Abstract:
SMEs play a prominent role in any economy through generating employment,
contributing to Gross Domestic Product (GDP), embarking on innovations and
stimulating of other economic activities (ESBA, 2011). This sector is said to be the
backbone for all developed and developing nations. SME sector is envisaged to
contribute to transforming lagging regions into emerging regions of prosperity
(Ministry of Industry and commerce, 2015). End of the local war in Sri Lanka,
SMEs in Jaffna district have been facing complex environment and the struggling
to develop. At the same time, SMEs have plentiful opportunities to develop in the
Jaffna district. There is need to identify the determining factors of development of
SMEs. Financial development, growth and customer development were already
investigated and empirically tested with the name of financial performance and
market performance in SMEs. Organization development explains one of the
dimension as the employee development which was not empirically analyzed in
SMEs. Sustainable development reveals the social development which is also a
unique concept for the SMEs. However, this combination of development concept
for SMEs has still not been developed and empirically investigated in the SMEs in
the Jaffna district, which is the gap of the study. There is a need to study how these
SMEs have been growing and developing by managing external environmental
challenges and the internal environment weakness. Therefore, the main aim of this
study is to identify the determining factors of development of SMEs in Jaffna
district.