Behaviour Of Small- And Medium-sized Enterprises Research Articles

EXPLORING THE INFLUENCE OF SMEs DEMOGRAPHIC PROFILE ON TAX COMPLIANCE BEHAVIOUR

Tax compliance is the extent to which a taxpayer complies or fails to comply with the tax rules of the country. Tax compliance is crucial for the government, as taxes constitute the main source of income. In 2023, the Inland Revenue Board of Malaysia (IRBM) collected RM183.3 billion in tax revenue, representing a substantial increase of RM7.8 billion, or 4.49%, compared to the previous year. The amount collected is the highest by IRBM, which reflects the effective tax collection mechanisms. Small and medium-sized enterprises (SMEs) are the main drivers of economies in emerging nations and in Malaysia, SMEs account for 98.5% of all businesses. Therefore, it is vital for tax authorities to understand the diverse profile of SMEs as part of tax-driven strategies to maximise tax collection. The purpose of this study is to provide insights based on previous studies on determinants of tax compliance among SMEs in Malaysia. The study highlights demographic factors, namely age, gender, education level and income level, that influence the tax compliance behaviour of SMEs. The study can add to the literature on factors influencing tax compliance by highlighting how compliance behaviours differ among various demographics of SME owners and how these differences affect their compliance decisions. The paper might assist tax authorities in dealing with tax compliance issues by gaining a deeper insight into the importance of various demographic characteristics of SMEs.

Does digital finance help reduce self-rationing of small and medium-sized enterprises? Evidence from China

Due to high rejection rates and the costly and time-consuming application procedures, small and medium-sized firms may be discouraged from applying for a bank loan, thus resulting in the so-called self-rationing behaviour. Using the World Bank Enterprise Survey Data collected from 2,700 privately owned firms in China during 2011–2013, we document that there exist a significant number of small and medium-sized enterprises (SMEs) which have good performance and financing needs, but are discouraged from applying for a bank loan. We theoretically and empirically show that digital finance development can alleviate the self-rationing behaviour of SMEs. The mechanism analysis shows that, from the supply side, digital finance development enhances the probability of loan approval and the proportion of private firms’ working capital financed by banks, and reduces the obstacle to access bank loans; while from the demand side, the development of digital finance improves financial inclusion and the financial literacy of firms. Our findings suggest that digital finance development improves loan efficiency and helps SMEs better access bank credits.

Are small- and medium-sized enterprises more likely to innovate when facing informal competition? Evidence from Kazakhstan

PurposeThis paper aims to investigate whether Kazakh small- and medium-sized enterprises (SMEs) that claim to compete with the informal sector are more likely to invest in innovation than their competitors who do not perceive such pressure.Design/methodology/approachLogistic regression and classification trees are performed on the Business Environment and Enterprise Performance Survey (2018–2020) to examine whether the degree of informal competition correlates with a firm's propensity to innovate.FindingsThe findings show that informal sector competition is a critical factor that shapes the organizational behaviour of Kazakh SMEs. There is a stimulating positive effect of informal competition on both product and process innovation, depending on its perceived intensity.Originality/valueThis study challenges conventional thinking that still views informal sector competition as a barrier to innovation and entrepreneurship by assessing whether innovation is compatible with informal entrepreneurial practice.

Determinants tax compliance behavior of small and medium-sized enterprises

The paper aims to factor in the effect of tax compliance on small and medium-sized enterprises (SMEs) in Vietnam. For SMEs, tax compliance is a critical aspect of financial management. In an emerging market with a dramatically growing economy, Vietnam provides a wide range of opportunities for SMEs to thrive. The author’s 91 samples were collected from individuals specializing in accounting, auditing, and tax fields in some places in Vietnam. Efebera et al. (2004) applied an extension of the theory of planned behavior (TPB) model to demonstrate a positive relationship between equity perception, normative expectations, legal sanctions, and the intention to comply with tax regulations of individual taxpayers. We assess and analyze four factors including the perception of the utility of tax compliance, subjective norms, characteristics of tax policies, and economic environment affecting the tax compliance behavior of SMEs. The data analysis is carried out by using partial least squares structural equation modeling (PLS-SEM). The result shows that the perception of the utility of tax compliance, the characteristics of tax policies, and the economic environment have a positive and significant impact on tax compliance behavior. However, the research fails to test the influence of subjective norms on tax compliance behavior.

SMEs Tax Compliance Behaviour in Emerging Economies: Do Tax Compliance Costs Matter? Evidence from Ghana

Purpose-Emerging nations are characterised by low-income levels. In spite of this, some of these nations, like Ghana, continue to experience gaps in their revenue targets. A key cause of this gap is the unethical behaviour of tax non-compliance by small and medium-sized enterprises (SMEs). SMEs represent about 99% of businesses in Ghana and are vital for the growth of the country. Some studies conducted in emerging nations have shown that the cost incurred by businesses to comply with tax regulations influences their tax compliance behaviour. However, very little is known of such a relationship in Ghana. This study investigated the connection between tax compliance costs and SMEs' tax compliance behaviour.Design/methodology/approach-Data was collected through a survey of SMEs. Tax compliance behaviour was measured by hypothetical case scenarios obtained from the literature. The tax compliance cost (TCC) was measured as the internal, external and incidental expenses paid by SMEs. A multiple regression analysis was utilised to examine the relationship between TCC and tax compliance behaviour.Findings-The study found that SMEs that incurred large compliance costs were less inclined to act in a non-compliant manner. The TCC was significantly inversely related to the tax compliance behaviour of SMEs.Originality/value-Although a few studies have been conducted in emerging economies, very little is known in the case of Ghana. The study thus adds to the literature on the tax compliance behaviour of SMEs in emerging economies. The study will be a benchmark against which future studies conducted in Ghana can be compared.

Awakening the giant within: turning SME’s survival strategy into improved performance

Purpose This study aims to examine the positive impact of strategies on the viability of small and medium-sized enterprises (SMEs) in times of crisis. Specifically, it investigates the influence of resource utilization as an initial survival strategy on innovation practices and SMEs’ performance. It further assesses the potential impact of government aid and partnerships on the relationship between resource utilization and innovation. Design/methodology/approach This study used a mixed-method approach that integrates phenomenology and quantitative research. This phenomenological study conducted in-depth interviews with 23 SME owners. Based on qualitative findings, a quantitative research design was developed, and this study surveyed 352 SMEs. Structural equation modeling was used for hypothesis testing. Findings Resource utilization as an initial survival strategy has a positive effect on increasing organizational innovation practices and ultimately affects business performance. Furthermore, government support and external partnerships significantly enhance the relationship between resource utilization and innovation. Practical implications The COVID-19 pandemic brought a crisis for businesses but has provided many positive transformations. SME entrepreneurs should sustain their survival strategies and seize external support to enhance their potential. Due to the pandemic, various efforts have created innovations, honed business resiliency and increased competitiveness. Originality/value SMEs struggled with the crisis and responded by utilizing many retrenchment strategies. This study is among the first to provide empirical evidence of an emergency response that has resulted in fruitful impacts. The findings can be generalized to represent the behavior of SMEs, especially in emerging countries.

Identifying types of behavior of food SMEs towards food waste management

Food waste is a significant sustainable challenge in Indonesia, particularly in commercial centers like Banyumas, it ranks as the second largest source of food waste. Despite the availability of information on food waste management, a substantial amount of food waste continues to be generated by food Small and Medium-sized Enterprises (SMEs). This research aims to categorize food SMEs in Banyumas based their food waste management behavior. The Extended Norm Activation Model framework was employed to assess the behavior of food SMEs in managing food waste. A questionnaire survey was conducted on 115 food SMEs in Banyumas, leading to the formation of two clusters through K-Means clustering: unmanageable and manageable. The unmanageable cluster exhibited the lowest levels of knowledge, awareness, and intention regarding food waste management and still requires substantial improvement in managing food waste. In contrast, the manageable cluster comprises food SMEs that have successfully implemented food waste management practices. These businesses demonstrate a heightened awareness of the food waste issue, take individual responsibility for addressing it, actively work to reduce waste. The finding of this research can serve as a basis fpr developing tailored mitigation strategies based on the behavior of SMEs in each cluster.

Developing the interconnection between green employee behavior, tax avoidance, green capability, and sustainable performance of SMEs through corporate social responsibility

Small and medium-sized enterprises (SMEs) are essential to any economy, as they contribute significantly to the gross domestic product (GDP) and create jobs. Nonetheless, the negative environmental impact of SMEs draws attention to the sustainability of SMEs. In order to achieve sustainable performance, businesses must possess a combination of factors that confer a competitive advantage and facilitate the attainment of objectives that culminate in a triple-bottom-line performance. Although prior research has identified the effects of employee behavior and corporate social responsibility (CSR) on firm performance, less is known about the effects of green employee behavior (GEB), green capability (GC), and CSR (to the community – to the environment) on sustainable firm performance (SFP). Current research bridges the literature gaps by answering how GC, GEB, and tax avoidance (TA) in SMEs correlate to achieving SFP. The study utilized a sample of 375 small and medium-sized textile enterprises in Pakistan and employed partial least square structural equation modeling (PLS-SEM) to analyze the data. The findings suggest that the relationship between corporate social responsibility (CSR) and sustainable firm performance is mediated by green capability. Additionally, corporate social responsibility to the environment does not influence the link between tax avoidance and sustainable firm performance, which still does not shadow the importance of tax avoidance and requires serious attention from the management.

International entrepreneurial behavior of internationalizing African SMEs – Towards a new research agenda

Research on the international entrepreneurial behavior of small and medium-sized enterprises (SMEs) originating from Africa has been receiving growing scholarly attention. Despite a proliferation of studies on the subject, the literature has hitherto remained fragmented, theoretically limited, and empirically inconclusive, thereby leaving important topics underexplored. This paper seeks to address this shortcoming through a systematic literature review aimed at critically analyzing and synthesizing 66 articles published in leading journals from 1995 to 2021. Our paper describes how research on the international entrepreneurial behavior of African SMEs has evolved over time, and identifies key gaps in the existing literature, thereby pointing at future avenues for research. By mapping descriptive findings in terms of methods, geography, and theoretical perspectives, we further develop an integrative framework suited to frame insights drawn from the current literature and offer important opportunities for future research on internationalizing SMEs originating from Africa.

Ambidexterity Behavior of Creative SMEs for Disruptive Flows of Innovation: A Comparative Study of Indonesia and Taiwan

Disruptive innovation forces small-business managers to innovate by carrying out exploitation and exploration activities simultaneously. This ambidexterity is crucial to the survival of today’s businesses, especially small and medium-sized enterprises (SMEs). In the organizational structure of SMEs, the manager and owner play an essential role in determining the business orientation. This study examined the influence of SME managers’ social networks on the organization’s ambidexterity and its impact on the firm’s innovation performance. This study used two moderating variables in the form of two internal factors in respect to managers: how proactive they are and their commitment to innovation. The study population was drawn from SMEs in the creative manufacturing sector in Indonesia and Taiwan, with a total sample of 224 SMEs, including 101 from Indonesia and 123 from Taiwan. The analytical technique was the PLS-SEM, conducted by the Smart-PLS software version 3.3.6: Hamburg, Germany. The results supported the construction in both countries. The results of the multiple-group analysis show that the SMEs in Indonesia exhibited greater ambidexterity, commitment to innovation, and innovation performance than those in Taiwan.

Credit risk prediction of SMEs in supply chain finance by fusing demographic and behavioral data

The credit risk of small and medium-sized enterprises (SMEs) in supply chain finance (SCF) is defined as the probability that the SME would default on loans derived from financing for the SCF platform. Traditional models make use of merely the static data of SMEs, such as enterprise demographic data and financial statement data, to predict the credit risk of SMEs in SCF. Nevertheless, behavioral data, which reflect the dynamic financing behavior of SMEs in SCF, are overlooked by these models, which limits the performance of credit risk prediction. To address this problem, a novel approach is proposed called DeepRisk to fuse enterprise demographic data and financing behavioral data to predict the credit risk of SMEs in SCF. We adopt the multi-modal learning strategy to fuse the two different sources of data. The concatenated vectors derived from data fusion are then used as the input of the feed forward neural network to predict the credit risk of SMEs. Experiments on a real SCF dataset demonstrate that the proposed DeepRisk approach outperforms the baseline methods in credit risk prediction in terms of precision, recall, F1-score, area under curve (AUC), and economic loss. The fusion of the two different sources of data is superior to the existing approaches to the credit risk prediction of SMEs in SCF. Both the static enterprise demographic data and the dynamic financing behavioral data are crucial to improve the credit risk prediction of SMEs. Nevertheless, the variables derived from the financing behavioral data have a better predictability than those from the enterprise demographic data. Managerial implications have been identified for decision makers involved in SCF in utilizing the benefits of SCF and in managing their credit risks.

Female Managers and Corruption in SMEs: A Comparison Between Family and Nonfamily SMEs in Vietnam

Empirical evidence, regarding the impacts of female leadership on firm’s corrupt level, is lack of studies in various research context. The objective of this study is to assess whether female managers impact negatively or positively on the corrupt behavior of family SMEs (household business) and nonfamily SMEs (Small and Medium-sized Enterprises). To do that, this paper used regressions, taken from a sample of 1,720 Vietnamese SMEs (based on the survey data of UNU-WIDER), to compare the impact of female percentage in management board in family and nonfamily businesses in reducing the level of corruption of the firms for the period 2011 to 2015.The findings indicated that first, drawing on socioemotional wealth theory and Vietnam context, family SMEs (household businesses) are more likely to engage in corruption. Second, we also found that female participant in management team can promote firms to be less involved in unethical practices such as bribe. However, the positive role of female managers in reducing corruption engagement is moderated by family control. We used upper echelon theory to suggest that female managers tend to have less managerial discretion in family-controlled organizations. This study has practical contributions, especially for policymakers and owners of household businesses.

The enabling role of formalized corporate networks to drive small and medium‐sized enterprises toward sustainability

AbstractThe global economy's transition toward more sustainable development models is undoubtedly grounded on small and medium‐sized enterprises (SMEs). However, SMEs, individual entrepreneurs, and microenterprises have always encountered barriers to implementing social responsibility and sustainability concepts. The paper investigates the enabling role of formalized corporate networks to drive SMEs toward sustainable behaviors. A quantitative nonlinear regression approach is applied to a content analysis of a sample of network contracts coded. The content analysis is applied to analyze the declared objectives, the purpose of the contract, and sustainability areas. An ordered logistic regression is applied on variables related to the behavior of SMEs before entering in the contract and post‐adhesion phases. Data demonstrates how networks of SMEs can be used as enabling factors to boost sustainability among them. Specifically, the study is based on a sample of 96 formalized network contracts (FNCs), including 1486 Italian SMEs in that sustainability‐oriented networks. It offers an evidence‐based perspective on how networks of companies can play a fundamental role in the development of policies aimed at bringing small companies closer to the concept of sustainability (such as eco‐innovations, eco‐efficiency, environmental performance, and social innovations, among others) and its practical implementation. This paper has two significant strengths. The first is that it uses as a sample a set of 1486 companies, including individual entrepreneurs and microenterprises, whose data are usually difficult to collect. The second is that it demonstrates the efficacy of a contractual form that could be scalable to different countries.

Do CEO's early-life marketization experiences affect the innovation behavior of SMEs?

We investigate the relationship between chief executive officers’ (CEOs) early-life exposure to marketization transition and the research and development (R&D) intensity of Chinese small and medium-sized enterprises (SMEs). We find that there is a significant positive relationship between the early-life transition experiences of CEOs and the R&D intensity of SMEs. CEOs who have experienced higher stages of marketization transition are significantly more likely to engage in proactive innovation activities. The means of the potential R&D intensity distributions are increasing in the treatment level, although this increasing trend is not always significant. Overall, the results confirm the view that experiencing a transition in early-life significantly facilitates CEOs’ engagement in innovation activities.

An Incentive Mechanism Model of Credit Behavior of SMEs Based on the Perspective of Credit Default Swaps

The rapid development of credit default swap (CDS) market has changed the manner of credit risk management of banks to some extent and has had a new influence on the bank-enterprise credit model. In this study, the credit financing process of credit risk in small- and medium-sized enterprises (SMEs) gathers within a bank, which makes it difficult for SMEs to raise funds. On the basis of the perspective of CDS, we construct an incentive game model of bank-enterprise credit behavior and analyze the influence mechanism of the credit financing of SMEs on CDS contract coupon rate, CDS payout ratio, bank-enterprise credit effort, and loan recovery rate when considering CDS. The result shows that the CDS contract leads to insufficient supervision after a bank loan, the moral hazard of the SMEs rises, and the probability of credit default events increases. In addition, in view of CDS, the SMEs can access more credit funds.

The role of virtual space in ensuring ‘fair access’ to banking services –results of empirical research conducted in the Polish SME sector

The aim of this article is to present results of long-term empirical research on the changing behavior of micro, small and medium-sized enterprises (SMEs) in Poland in the context of spatial exclusion and spatial ‘justice’. Between 2007 and 2015, the authors conducted cyclical research on the financial behavior of SMEs in Poland on large samples. The scope of research on traditional and virtual space covered mainly: the criteria for selecting a bank for current service and the use of various banking services in particular distribution channels. In the researched period, the percentage of indications to convenient location as the most important factor for selecting a bank dropped from 29% to 16%. In the entire period under research, the highest percentage of indications to convenient location as the most important factor for selecting a bank was recorded in the micro enterprises sector. The percentage of entrepreneurs’ indications of fees and commissions as the most important factor in choosing a bank increase from 28% to 36%. Price parameters became the most important factor of bank selection in the SME sector. Virtual space was used primarily to distribute less complex banking services (checking the account balance and viewing the history of operations on the account, as well as to make transfers). In the case of more complex products, such as deposits or loans, traditional banking branches were preferred. In contrast to the results of the American research (Degryse & Ongena, 2002), in Poland there was no impact of the distance between the company and the bank branch on the loan utilization rates and the loan refusal rates. The research has shown that the virtual space equalizes the opportunities, facilitates business operations, contributes to a drop in prices and improvement in quality of the offered products and services, and renders the access to products and services fairer.

Female Executives in the Service Sector: The Case of Small and Medium-Sized Enterprises in Spain

Small and medium-sized enterprises (SMEs) and women are important agents for economic and social development. This study attempts to understand how the economic crisis has affected the behavior of SMEs with high female participation in the decision-making process. To that end, the quantitative research focused on a sample of 425 small and medium-sized enterprises in Spain relying on a questionnaire-based survey. The results of the empirical study offer new evidence on the effects of the recession on decision-making female-dominated bodies in organizations and illustrate the importance of corporate governance issues. In addition, the research provides greater knowledge of female entrepreneurs in a country severely affected by the global economic crisis. Several recommendations are proposed to provide a theoretical basis for governments to reduce glass ceiling and promote women’s empowerment policies.

Socially responsible supply chain management in small and medium enterprises in the GCC

PurposeThe purpose of this study is to examine variables and their relationships that hinder socially responsible behaviours in the supply chain of small- and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC). countries.Design/methodology/approachThe study uses the mixed-method approach that includes the survey method and soft mathematical modelling. Empirical data were collected from 130 SMEs and their suppliers based in Qatar and Oman. Furthermore, to understand the barriers and their interrelationships, interpretive structural modelling approach is applied.FindingsThe results of empirical study reveal lack of coherence among SMEs and their suppliers in prioritising social responsibility issues in their supply chain. The hierarchy-based model reveals that shortages of incentive, short-term objectives, the lack of cooperation and willingness among supply chain partners, constraints (financial, managerial and technological) and the pressure from customers were the independent barriers and have strong driving power.Research limitations/implicationsThe findings of this study are expected to provide an insight to further improve and promote socially responsible supply chain in emerging economies in Gulf region. Future research could compare the socially responsible activities of SMEs from different Gulf countries and expand the understanding of the barriers that outline the responses of suppliers situated in different Gulf economies.Originality/valueThe results contribute to the field of supply chain sustainability as the first academic attempt to shed light on how SMEs in GCC are dealing with supply chain social responsibility issues and one of the few in the emerging economy perspective that probes the key role of barriers to improve the socially responsible behaviour of Gulf-based SMEs.

Home country institutions and export behaviour of SMEs from transition economies: the case of Russia

This study examines the relationship between home country institutional environment and export behaviour of small and medium-sized enterprises (SMEs) from transition economies. It is argued that perceived institutional challenges in home country may explain significant differences in exporting among firms. By focusing on Russia, as a context of transition economy, it is empirically tested how the perceived tax and financial barriers define export propensity of SMEs, and whether corruption concerns can play a role of a moderator and navigate firms' export activities. Data on 3136 Russian SMEs provide strong support for the effects of the perceived institutional dimensions on firms' propensity to export. The results offer a more fine-grained picture of institutional environment by contributing to the extant literature and show that the impact of home country institutions is dependent on the subjective perception which plays an important role in shaping export behaviour of Russian SMEs. The implications are discussed.

A critical incident analysis of the export behaviour of SMEs: evidence from an emerging market

PurposeIn line with the slogan “Africa rising”, the paper responds to the calls to shed light on the management knowledge of Africa, especially on the internationalisation of process of small and medium-sized enterprises (SMEs) from Africa. This paper aims to explore the critical incidents that trigger the export initiation of SMEs from the garment and textile sub-sector of Ghana.Design/methodology/approachThe study is based on the qualitative multi-case study research approach, coupled with the critical incident method and uses 36 case firms from the garment and textile sub-sector of Ghana.FindingsFrom the interview transcripts, it was found that being in the receipt of unsolicited order, wining government award and having international orientation are among the critical incidents that catapult SMEs in the garment and textile sub-sector of Ghana to initiate export business.Research limitations/implicationsThe study is based on the interpretivist qualitative method; therefore, future studies could extend the results by improving the sample size and use statistical methods.Practical implicationsBased on the findings, it is recommended that what is needed to improve export participation of SMEs from Ghana is entrepreneurial orientation. Implicitly, public policy must promote entrepreneurship education, i.e whether the government expects to see improvement in export involvement of SMEs from Ghana. Such initiatives will catapult most entrepreneurs from their comfort zones to take advantage of the various critical incidents in the external business environment and become exporters.Originality/valueThe contribution of the paper is that unlike previous studies that use objective quantitative measures to examine the issue from other settings, the present paper uses the critical incident method which is proven to delve deeper into the phenomenon. Another contribution is that it sheds light on the internationalisation process of manufacturing SMEs from an under-researched and a new geographical context.