Internal control practices and performance of service SMES in Cameroon: A quantitative analysis

Abstract

In a context marked by increasing competition, persistent economic instability, and significant organizational constraints, the performance of small and medium-sized enterprises (SMEs) has become a central issue for emerging economies. Internal control is generally portrayed in the literature as a key lever for enhancing organizational performance. However, existing studies remain largely focused on large firms and institutionally formal environments, leaving a notable research gap regarding the actual role and effectiveness of internal control within service SMEs operating under conditions of resource scarcity and informality.To address this gap, this study examines the effect of internal control on the overall performance of 431 service SMEs in Cameroon using a quantitative approach. The reliability of the measurement instruments is assessed through Cronbach’s alpha, while the overall adequacy of the data for factor analysis is confirmed by a satisfactory Kaiser–Meyer–Olkin (KMO) index and a significant Bartlett’s test, justifying the use of Principal Component Analysis (PCA). Overall performance is measured using a composite score based on six dimensions: financial, social, environmental, commercial, strategic, and organizational. A multiple linear regression model is then estimated.The results show that certain operational internal control practices—particularly document archiving, effective use of procedures manuals, and risk identification—have a positive and significant impact on performance, unlike more formalized mechanisms. The study highlights the importance of a contextualized and effectively operationalized internal control system, contributing both to the academic literature and to managerial practice.

JEL Codes: M40, M42, M10, D22

Article Type: Empirical Research