Abstract
Business performance has been researched previously in relation to entrepreneurial orientation, market orientation, business strategy or strategic planning, and the characteristics of the owners/managers themselves. Recent studies initiated that the firm’s business model plays significant roles in determining the firm’s performance. However, not much has been done looking at the relationship between business model and performance of the firm, especially on manufacturing small and medium enterprises (SMEs) in Malaysia. A study has been conducted on manufacturing SMEs in Malaysia using mail survey questionnaire. Preliminary analyses conducted revealed that only competencies dimension of the business model has a significant direct impact on firm performance. The findings of this study suggest that in order to increase the firm’s performance, one of the important factors to be emphasized is to have a practical business model. This research gives benefit to the SMEs, business owners, Malaysian government as well as the entire agencies and the academicians on the importance of the business model on SMEs’ performance in Malaysia. Furthermore, the findings benefit entrepreneurs as well as the decision makers, and the outcomes from this research are expected to have policy implications for the future development of entrepreneurship and SME programs for current and future entrepreneurs and also for business owner/managers in Malaysia. Key words: Business model, small and medium enterprise (SME), SME performance, Malaysia.
Highlights
The importance of small medium enterprise (SMES) to the nation’s economy has been well established, in that small and medium enterprises (SMEs) are considered the most dynamic businesses in both the developed and developing countries
This study was conducted on manufacturing SMEs in Malaysia, which was different from the previous settings
The findings of this study would be useful to the policy makers and practitioners especially in designing the future development of entrepreneurship programs for current and future entrepreneurs in Malaysia
Summary
The importance of small medium enterprise (SMES) to the nation’s economy has been well established, in that SMEs are considered the most dynamic businesses in both the developed and developing countries. SMEs contributed only to 32% of the Malaysian gross domestic product (GDP) as compared to about 50% contribution to GDP in other countries, SMEs account for the bulk of the business enterprises and employ 56% of the total workforce (Ang, 2010). They contributed only about 19% of the total export value. The national venture capital association in the US finds that the expected success rate for new ventures is very low, estimated at less than two in ten (Sarasvathy, 2001)
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