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Modelling the Link Between Management Practices and Financial Performance. Evidence from Small Construction Companies

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  • Johan Maes
  • Luc Sels
  • Filip Roodhooft

Abstract

This paper develops a structural model to investigate the direct and indirect effects of owner–manager and company characteristics and selected management practices on the financial performance of a sample of 218 small Belgian construction companies. The results show that the owner–manager and company characteristics (experience, education, financial knowledge, knowledge of cost accounting, company size and age) have no direct significant impact on financial performance. However, several significant paths have been found between the owner–manager and company characteristics and management practices. As far as the direct effects of the management practices are concerned we observe several significant paths from the management practices to financial performance. Our findings indicate that a model approach by including owner–manager and company characteristics and management practices in an intertwined way is necessary when exploring their effects on small business financial performance. Copyright Springer 2005

Suggested Citation

  • Johan Maes & Luc Sels & Filip Roodhooft, 2005. "Modelling the Link Between Management Practices and Financial Performance. Evidence from Small Construction Companies," Small Business Economics, Springer, vol. 25(1), pages 17-34, August.
    • Handle: RePEc:kap:sbusec:v:25:y:2005:i:1:p:17-34
    DOI: 10.1007/s11187-005-4255-y
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    5. Maxwell Sandada & Lorraine Mangwandi, 2015. "An Assessment of the Influence of Selected on the Performance of Small to Medium Sized Family Owned Businesses in the Zimbabwe Retail Sector," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(5), pages 5-16, October.
    6. Horta, I.M. & Camanho, A.S. & Moreira da Costa, J., 2012. "Performance assessment of construction companies: A study of factors promoting financial soundness and innovation in the industry," International Journal of Production Economics, Elsevier, vol. 137(1), pages 84-93.
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    More about this item

    Keywords

    company characteristics; construction sector; financial performance; management practices; small business; owner-manager characteristics; L20; L74; M10;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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