Research paper sheds light on SME governance in Jordan

AMMAN — Endeavor Jordan, an international organisation that encourages entrepreneurship, in partnership with Amam Ventures, a gender-lens impact investment fund, published a research paper on the state of small-scale enterprise (SME) governance in Jordan, stressing its importance as a catalyst for business and economic growth.

The research efforts were carried out as part of the initiative of SURGE (Scale-up Roadmap for Growing Enterprises), co-founded by the European Union’s “Innovation for Enterprise Growth and Jobs” programme “Innovate Jordan”, according to an Endeavor Jordan statement. 

The paper draws on the experience of founders, investors and other critical stakeholders, gained through interviews and a roundtable workshop. 

It also incorporates the results of a survey of 50 SMEs that form part of the Endeavor core portfolio and pipeline companies. The interviews, workshop and survey shed light on how some SME founders perceive the applicability of governance to their companies.

The paper’s findings show that the majority of the founders interviewed have serious intentions to instill good governance measures across their departments and among their stakeholders, according to the statement. 

However, only 30 per cent of the surveyed SMEs were well informed on what building good governance entails. When asked about the reasons for implementing good governance, the surveyed SMEs’ answers varied from long-term strategic planning to addressing instant needs and requirements like accessing bank credit and attracting investments. 

The assessments suggest that implementation of governance among SMEs in Jordan continues to lag because it is viewed as a costly process; most founders lack the know-how and experience to implement it; it is perceived as a loss of control over business; founders fear the loss of agility and dynamism; it is not viewed as a priority given the many day-to-day challenges SMEs face; and dynamics between CEO and the board can become fraught, thereby impacting work.

Endeavor Jordan’s Managing Director Reem Goussous said: “While true that applying SME governance may entail additional costs, doing so earlier and gradually will render these costs more manageable. SME governance must be viewed as an investment, not a cost, that will yield returns and long-term benefits.”

The partner at Amam Ventures, Tamara Abdel-Jaber said: “This paper is key to inform the design of support programmes that can specifically support SMEs in the strategic topic of SME Governance. Many Jordanian SMEs have the intention and understand the importance of governance, however, they need to learn to implement the concepts early on in their growth journey.”

SURGE, a three-year programme implemented by a consortium led by Endeavor Jordan (not for profit) and includes Oasis500 and BeyondCapital, aims to foster the demand-driven growth and scaling of 45 HPGCs in total, the statement said. 

This is achieved by focusing on strengthening their core business functions and assisting them in identifying and seizing new market opportunities, according to the statement.