Evaluating the Effects of Operational Performance on Financial Performance of Iranian Small and Medium Sized Enterprises (SMEs)

This study aims to evaluate the effects of operational performance (cost, quality, flexibility and delivery speed) on financial performance (sale, market share and return on investment) of Iranian Small and Medium Sized Enterprises (SMEs). Many researches have shown that the relationship between operational and financial performance is affected by environmental factors (context). Therefore the effects of internal environment (age, size and property) and external environment (dynamics, span and concentration of marketplace) are also involved in this study. Investigations are based on empirical data gathered from 82 Iranian SMEs by means of a questionnaire-based survey. Structural Equation Modeling (SEM) is used to analyze the data. The findings indicate that there is a statistically significant relationship between operational and financial performance of firms. The effects of environmental factors (context) on financial performance are also statistically significant. The results of this research show the importance of operational performance in the path of improving financial performance.

Keywords:

Operations Strategy , Operational Performance , Financial Performance , Environmental Variables , Empirical Study