Corporate Governance in The Small and Medium Enterprises (SMES) As Performance Enhancer

Abstract

Although the number of Palestinian SMEs has been grown last few decades, they face a lot of challenges. The low performance compared to other counterparts around the world is the first of these challenges. Therefore, this paper aims to provide concise description of SMEs in Palestine with an analysis for the current challenges they face. Moreover, the study aims to explore the need of SMEs to embrace a corporate governance (CG) code to elevate their performance and the different advantages and disadvantages of the implementation of their practices. The study found that there is a wide believe that CG code introduces new strategic perspectives through the use of external directors who will add value over the improvement of entrepreneurial activities and increase the competitiveness of SMEs. This is particularly important, as a considerable portion of entrepreneurs in context of Palestine initiated business without a former technical experience. Further challenges such as funding constraint and managerial lack of proficiency in the sector of Palestinians SMEs could be coped with the use of a sound structure of CG in place. There is a wide body of knowledge supports the embracing of CG practices within SMEs at premature phase, in order to have a smooth progress when these SMEs grow in the market.