The Moderating Effect of Location on Small Firm Performance: Empirical Evidence

Abstract

The global interest on entrepreneurship and small business development as a means of economic sustainabilityand growth through emphasis on location has not been commonly utilized and openly declared. However, theinconsistent results on the relationship between entrepreneurial factors and firm performance have led theauthors to propose a contingency model in which the effects of individual determinants, external factors and firmcharacteristics on firm performance are moderated by location. A cross-sectional study of questionnaire surveyresearch design was conducted and data was generated from 182 entrepreneurs or owner-managers of smallfirms in both manufacturing and service industries. The questionnaires were distributed through drop-off andpick procedure of data collection. The findings indicate that location strongly moderate the relationship betweenboth external factors and firm characteristics with firm performance. However, it is found that location factordoes not moderate the relationship between individual determinant and small firm performance.