FINANCIAL PLANNING AND DECISION MAKING AS PREDICTORS OF FINANCIAL PERFORMANCE IN MSMES

Authors

DOI:

https://doi.org/10.26668/businessreview/2024.v9i3.4431

Keywords:

Financial Planning, Decision Making, Financial Performance, MSMEs

Abstract

Purpose: the present study demonstrates that the combination of financial planning and decision making jointly contribute as predictors of efficient financial performance, permeating into MSMEs’ market sustainability.

 

Theoretical Framework: Micro, small and medium enterprises (MSMEs) currently have a relevant role in gross domestic product and direct job creation in Latin American countries. The literature shows that financial planning is a highly valuable tool for large businesses, facilitating decision making and creating positive impacts on financial performance. However, these studies are centered on businesses classified as large, excluding MSMEs. Recent studies have approached financial planning, decision making, and financial performance in MSMEs on an individualized basis.

 

Methodology: The study carried out was quantitative, non-experimental, correlation, cross-sectional, and explanatory. A total of 308 MSMEs participated, obtained from the National Geography and Statistics Institute (INEGI, 2019), of which 34.41% were industrial, 32.14% commercial, and 33.41% from the service sector. Normal distribution tests were done (Kolmogorov-Smirnov tests), along with symmetry and kurtosis.

 

Findings: The findings suggest that MSMEs which have been around for seven years or more have financial planning knowledge favoring their decision-making and generating efficient financial performance, making time a determining factor.

 

Research, Practical & Social Implications: Our findings have significant implications for generating proper planning based on solid tools, with the effect of assertive decision making which favors financial performance.

 

Originality/Value: The most important contribution from this study to MSMEs is to show that financial planning is not only for large organizations, but can apply to them as well.

Downloads

Download data is not yet available.

References

Algahtani, J., Duong, L., Taylor, G. & Eulaiwi, B. (2022). Outside directors, firm life cycle, corporate financial decisions and firm performance. Emerging Markets Review, 50, 100820. https://doi.org/10.1016/j.ememar.2021.100820

Al-Mamary, Y. H., Alwaheeb, M. A., Alshammari, N. G., Abdulrab, M., Balhareth, H. & Soltane, H. B. (2020). The effect of entrepreneurial orientation on financial and non- financial performance in Saudi SMES: a review. Journal of Critical Reviews, 7(14), 200-208. http://doi.org/10.31838/jcr.07.14.35

Álvarez-Aros, E. L. & Bernal-Torres, C.A. (2022). Colaboración externa de la innovación abierta y desempeño financiero de las PYMES en Tamaulipas, México. Revista de Administração de Empresas, 62(3), 1-21. https://doi.org/10.1590/S0034-759020220301

Atlatenco, Q., De la Garza, M. T. & Guzmán, E. (2022). Planeación Financiera para el retiro desde la perspectiva de jóvenes universitarios, Nóesis. Revista De Ciencias Sociales y Humanidades, 30(60), 90-103. https://doi.org/10.20983/noesis.2021.2.5

Barrios-Hernández, K. C., Figueroa-Saumet, B. C., Niebles-Bárcenas, M. J. & Palacios-Pérez, R. J. (2022). Condiciones facilitadoras para el desarrollo del emprendimiento: una mirada al caribe mexicano. Información Tecnológica, 33(1), 71-80. http://doi.org/10.4067/S0718-07642022000100071

Battaglia, F. & Gallo, A. (2015). Risk governance and Asian bank performance: An empirical investigation over the financial crisis. Emerging Markets Review, 25, 53-68. https://doi.org/10.1016/j.ememar.2015.04.004

Castillo, F. (2022). Caracterización de la Gestión Financiera para las empresas del sector de construcción del municipio de San Gil, Santander, Colombia. Revista Activos, 20(1), 109-133. https://doi.org/10.15332/25005278.7869

Chen, Y. P., Chen, Y. L., Chiang, S. H. & Mo, W. S. (2023). Determinants of connectedness in financial institutions: Evidence from Taiwan. Emerging Markets Review, 55, 100951. https://doi.org/10.1016/j.ememar.2022.100951

Choung, Y., Chatterjee, S., & Pak, T. Y. (2022). Depression and financial planning Horizon. Journal of Behavioral and Experimental Economics, 98, 101877. https://doi.org/10.1016/j.socec.2022.101877

Chrysafis, K. A., Papadopoulou, G. C. & Theotokas, I. N. (2024). Measuring financial performance through operating business efficiency in the global cruise industry: A fuzzy benchmarking study on the “big three”. Tourism Management, 100, 104830. https://doi.org/10.1016/j.tourman.2023.104830

Civelek, M., Durda, L., Vincúrová, Z., Dudáš, T. & Brezina, I. (2022). The differences in the impact of entrepreneurial abilities of various European SMEs on their financial risk perceptions. Entrepreneurial Business and Economics Review, 10(4), 107-124. https://doi.org/10.15678/EBER.2022.100407

Cull, R., Harten, S., Nishida, I., Rusu, A. B. & Bull, G. (2015). Benchmarking the financial performance, growth, and outreach of greenfield MFIs in Africa. Emerging Markets Review, 25, 92-124. https://doi.org/10.1016/j.ememar.2015.05.002

Davydov, D. & Vähämaa, S. (2013). Debt source choices and stock market performance of Russian firms during the financial crisis. Emerging Markets Review, 15, 148-159. https://doi.org/10.1016/j.ememar.2013.01.001

Delgado-Vélez, L. D. (2021). Desarrollo de un modelo de planeación financiera para una compañía de alimentos utilizando simulación Monte Carlo. Entramado, 17(2), 24-40. https://doi.org/10.18041/1900-3803/entramado.2.7563

Endris, E. & Kassegn, A. (2022). The role of micro, small and medium enterprises (MSMEs) to the sustainable development of sub‐Saharan Africa and its challenges: a systematic review of evidence from Ethiopia. Journal of Innovation and Entrepreneurship, 11(20). https://doi.org/10.1186/s13731-022-00221-8

Esubalew, A. A. & Raghurama, A. (2020). The mediating effect of entrepreneurs’ competency on the relationship between Bank finance and performance of micro, small, and medium enterprises (MSMEs). European Research on Management and Business Economics, 26(2), 87-95. https://doi.org/10.1016/j.iedeen.2020.03.001

Fauzi, F., Antoni, D. & Suwarni, E. (2020). Women entrepreneurship in the developing country: the effects of financial and digital literacy on smes’ growth. Journal of Governance and Regulation, 9(4), 106-115. https://doi.org/10.22495/jgrv9i4art9

Gámez, R. D., Palma, E. & Beltrán, L. G. (2020). Planeación y rentabilidad financiera en empresas prestadoras de servicios de bombeo electro sumergible en PDVSA, Venezuela. Revista Innova ITFIP, 7(1), 78-87.

Gualipa, A. & Urbina, M. A. (2021). Determinantes del desempeño financiero de las cooperativas de ahorro y crédito del Ecuador. Revista Economía y Política, 34, 112-129. https://doi.org/10.25097/rep.n34.2021.07

Instituto Nacional de Estadística y Geografía (2019). Micro, pequeña, mediana y gran empresa. Estratificación de los establecimientos. https://www.inegi.org.mx/contenidos/productos/

prod_serv/contenidos/espanol/bvinegi/productos/nueva_estruc/702825198657.pdf (accessed 20 May 2023).

Joseph, A. J. (2018). La planeación financiera y la toma de decisiones como predictores del desempeño financiero de las pymes del municipio de Medellín, Colombia. Doctoral thesis, Universidad de Montemorelos, Nuelo Leon, Mexico.

Long, T. Q., Morgan, P. J. & Sonobe, T. (2020). Investment behavior of MSMEs during the downturn periods: Empirical evidence from Vietnam. Emerging Markets Review, 45, 100739. https://doi.org/10.1016/j.ememar.2020.100739

Loor, H. Y., Santistevan, J. P., Ureta, M. I. & Mera, R. B. (2023). Análisis de indicadores de desempeño financiero de Balanceados Coprobalan S. A. Revista San Gregorio, 1(54), 128-146. https://doi.org/10.36097/rsan.v0i54.2455

Mayett, Y., Zuluaga, W. & Guerrero, M. J. (2022). Gestión financiera y desempeño en MiPyMes Colombianas y Mexicanas. Investigación Administrativa, 51(130), 1-20. https://doi.org/10.35426/iav51n130.06

Menne, F., Sury, B., Yusuf, M., Suriani, S., Ruslan, M. & Iskandar, I. (2022). Optimizing the Financial Performance of SMEs Based on Sharia Economy: Perspective of Economic Business Sustainability and Open Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(1), 18. https://doi.org/10.3390/joitmc8010018

Morales, J. C., López, M. S., Díaz, J. L. & Huerta, M. J. (2023). Educación y capacitación financiera para lograr la inclusión financeira. Horizontes de la Contaduría en las Ciencias Sociales, 18, 45-61. https://doi.org/10.25009/hccs.v0i18.63

Murillo, C. A., Acosta, E. & Quintero, M. A. (2021). Nivel de educación financiera como influencia en la toma de decisiones de endeudamiento en el uso de tarjetas de crédito en Navojao, Sonora. Revista De Investigación Académica Sin Frontera, 36(14). https://doi.org/10.46589/rdiasf.vi36.400

Panchi, J. E., Rocha, E. E. & Altamirano, S. H. (2023). Desempeño financiero de las MiPymes del sector agrícola la provincia de Cotopaxi, en el contexto de pandemia de Covid-19. TESLA Revista Científica, 3(1), e208. https://doi.org/10.55204/trc.v3i1.e208

Parra, A. (2020). Estrategias para actuar en épocas de incertidumbre: una propuesta financeira. Revista Activos, 18(2), 165-204. https://doi.org/10.15332/25005278/6265

Préstamo, F. E., Cordero, A. & Zúñiga, J. (2021). Administración del riesgo y planeación financiera como estrategias de las Pymes del sector tecnológico en Costa Rica ante la pandemia del Covid-19. Revista Metropolitana de Ciencias Aplicadas, 4(1), 16-25.

Prieto-Tibaduiza, W. A., Rocha-Vega, S. M., Páez, H. J. & Lozano-Ramírez, N. E. (2019). Proposal of a Tool for Integrating BIM and Financial Decisions in Construction Projects. Ingeniería y Ciencia, 15(29), 75-101. https://doi.org/10.17230/ingciencia.15.29.3

Reus, N. N. (2020). Análisis sobre la planeación financiera de los estudiantes de la Lic. en Administración, Córdoba, España. RIDE Revista Iberoamericana para la Investigación y el Desarrollo Educativo, 10(20), e089. https://doi.org/10.23913/ride.v10i20.669

Sarkar, J. & Selarka, E. (2021). Women on board and performance of family firms: Evidence from India. Emerging Markets Review, 46, 100770. https://doi.org/10.1016/j.ememar.

100770

Valle, A. P. (2020). La planificación financiera una herramienta clave para el logro de los objetivos empresariales. Revista Universidad y Sociedad, 12(3), 160-166.

Villalta, A. L. & Cueva, N. C. (2022). La educación financiera y su incidencia en comerciantes del cantón Zapotillo. Ciencia Latina Revista Científica Multidisciplinar, 6(2), 4102-4123. https://doi.org/10.37811/cl_rcm.v6i2.2152

Xinlan, L., Changhong, L. & Guo, X. (2023). Environmental practices, family control, and corporate performance: Evidence from Chinese family firms. Emerging Markets Review, 55, 100953. https://doi.org/10.1016/j.ememar.2022.100953

Yadegaridehkordi, E., Foroughi, B., Iranmanesh, M., Nilashi, M. & Ghobakhloo, M. (2023). Determinants of environmental, financial, and social sustainable performance of manufacturing SMEs in Malaysia. Sustainable Production and Consumption, 35, 129-140. https://doi.org/10.1016/j.spc.2022.10.026

Zubair, S., Kabir, R. & Huang, X. (2020). Does the financial crisis change the effect of financing on investment? Evidence from private SMEs. Journal of Business Research, 110, 456-463. https://doi.org/10.1016/j.jbusres.2020.01.063

Downloads

Published

2024-03-22

How to Cite

Ruiz, E. D., Gómez, J. F. S., & Rivera, M. de J. V. (2024). FINANCIAL PLANNING AND DECISION MAKING AS PREDICTORS OF FINANCIAL PERFORMANCE IN MSMES. International Journal of Professional Business Review, 9(3), e04431. https://doi.org/10.26668/businessreview/2024.v9i3.4431