The Effect of Institutionalization on Firm Performance

It is a necessity for enterprises to survive in an increasingly competitive and globalized environment, to develop, to be able to sustain their assets and to be able to be transferred to the next generation, to achieve an institutionalized level of business. It is clear that the way of achievement for businesses is the institutionalization. In this quantitative research, the impact of institutionalization on business performance was analyzed in Small and Medium Sized Enterprises (SMEs). The hypothesis was tested using Explanatory Factor Analysis and linear regression techniques based on available data from 295 randomly selected employees working in manufacturing enterprises. As a result of the research, it was stated that the flexibility component of institutionalization structure had an essential effect on both financial and non-financial business performances. It was also concluded that the components of professionalism, simplicity, transparency and consistency are only essential effects in terms of non-financial business performances.