The Effect of Business Development Services on Small Medium Enterprises (SMEs) Performance

Abstract

This research aims to investigate the effect of Business Development Services (BDS), namely the non-financial services and financial services on the performance of manufacturing Small Medium Enterprises (SMEs) in Sabah, Malaysia. Business development services are recognised as the support services to SMEs, aimed to assist SMEs in overcoming internal and external constraints in its development, thus, improving its performance. A self-administered questionnaire was used to collect data from 161 SMEs within the manufacturing sector in Sabah. Partial Least Square (PLS) was employed to analyse data collected. The results reveal that only financial support has an effect on SMEs performance, whilst contrary to expectation, non-financial support was found to have no effect on SMEs performance in Sabah, Malaysia. The outcome of this study provided significant information, especially to the government agencies responsible for the development of SMEs such as SME Corporation Malaysia. They should evaluate further the existing programmes and guidelines and enforce more effective policies to improve the performance of SMEs in Malaysia, particularly in Sabah.