Impact of customer & competitor orientation and inter-functional coordination on SME’s performance.

Abstract

Small and Medium Enterprises (SMEs) play an important role in economic development and development in most developed countries. However, in most developing countries, the market and financial performance of SMEs are significantly undermined by many issues. One of the problems that impedes the performance of SMEs in Sri Lanka, especially at the eastern cost, is the lack of market orientation in most SMEs. This study examined the effect of market orientation on improving the performance of SMEs in Sri Lanka. Review of the literature suggested that market-oriented SMEs are generally characterized by customer orientation, competitor orientation, inter-functional coordination, long-term focus and profitability, and that these have positive impacts on the market and financial performance of SMEs. The study population consisted of 150 SMEs in the areas of manufacturing and services within the Eastern province of Sri Lanka selected based on the convenient sampling method. Data were analysed using SPSS. It was concluded that market orientation can significantly enhance SMEs performance. It was recommended that in addition to the over-emphasis placed on financing for SMEs by the governments and other stakeholders in Sri Lanka, emphasis should be shifted to promoting market orientation in SMEs for effective performance.