SME Entrepreneurship Firm Performance and Corporate Governance Practices in Indian Service Firms

This paper shows an important relationship between Indian private service firms' corporate governance practices and firm performance for sample firms from Bombay Stock Exchange (BSE) Small CAP Index. The underlying assumption, is unlike affiliate and foreign service firms, Indian Private service firms' corporate governance implementation is unaffected by any other external forces. So, the final sample consists only of Indian private service firms and these firms have been classified as SME based on market capitalization. The research hypothesis has been constructed to prove that corporate governance practices in Indian service firms have positive influence on firm performance. In this regard, the factor analysis is used to reduce the corporate governance data into meaningful factors. Subsequently, factor analysis results are submitted for OLS regression analysis. It is evident from the analysis that corporate governance data are grouped under four different factors: ownership component, board component, committee component, and board procedure component. OLS regression analysis proved that committee component has statistically significant relationship with firm performance. It is concluded that corporate governance practices in the Indian service firms have positively influenced the firm performance.