Analysis of the uncertainty sources and SMEs’ performance

The objective of this paper is to explore uncertainty sources which influence SMEs performance. A framework of uncertainty sources from previous literature was tested against empirical data based on a hundred and two SMEs operating in clothing/textile and leather industry in Indonesia. The data was collected through survey. Structural Equation Modelling (SEM) was applied to test the theoretical framework against the empirical data. The results indicate that the framework receives reasonably support from the data. The study demonstrates that the uncertainty related to product specification seems to be the highest uncertainty perceived by SMEs. The structural model reveals that both the internal supply chain and external uncertainties significantly impact SMEs performance, whereas internal organization uncertainty gives a non-significant impact. By understanding uncertainty sources impacting SMEs performance, SMEs could identify the root causes and formulate appropriate strategies to minimize and mitigate uncertainties, rather than perform reactive interventions based on current conditions.