Abstract
Towards improving the socio-economic condition of low-income households, development organizations offer a repertoire of initiatives. This study focused on the impacts of access to working capital and enterprise development training programs, on the performance and sustainability of micro-enterprises owned and managed by low-income households, in the state of Kelantan, Peninsular Malaysia. The data of 450 micro-entrepreneurs, was randomly selected from the participants’ list of three development organizations servicing Kelantan: Amanah Ikhtiar Malaysia (AIM); National Entrepreneurs Economic Group Fund (TEKUN); and Malaysia Fisheries Development Board (LKIM). This study revealed several participation indicators (i.e., years of participation, total number of trainings, total number of training hours received, and number of center meetings or discussions attended, etc.), which have a positive effect on micro-enterprise performance and sustainability. However, the findings were inconclusive as one of the key participation indicators, ‘total amount of economic loans received’, showed a negative (not statistically significant) effect on micro-enterprise performance and sustainability. This study expanded the limited literature on micro-enterprise performance and sustainability, and the role of working capital and enterprise development training programs; thus providing a clearer understanding of the effectiveness of current development initiatives.
Highlights
The National Small and Medium Enterprise (SME) Development Council defines micro-enterprises as companies primarily participating in, the manufacturing and agro-based industries, which record annual sales turnover of less than Ringgit Malaysia (RM) 300,000 or less than five full-time employees (Bank Negara Malaysia 2013)
In a recent study on Malaysian micro-enterprises owned and managed by micro-entrepreneurs who participated in various development initiatives, Al-Mamun et al (2018) mentioned that the effect of micro-enterprise performance was expected to uplift the economic wellbeing of low-income households, minimizing economic vulnerability
Findings of this study revealed that the effects of a few participation indicators, on the performance and sustainability of micro-enterprises owned and managed by micro-entrepreneurs who participated in various development initiatives, were positive
Summary
The National Small and Medium Enterprise (SME) Development Council defines micro-enterprises as companies primarily participating in, the manufacturing and agro-based industries, which record annual sales turnover of less than Ringgit Malaysia (RM) 300,000 or less than five full-time employees (Bank Negara Malaysia 2013). Enterprise development training programs are skills-based training aimed at improving micro-entrepreneurs’ competencies in money and business management, as well as improving marketing strategies to increase micro-enterprise revenue, and lead to better performance and sustainability. During the 1970s and 1980s, three key development organizations were established to provide access to working capital and enterprise development training programs: (i) Amanah Ikhtiar Malaysia (AIM); (ii) National Entrepreneurs Economic Group Fund (TEKUN); and (iii) Malaysia Fisheries Development Board (LKIM). AIM provides non-financial assistance programs known as Sahabat Teras, Strengthening Entrepreneurship and Sahabat Berjaya, which focus on improving key competencies and skills, and monitoring of the risk management plan. In 2017, Kelantan only achieved 0.4 percent of (EPU 2018)
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