Factors contributing to investment decisions in small and medium enterprises: a case study of Kaliwajala trading area

Abstract

Nowadays, the SMEs are the key drivers of economic development. They create new jobs, added value and SMEs increasingly participate in inclusion of the national economy in world trade through their internationalization. The development of enterprises in Kaliwajala is one of the basic business principles and the most important part of the overall process of development is investment. The process of making investment decision as a complex and dynamic process involves analysis of all factors (financial, market, technical - technological, location, and social), forecasting various alternatives understanding and evaluating the effects. The procedure of evaluating the feasibility of investment projects is different in small and medium than in large enterprises. The differences becoming from the possibilities to access to finance for SMEs, opportunities and capabilities for planning by the owners of small businesses, short-term orientation in the operation etc. Therefore, SMEs often avoid the process of investment decision or it’s made only with cursory analysis of the business environment and some investment criteria. Considering all this, the main aim of this paper is to outline the factors which affect to the process of making investment decision in SMEs and showing some possible scenarios. Also an analysis of investment process in SMEs and large firms will be performed. For realizing the main aim, the survey will be conducted among the SMEs in Kaliwajala region. And in the end of the paper we will propose many recommendations for improving the investment process in SMEs. Key words: investment decision, determinants of investment, SMEs