Introduction

It is generally accepted that small and medium enterprises (SMEs) play a significant role in economies around the world (Naser, 1999). Small companies are competing with big businesses in whole new ways (Mele, 2015). They are thinking and acting globally, competing with rivals of all sizes and investing aggressively in technology to improve operations and make themselves more nimble (Oxford Economics, 2013). Furthermore, SMEs are being considered as engines of economic growth worldwide (Ardic et al., 2011; Caner, 2010). One of the most important roles of SMEs in this context includes poverty alleviation through job creation (Jasra et al., 2011). In developing countries, SMEs are a major source of income, a breeding ground for entrepreneurs and a provider of employment (UNIDO, 2000). In Palestine in particular, SMEs are considered to be among the most important pillars of socio-economic development as these businesses serve as a basis for improving production capacity as well as contributing to the decrease of poverty and unemployment problems (MAS, 2014). According to the results of the general census conducted by the Palestinian Central Bureau of Statistics (PCBS) (2012), the total number of private business entities was 131,618 entities out of 135,401 (91,203 in the West Bank and 44,198 in the Gaza Strip using 262,825 and 121,953 workers, respectively), which represents around 95 per cent of working organizations in Palestine. These SMEs are working in various business fields including manufacturing, trading, services, small women-headed projects, agriculture and some industries which produce highly developed products in the fields of engineering, commerce and information technology. However, in spite of the fact that SMEs are an essential element of the Palestinian economy, there is no clear-cut classification for small and medium-sized enterprises and neither are there accurate or reliable statistics about the number of small and medium-sized enterprises existing in Palestine. Besides, a great portion of small firms are operating within the informal sector (not registered officially) and not included in any statistical survey. Considering their contribution to economic growth and overall development of a country, research on critical factors for building and maintaining a successful SME is increasingly pertinent and necessary. However, most of the previous work and research on SMEs has focused on failure factors, that if avoided will become success factors. However, whether they are failure or success factors, they are not specific, holistic and coherent enough to constitute critical success factors (CSFs) of SMEs (Laguna et al., 2012; Jasra et al., 2011; Ihua, 2009; Mbonyane, 2006; Bradley and Cowdery, 2004; Everett and Watson, 1998). Thus, the knowledge base on CSFs for SMEs is lacking. In addition, most prior research, especially in Palestinian context, has narratively investigated SMEs without modeling successful performances of such businesses. Key success factors can be understood as an activity, skill or resource that a business can invest in, in the market that business is operating in, that can explain a major part of the observable differences in perceived value and/or relative costs. Key or CSFs imply a causal relationship between a skill or resource and perceived value and/or relative costs. They are small in number but can explain a major part of the variance in perceived value and/or relative costs (Grunert and Ellegaard, 1992). This research aims at contributing to knowledge on the CSFs of SMEs in the Palestinian context, specifically in the West Bank. The next part of the study presents the research theoretical framework. The third part presents the research methodology, and the fourth part presents the research findings, discussion and conclusion.