Determining Factors of Smes’ Sales’ Performance —— Case of Togo

By using a cross-firms time-series data of 135 SMEs for the years 2009 and 2016, this paper has identified the determinants and has empirically investigated their impact on corporate performance in Togo. The sample was clustered on SMEs given that no previous studies have focused on this area of research. We have considered in our analysis two categories of determinants including internal and external factors to the SMEs so as to have room for targeted policy recommendations to both corporate managers and the government who administrates and regulates the business environment. To measure the influence of identified determinants on SMEs level of performance, we have first set up a conceptual framework adapted from the Balanced Scorecard model which originally provides a clear prescription as to what companies should measure in order to ‘balance’ their financial perspective. In the basic econometric model that follows, we have used SMEs annual sales, the dependent variable, as a proxy for performance. Results, following the regression –using random effects model – pointed out five variables with high significant impact on SMEs development. We found that in practice, firms with experienced top managers have direct impact on their annual sales. Similarly, banks loans to working capital, manufacturing as well as firms that use internet and sell whole or part of their products to foreign markets enjoy significant positive margin as compared with the rest. On the downside, taxation appeared as one of major obstacles that hamper SMEs growth. Following all above findings, we sensed that both managers, financial institutions and the government have equally high responsibilities to take. Internally, business starters and less experienced managers need to be trained. Programs designed for more interaction and knowledge sharing between managers can mean a way to make them more productive. Despite recent efforts, we argued that external factors including infrastructure, production facilities, tax schedules and the financial environment must feature high in government priority actions to implement.