Does firm size matter in explaining differences in macroeconomic environment and higher firm performance?

Environment has remained a subject of significant discussion in management, marketing and economic researches in recent time. Firms can understand the quality of these factors through environmental analysis to reduce uncertainty and create strategy to achieve higher performance. This study examine how environmental factors, namely, competitive environment and government support affect the achievement of higher performance of small firms. In addition, this study investigates whether firm size moderates the environment-performance relationship. Survey methodology and regression modeling are adopted to assess these relationships. High performance positively affected by Competitve environment and government support. Firm size moderates the links between external environment and firm achievement of higher performance. The results provide a more robust understanding of the effect of environmental factor on SMEs performance and recommended that practitioner should carefully consider environmental factors in decision making. Very few managers understand that the value of their decisions is increased by considering important features of the environment before final decisions can be taking because a resource that at one time, a source of sustained competitive advantage, may no longer be valuable due to environmental changes. As such, managers should cultivate a learning and innovative culture to effectively compete in a changing business environment