The Effect of Quality Management Practice on Business Performance of SMEs in Merhabete/ Alem Ketema/, North Shoa, Ethiopia

Abstract

The study investigated the quality management practices and business performances of SMEs in Merhabete/Alem Ketema, Ethiopia. Four key dimensions of quality management practices including customer focus, human resource focus, supplier quality management, and continuous improvements were used as independent variables accompanied by different measurement instruments under each variable, while a non-financial performance variable was used to measure the business performance. Primary data was collected using a self-administered questionnaire from a sample of 245 employees. Data were analyzed using descriptive and econometrics analysis. The findings indicate that the four key independent variables had a positive and significant effect on the performance of SMEs. The study recommended that SMEs should ensure that the objectives of the organization are linked to customer needs and expectations to improve performance, and they should allow participative consultation and engagement of employees in making decisions on quality issues and provide freedom to act with responsibility and accountability.