PERFORMANCE EFFECTS OF COMMERCIAL DEPENDENCY FOR MANUFACTURING SMEs

Louis Raymond and Josée St-Pierre ()
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Louis Raymond: UQTR - Université du Québec à Trois-Rivières
Josée St-Pierre: INRPME - Institut de recherche sur les PME - UQTR - Université du Québec à Trois-Rivières, UQTR - Université du Québec à Trois-Rivières

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Abstract: The commercial dependency of manufacturing SMEs upon certain important customers or the absence of diversification in their customer base can have significant impacts upon the productivity and profitability of these organizations. Through an empirical study of 210 Canadian SMEs, it was found that more commercially dependent firms have higher manufacturing costs but lower sales and administrative costs as a percent of sales. These firms also have a lower return on investment and are perceived by their chief executive to be less profitable. In effect, commercial dependency renders manufacturing SMEs more vulnerable and increases their business risk.

Date: 2002-04-17
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Published in National Meeting of the Academy of Business Administration, Apr 2002, Key West, Florida, United States

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01701620

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