The effect of business environment on the performance of small and medium enterprises

This study empirically investigated the impact of key business environment factors on Small and Medium Enterprise (SME) performance in Kampala, Uganda. A quantitative research design was employed, utilizing a cross-sectional survey of 400 SMEs. Data were analyzed using descriptive statistics, reliability analysis, correlation, and multiple regression to assess the effects of financial factors, networking, and information and communication technology (ICT) on SME performance. The findings revealed that all three factors demonstrated statistically significant positive effects, with financial factors exhibiting the strongest influence, followed by ICT and networking. The regression model was found to explain 71.2% of the variance in SME performance. This research provided empirical validation for business environment theory and offered practical insights for policymakers to prioritize financial access, digital infrastructure, and networking support, while suggesting SME owners enhance financial management and technology adoption for improved competitiveness and sustainable growth.