Disaggregating Financial Management Practices and SME Performance: Evidence from Agro-Processing Firms in Emerging Markets

Small and medium enterprises are essential drivers of economic growth and employment in emerging markets but often struggle with weak financial management practices. This study investigates the influence of financial management strategies, financial reporting and analysis, inventory decisions, financing structures, and working capital management on the performance of agro-processing enterprises in Uganda’s Ankole sub-region. A quantitative cross-sectional survey was conducted with 192 formally registered enterprises. Structural equation modeling was used to examine the relationships between financial management practices and business performance. The results show that financial reporting and analysis, financial management strategies, and financing structures have a significant positive impact on business performance. Inventory decisions and working capital management showed no direct effect, although the effect of working capital management became significant when firm age was considered. These findings highlight the need for targeted financial training and policy support tailored to enterprise maturity and context.

Financial Management Practices; Small and Medium Enterprises (SMEs);...

1. Abanis, T., Mpora, B. E., Sunday, A., & Eton, M. (2022). Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda. International Journal of Scientific Research and Management. https://doi.org/10.18535/ijsrm/v10i7.em03 [Google Scholar] [Crossref]

2. Ali, M., Alhassan, S., & Owusu, K. A. (2024). Strategic investment decision-making and firm performance: Evidence from emerging economies. Journal of Business Strategy, 45(2), 88–102. (Cited in: Investment Decisions) [Google Scholar] [Crossref]

3. Amoako, G. K., Marfo, E. O., & Gyabaah, E. N. (2023). Financial reporting and firm performance: The moderating role of SME size. International Journal of Accounting Research, 11(3), 45–58. (Cited in: FRA section) [Google Scholar] [Crossref]

4. Bhagavath, V., & Sasirekha, M. (2025). Financial disclosure and sustainability practices in SMEs. Journal of Finance & Sustainability, 8(1), 12–25. (Cited in: FRA) [Google Scholar] [Crossref]

5. Crous, C. J., De Villiers, C., & Hsiao, P. C. K. (2021). ESG reporting and SME governance: Emerging perspectives. Journal of Sustainable Business Research, 9(4), 213–234. (Cited in: FRA) [Google Scholar] [Crossref]

6. Francisco, P. M. (2024). A survey of corporate finance practices in micro-enterprises: An exploratory analysis conditional on firm and manager characteristics. Cogent Business & Management, 11(1), 2429791. [Google Scholar] [Crossref]

7. Gherghina, Ș. C., Botezatu, M. A., Hosszu, A., & Simionescu, L. N. (2020). Small and medium-sized enterprises (SMEs): The engine of economic growth through investments and innovation. Sustainability, 12(1), 347. [Google Scholar] [Crossref]

8. Karadag, H. (2015). The role and challenges of small and medium-sized enterprises (SMEs) in emerging economies: An analysis from Turkey. Business and Management Studies, 1(2), 179–188. [Google Scholar] [Crossref]

9. Labeeque, A., & Sanaullah, A. (2019). Towards inclusive economic growth: Synthesizing strategies for social inclusion in development. Journal of Policy Options, 2(2), 77–95. [Google Scholar] [Crossref]

10. Nasimiyu, A. E. (2023). Cashflow management practices and financial performance of small and medium business enterprises in Kenya. African Journal of Commercial Studies, 4(3), 252–263. [Google Scholar] [Crossref]

11. Nguyen, B., & Canh, N. P. (2021). Formal and informal financing decisions of small businesses. Small Business Economics, 57(3), 1545–1567. [Google Scholar] [Crossref]

12. Rahmah, R. A., & Peter, F. O. (2024). The impact of financial management practices on firm performance: A study of the manufacturing sector in Indonesia. Involvement International Journal of Business, 1(1), 1–13. [Google Scholar] [Crossref]

13. Sumantri, R., Wardani, A. K., & Siregar, R. (2024). Digital transformation, financial literacy, and performance among Indonesian SMEs: A mediating model. Journal of Financial Technology and Innovation, 6(2), 112–127. (Cited in: FRA section) [Google Scholar] [Crossref]

14. Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory. Prentice Hall. [Google Scholar] [Crossref]

15. Wolmarans, H. P., & Meintjes, Q. (2015). Financial management practices in successful small and medium enterprises (SMEs). The Southern African Journal of Entrepreneurship and Small Business Management, 7(1), 88–116. [Google Scholar] [Crossref]

16. World Bank. (2021). SME Finance: Development News, Research, Data. Retrieved from https://www.worldbank.org/en/topic/smefinance [Google Scholar] [Crossref]