Factors of market-driven strategies and access to finance effect on SMEs competitive performance in Lesotho

Abstract

Background: Entrepreneurship literature indicates a high rate of small and medium-sized enterprises (SMEs) failure in Lesotho, especially those operated by Basotho in major districts. Critical factors of market-driven strategies and access to finance are suggested strategic solutions to address this challenge. Aim: This article empirically investigates the influence of market-driven strategies and access to finance factors on SMEs’ competitive performance in Lesotho. Setting: The study was conducted in the four Lesotho districts of Butha-Buthe, Leribe, Mafeteng and Maseru where Basotho SME enterprises dominate. Methods: A questionnaire was used to obtain the data from the surveyed districts. The study adopted the descriptive correlation design and used the stratified random sampling in selecting 400 SMEs owners and managers in the four districts in Lesotho. Data analysis was conducted using descriptive and inferential statistics. Results: The analysis of the data showed a positive and significant relationship between some factors of market-driven strategies and access to finance and as such influenced Basotho SMEs’ capacity to attain competitive performance in Lesotho. Conclusion: The findings showed that the technological dynamics and competitive intensity strategies play crucial roles in increasing SMEs’ capacity to attain competitive performance. SMEs’ incapacity is further compounded by the challenges associated with high collateral requirements by banks and inadequate access to financial information. Contribution: The complementarity of the relevant factors of market-driven strategies and access to finance contribute significantly to SMEs’ capacity to attain competitive performance.