market share. Alterations in firm size and commitment are attributed to differences in market structures, namely, non-European union and European union member states. Results of the empirical research state that firm size and commitment have a positive and significant effect on performance indicators (sales growth rate, operating profit, and market share). Separating firms that originate from the European union member states from those that do not, suggested that firms that are not part of the European union rely on commitment more firmly than those that from the European union member states. Moreover, firm size moderates the relationship between commitment and firm performance indicators only in the non-European union countries. Larger firm size indicates a smaller effect of the commitment on firm performance for firms from the non-European union countries. The study concludes with limitations and practical implications of the empirical research.