Abstract:

SMEs in Palestine are growing in their numbers, they have a unique set of characteristics that differentiate them from other types of firms. These SMEs do face a lot of challenges in the context of Palestine and one of the main challenges is the low performance when compared to other counterparts around the world. Therefore, this paper aims to provide concise description of SMEs in Palestine with the current challenge that the sector faces. Moreover, the study aims to explore the argument of SMEs and their need to embrace a corporate governance (CG) code to elevate their performances. The benefit of embracing CG practices outweighs the disadvantages.  The study found that there is a wide believe that CG code brings new strategic perspectives through the use of external directors who will add value over the improvement of entrepreneurial activities and increase the competitiveness of such SMEs. This is particularly important, as a considerable portion of entrepreneurs in context of Palestine initiated business without a former technical experience. Further challenges such as funding constraint and managerial lack of proficiency in the sector of Palestinians SMEs could as well be coped with the use of a sound structure of CG in place.  Moreover, there are wide body of knowledge supports the embracing of CG practices within SMEs at premature phase, in order to have a smooth progress when these SMEs grow in the market.