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Impact of Size and Other Factors on SMEs Performance: Evidence from the Czech Republic
Název práce v češtině: Dopad velikosti a ostatních charakteristik na výkonnost SMEs: případ České republiky
Název v anglickém jazyce: Impact of Size and Other Factors on SMEs Performance: Evidence from the Czech Republic
Akademický rok vypsání: 2016/2017
Typ práce: bakalářská práce
Jazyk práce: angličtina
Ústav: Institut ekonomických studií (23-IES)
Vedoucí / školitel: Mgr. Aleš Čornanič
Řešitel: skrytý - zadáno vedoucím/školitelem
Datum přihlášení: 13.06.2017
Datum zadání: 16.06.2017
Datum a čas obhajoby: 11.09.2018 09:00
Místo konání obhajoby: Opletalova - Opletalova 26, O105, Opletalova - místn. č. 105
Datum odevzdání elektronické podoby:21.06.2018
Datum proběhlé obhajoby: 11.09.2018
Oponenti: Mgr. Barbora Gregor, Ph.D.
Kontrola URKUND:
Seznam odborné literatury
Močnik, D., & Širec, K. (2015). Determinants Of A Fast-Growing Firm’s Profits: Empirical Evidence For Slovenia. Annals of the Alexandru Ioan Cuza University - Economics, 62(1).

Margaretha, F., & Supartika, N. (2016). Factors Affecting Profitability of Small Medium Enterprises (SMEs) Firm Listed in Indonesia Stock Exchange. Journal of Economics, Business and Management, 4(2), 132-137.

Goddard, J., Tavakoli, M., & Wilson, J. O. (2005). Determinants of profitability in European manufacturing and services: evidence from a dynamic panel model. Applied Financial Economics, 15(18), 1269-1282.

Pattitoni, P., Petracci, B., & Spisni, M. (2014). Determinants of profitability in the EU-15 area. Applied Financial Economics, 24(11), 763-775.

Niresh, J. A., & Velnampy, T. (2014). Firm Size and Profitability: A Study of Listed Manufacturing Firms. International Journal of Business and Management, 9(4)

Serrasqueiro, Z. S., & Nunes, P. M. (2008). Performance and size: empirical evidence from Portuguese SMEs. Small Business Economics, 31(2), 195-217.

Abbasi, A., & Malik, Q. A. (2015). Firms’ Size Moderating Financial Performance in Growing Firms: An Empirical Evidence from Pakistan. International Journal of Economics and Financial Issues, 5(2), 334-339.

Sivathaasan, N., Tharanika, R., Sinthuja, M., & Hanitha, V. (2013). Factors determining Profitability: A Study of Selected Manufacturing Companies listed on Colombo Stock Exchange in Sri Lanka. European Journal of Business and Management, 5(27), 99-107.

Pervan, M., & Višić, J. (2012). Influence of Firm Size on Its Business Success. Croatian Operational Research Review (CRORR), 3, 213-223.
Předběžná náplň práce
Research question and motivation:

Firm performance has attracted attention of many researchers in recent years and there exist many studies examining it in many different ways. Related existing literature suggests that firm performance is affected by internal factors (firm related) and external factors (market related). As small and medium-sized enterprises (SMEs) are a very important part of economy, the main subject of my thesis is to examine determinants of SMEs performance in the Czech Republic.
The main factors determining whether an enterprise is an SME are number of employees and turnover or balance sheet total. A business is considered a SME if it employs fewer than 250 people and it has an annual turnover lower than 50 million euros (its balance sheet total cannot exceed 43 million euros). So I will be primarily interested in examining the effect of firm size on its performance.

Accounting earnings scaled by assets and cash flow from operations will be used as measures of firm performance. As mentioned above, I will primarily focus on impact of size. The size of firm will be measured by total assets, number of employees and sales. In order to control for firm specifics I will include additional internal factors. Previous research of SMEs was also focused on SMEs and capital structure, which will be one of the other factors I will examine. With respect to related literature, the other internal factors except of capital structure I would like to add into the model are for example age, productivity, growth rate. On the other hand, I will include some market factors (external factors) like industry fixed effects, GDP growth etc. In addition, Pattitoni, Petracci and Spisni (2014) used for example nominal GDP or annual inflation.


H1: There is a negative relationship between size of SMEs and its performance.

Current evidences of the relationship between size of SMEs and its performance are mixed. Močnik and Širec (2015) stated that there is a negative relationship between size and firm performance. On the other hand Margaretha and Supartika (2016) found a positive link between size of a firm and its performance. Some studies also say that there is no significant relationship between size and firm performance. I expect that our firms have strong market growth orientation, so they are oriented towards market growth rather than profits.

H2: There is a positive relationship between capital structure of SMEs and its performance.

Sivathaasan, Tharanika, Sinthuja and Hanitha (2013) found the empirical evidence of positive relationship between capital structure of SME and its performance. I believe that more profitable companies have a tendency to use relatively high debt in their capital structure.


The main contribution of this bachelor thesis would be a new perspective on the determinants of firm performance. Most of the previous studies were focused on macroeconomics factors as inflation or GDP (e.g. Kung’U (2011) and Murungi (2013)), but there is a lack of studies examining the effect of internal factors on SMEs performance.

Existing studies analysing the impact of size and factors connected to it on firm performance have already been made, but provide mixed evidence. Therefore, more research is needed in this area, because understanding the determinants of performance is really important for developing an effective performance strategy, so this thesis could be useful for managers for improving their firm’s strategy.

Another contribution of this thesis would be using also cash flow from operations as a performance measure, which aims to reduce the impact of tax management. Companies want to optimize taxes, which could show on performance measured by earnings, but in case of cash flow of operations optimization is more difficult.


Data will be collected for only Czech firms from databases EMIS (https://www-emis-com.ezproxy.is.cuni.cz) and Magnus Web (www.magnusweb.cz) and additional information about firm characteristics will be obtained from annual reports. The bachelor thesis will use econometrics methods for analysis.


1) Introduction
2) Literature Review
3) Data and methodology
4) Analysis
5) Conclusion
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