A Log Linear Analysis of Factors Affecting Performance of European Manufacturing SMEs

The purpose of this exploratory study is the examination of the complex interactions among variables that affect the performance of European manufacturing SMEs by using a hierarchical log linear model. In the present study, firm performance is empirically measured in terms of turnover growth. The raw data were drawn from an official survey conducted by European Commission’s Sectoral e-Business Watch in 2007. This survey took place among SMEs from the Chemical, rubber and plastics, Steel and Furniture industries consisted of 1.716 telephone interviews with ICT decision-makers in seven selected EU countries (UK, France, Germany, Sweden, Spain, Italy and Poland). The seven variables, which take place in our study, concern employment of ICT practitioners, investments in ICTs, product-services innovations related to or enabled by ICTs, adoption of e-commerce and e-business activities, implementation of e-CRM and rivalry in the market. All these variables were found to be associated with the outcome variable firm performance in a chi-square test analysis. The results revealed seventeen out of an original twenty-eight possible two-way interrelationships between the chosen variables were identified as remaining in the hierarchical log linear model. This paper expands the research of factors affecting the firms performance and allows a better understanding of the complex interactions and associations at multiple scales of manufacturing in Europe.