The importance of strategic financial management practices for small and medium enterprises in emerging markets

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Abstract

Small and medium-sized enterprises (SMEs) play a key role in advancing the growth, and performance of SMEs especially in emerging markets like Zimbabwe (Musabayana et al., 2023). In recent years SMEs in emerging markets have failed to embrace strategic financial management practices (SFMP) considered a key driver to business growth (Dlamini et al., 2023). Hence, the aim of the study was to assess the importance of SFMP in emerging markets employing the mixed methods design that includes the quantitative, and qualitative methods gathering data from a target population of 640 SMEs selected from various sectors. Data was gathered from a sample of 240 participants using the questionnaire and 21 participants using open-ended interviews respectively. Quantitative data was analysed using descriptive statistics while cloud-maps analysed qualitative data. The study findings revealed that SFMPs were critically important for decision-making as they assist stakeholders and owner-managers in the development of the business’ vision, and mission statement, and preparation of financial management systems that enhance performance. SFMPs were also important for planning, budgeting, and decision-making. Drawing from the notable critical importance of vision and mission statements, the study recommended that every SME must develop a vision and mission statement as a priority to chart a way forward. The study finally recommended that similar studies be conducted in developing countries to promote the growth and performance of SMEs and also adds evidence to the corpus of literature that strategic financial management is important for SME performance.

Keywords: Strategic Financial Management Practice, Small to Medium Enterprise, Strategic Financial Planning, Vision, Emerging Markets

Authors’ individual contribution: Conceptualization — A.M.; Methodology — A.M.; Investigation — A.M.; Writing — Original Draft — A.M.; Writing — Review & Editing — A.M.; Supervision — A.D.K.; Funding Acquisition — A.D.K.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M19

Received: 03.11.2023
Accepted: 03.01.2025
Published online: 08.01.2025

How to cite this paper: Mutambara, A., & Kader, A. D. (2025). The importance of strategic financial management practices for small and medium enterprises in emerging markets. Corporate & Business Strategy Review, 6(1), 53–63. https://doi.org/10.22495/cbsrv6i1art5