Malaysian Small And Medium Enterprises Research Articles

Open-Source Enterprise Resource Planning Systems for Small and Medium Enterprises: A Conceptual Framework

The growing importance of information management in the digital economy has exerted considerable pressure on small and medium enterprises (SMEs) to implement advanced innovations in technology. Nonetheless, the high costs and intricacy of conventional Enterprise Resource Planning (ERP) systems have constrained their uptake among SMEs. This conceptual study examines the feasibility of Open-Source ERP (OS-ERP) systems as a practical option for Malaysian SMEs, offering a conceptual framework that connects information management capabilities, entrepreneurial orientation (EO), and enterprise success. The article contends that OS-ERP systems can augment entrepreneurial performance by enhancing information integration, strategic decision-making, and enterprise agility. This approach seeks to guide future research and offer practical insights for SMEs and policymakers to encourage digital transformation.

Exploring the Drivers, Challenges, and Opportunities of Supply Chain Technology Adoption for Small and Medium Enterprises (SMEs) in Malaysia

Small and Medium Enterprises (SMEs) have a crucial impact on the Malaysian economy, making major contributions to the functioning of the supply chain. Integrating supply chain technology has become a crucial element in enhancing the efficiency and competitiveness of SMEs in Malaysia. During recent years many developing and developed countries have witnessed the expansion of markets and supply chain networks; in the progress of these market and supply systems SMEs find various complexities when they are implementing or improving the technology integration of their supply chain. The current body of literature often addresses the adoption of technology in a general manner or within larger organizations, resulting in a significant gap in study about the specific circumstances and requirements of small and medium-sized enterprises (SMEs). This study employs a rigorous methodology that analyzes relevant papers to examine the drivers, challenges, and opportunities for adopting supply chain technology among SMEs in Malaysia. By implementing supply chain technology, Malaysian SMEs can increase their performance in many areas of key performance indicators. This includes improving efficiency, optimizing inventory management, achieving cost savings, enhancing customer service, and increasing market competitiveness. It is believed that the findings of the study can be useful for managers of SMEs, policymakers, and interested stakeholders. This will enable SMEs to navigate the challenges of adopting technology more effectively and enhance global competitiveness.

Empowering work-life balance: Exploring the nexus of flexible work arrangements, job satisfaction, and women's well-being in SMEs

The aim of this study is to evaluate flexible working arrangements, work-life balance, and job satisfaction among women who work in small and medium enterprises (SMEs). The COVID-19 pandemic has highlighted the importance of flexible working arrangements, particularly for women juggling work and family responsibilities. The study evaluates the extent to which flexible working arrangements enable women to maintain a balance between work and family life in order to achieve work-related satisfaction. One hundred and thirty questionnaires were collected from the respondents for analysis. The analysis demonstrated a significant relationship between flexible working arrangements and work-life balance/job satisfaction among women working in SMEs. Importantly, work-life balance is an explicit factor that influences job satisfaction and mediates the relationship between flexible working arrangements and job satisfaction. These findings emphasize the need for organizations to seriously consider implementing flexible working arrangements and work-life balance policies in return for enhanced satisfaction of their workforce, especially women in SMEs in Malaysia. Research in this area is scarce; however, these findings offer valuable insights for SMEs in improving employee satisfaction and striving for growth and sustainability in the long run.

Business Feasibility Analysis of Processed Sweet Potato Products at MSME Karya Indah Bandorasa Wetan

Sweet potato processing is a vital part of the local economy. In this study, the business costs incurred and feasibility of processing sweet potato product businesses in the Malaysian Small and Medium Enterprises (MSME) Karya Indah in Bandorasa Wetan are analyzed. The research is based on a census technique, namely, the MSME Karyan Wetans, which is used as the population and sample in the research. The business costs are calculated to calculate various costs associated with running a business consisting of fixed costs and variable costs. The acceptance feasibility ratio was found to be 1.455, so it is greater than 1 and is in the feasible and feasible category. This research offers practical guidance for MSMEs in assessing their operational efficiency and helps business owners make informed decisions about investment and expansion. Furthermore, it contributes to the broader understanding of sustainable business practices in the agricultural processing sector, specifically focusing on sweet potato products. Moreover, analyzing the impact of technological improvements or more efficient production methods on reducing costs and increasing productivity could provide valuable insights for enhancing business operations.

The Impact of Transformational and Transactional Leadership on Organisational Commitment in Small and Medium Enterprises (SMEs)

This study was conducted to explore the relationship between leadership styles and organizational commitment in the manufacturing sector in Small and Medium Enterprises (SMEs) in Malaysia. This study utilizes survey methods via questionnaires that involve 452 respondents. Findings from regression analysis show that both transformational and transactional leadership styles have a significant impact on organizational commitment in the manufacturing sector in Malaysian SME firms, especially transformational leadership. Hence, SME management teams are advised not to neglect the aspect of leadership styles in efforts to increase their organization's performance.

A Proposed Framework for Assessing the Readiness of AI in Small and Medium Enterprises (SMEs) in Malaysia

Small and Medium Enterprises (SMEs) have become increasingly important to Malaysia’s economy in recent years. They contribute significantly to GDP growth, job creation, and innovation. However, SMEs often face various challenges such as limited resources, market competition, and technological barriers. In this digital age, integrating Artificial Intelligence (AI) has tremendous potential to overcome these challenges and drive SMEs towards sustainable growth and competitiveness. Despite this, it remains unclear whether Malaysian SMEs are ready to adopt and use AI technologies. This research aims to bridge this gap by investigating the readiness of Malaysian SMEs to embrace AI, the factors that influence their readiness, and the potential impact of AI integration on their business performance and competitiveness. This initiative aligns with the National Science, Technology, and Innovation Policy (NSTIP) 2021-2030, i.e., promoting the development and readiness of local technology. This study proposes a conceptual framework to provide a detailed understanding of the readiness of Malaysian SMEs to adopt AI, analyze the factors that influence AI readiness, and evaluate the potential impact of AI integration on their business performance and competitiveness. The findings will inform future research initiatives aimed at enhancing SME competitiveness and fostering innovation in Malaysia’s business ecosystem.

Digital Transformation and its Effects on the Financial Performance of Malaysian SMEs

This study investigates the impact of digital transformation on the financial performance of Small and Medium Enterprises (SMEs) in Malaysia, a critical area given the country's ambition to become a digitally-driven economy. By integrating the Resource-Based View (RBV) and Dynamic Capabilities Theory, the research explores how the adoption of digital technologies, such as cloud computing and digital marketing, influences key financial metrics including profitability, revenue growth, and cost efficiency. The study highlights the moderating roles of firm size and industry sector, offering new insights into the conditions under which digital transformation is most effective. Through empirical analysis, the findings provide valuable guidance for SME owners, managers, and policymakers, emphasizing the importance of strategic digital adoption to enhance financial outcomes and contribute to Malaysia's broader economic goals. The research also identifies challenges such as digital skills gaps and infrastructure disparities, proposing targeted strategies to support SMEs in their digital transformation journey.

Are Psychological Empowerment and Tax Transparency Related with Tax Compliance Behaviour of SMEs in Malaysia? An Empirical Approach

The study explores the factors influencing tax compliance behaviour among small and medium enterprises (SMEs) in Malaysia. Its main objective is to examine the relationship between psychological empowerment and tax transparency on tax compliance behaviour. Malaysia continues to struggle with issues of under-reporting. Due to limited resources, the Inland Revenue Board of Malaysia (IRB) cannot fully ascertain the underlying causes of non-compliance. This study is novel in that it proposes a different model for measuring tax compliance behaviour, including the variable of psychological empowerment, which has been limited in previous taxation studies. The study employed SPSS and AMOS for data analysis. Responses from 230 SMEs in the manufacturing sector were collected using stratified random sampling. The results indicate that both psychological empowerment and tax transparency have a positive and significant relationship with tax compliance behaviour. These findings will be valuable for tax authorities and administrators by highlighting key areas that can be managed more effectively to reduce the high number of tax compliance issues in the country.

RIDING THE DIGITAL WAVES: READINESS OF SMALL ENTREPRENEURS IN ADOPTING DIGITAL TECHNOLOGIES

Malaysia business environment was predominantly made up of small and medium enterprises (SMEs), which indicates a total of 1,151,339 SMEs that represent 97.2 percent of total business establishments. The SMEs created employment accounted for 7.25 million workforces, which indicates 48 percent of total employment in the year 2020. The unexpected outbreak of the COVID-19 pandemic has presented a notable challenge for numerous SMEs, particularly in developing nations that have been slower in implementing digitalization strategies. Without exception, SMEs in Malaysia are currently facing ongoing challenges in their efforts to undertake digital transformation. Despite the considerable advantages derived from the digitised economy, small and financially constrained SMEs continued to lag due to internal resource and information deficiencies, skills gaps, and challenges related to securing financing. Hence, this study aims to investigate the digital transformation phenomenon and the challenges faced by SMEs following the COVID-19 pandemic so that the government can provide the necessary support for SMEs’ digital transformation.

Driving sustainability in industry 5.0 through sociotechnical approach of quality management

Industry 4.0 is primarily driven by technology, while Industry 5.0 (I5.0) places more emphasis on the interaction between human (socio) and technology (technical) aspects in shaping sustainability. Although I5.0 represents a burgeoning area of research, however, there remains a paucity of research on the sociotechnical perspective of quality management (QM) and sustainability in I5.0. This study intends to investigate the direct and indirect effects of socio-technical components of QM on sustainable performance through agile manufacturing, as well as the moderating role of firm size on these relationships. Data is gathered from 298 small and medium enterprises (SMEs) through a survey approach employing proportionate stratified sampling techniques. The findings support the socio-technical view of QM in Industry 5.0. Unexpectedly, employee education and training has no significant role in enhancing technical QM practices. Furthermore, QM and agile manufacturing are crucial to achieving sustainable performance in manufacturing SMEs. Finally, firm size has played a significant role as a moderating variable, particularly in I5.0. Based on the findings, the study offers novel theoretical contributions and practical implications by shedding light on the nuanced role of QM and agile manufacturing on sustainability within Malaysian manufacturing SMEs.

TOTAL QUALITY MANAGEMENT (TQM) ENABLERS AND STRATEGIC IMPLEMENTATION MODEL FOR MALAYSIAN MANUFACTURING SMALL AND MEDIUM ENTERPRISES

Small and Medium Enterprises (SMEs) contributed significantly to the Malaysian economy with 99% of business establishment. The contribution of SMEs to the GDP increased to 38.4% in 2022 as compare to 37.4% in 2021. They employed 7.32 million workers or 47.8% share to Malaysia employment and contributing substantial amount of RM580.4 billion or 38.4% in 2022 to the Malaysian GDP as compare to 2021 with RM520 billion or 37.4% (DOSM, 2023). Services and manufacturing sectors uphold their position as the main contributors to SMEs’ GDP, accounting for an 84.6% per cent share. The transformation and sustaining of the competitiveness of the service and manufacturing sector were among the major factors in determining the pace of economic activity for Malaysia. Therefore, strategies of the Twelfth (12th.) Malaysia Plan (2021-2025) was specifically designed to help the development of SME businesses to be more competitive in the market. Through an extensive literature review and interviews with academic experts in the field of TQM, the objectives of this study were designed to identify the enablers of successful TQM implementation, to determine what are the most contributing enablers as a result of TQM implementation and established strategic models engaged by Malaysian SME businesses. The self-administered questionnaire distributed to Malaysian SMEs to gain a general understanding of TQM implementation from the perspective of senior business managers. The finding indicates four enablers significantly contributed to the performance of organizations that includes customer focus, people's involvement, leadership and continuous improvement. As such it is reflected the importance to reinforce the role of management as systems designers in designing effective systems that are capable of sustaining levels of high performance.

Adoption of Industry 4.0 with Cloud Computing as a Mediator: Evaluation using TOE Framework for SMEs

Industry 4.0 represents a significant shift in production processes, necessitating the integration of humans, products, information, and robots into digitalized workflows. While this transformation offers numerous benefits, its adoption, particularly among small and medium enterprises (SMEs), is hindered by various challenges such as financial constraints, maintenance costs, and a lack of digital culture and awareness. This study examines the adoption of Industry 4.0, specifically through cloud computing technologies, within the manufacturing and service sectors of SMEs in Malaysia. Cloud computing is economical, straightforward, and easily implemented for SMEs. We propose a conceptual model based on an extended Technology-Organisation-Environment (TOE) model, integrating refined constructs and considering digital organizational culture as a moderator, with cloud computing acting as a mediator to enhance firm performance. The study investigates the relationship between these constructs and addresses overlooked factors influencing adoption. Utilizing a structured questionnaire with 54 items derived from previous research, we employ partial least squares structural equation modeling (PLS-SEM) to analyze data collected from a pilot study. Our findings confirm the reliability and validity of the proposed conceptual model, meeting established criteria for composite reliability, average variance extracted (AVE), Cronbach's alpha, and discriminant validity (HTMT Criterion). Furthermore, this study presents empirical findings on technological, organizational, and environmental influences on adopting cloud computing. The insights gained from this research offer valuable guidance to enhance the performance of SMEs in the Industry 4.0 landscape.

Successful Leadership Styles from the Lense of Qualitative Perspective: A Conceptual Visit

This paper explores the relevancy of transformational and servant leadership styles in Small and Medium Enterprises (SMEs) in Malaysia. The topic of leadership has been studied extensively throughout the years, with various leadership theories have been proposed. Previous studies have also highlighted on how leadership style is crucial in influencing the performance of an organization. Moreover, these two well-known leadership styles are believed to sit well with the concepts and strategies practiced among SMEs in this country. This study seeks to offer literature and practical insights into why these two styles of leadership are relevant and practical for the distinctive circumstances of Malaysian SMEs. Therefore, the researcher concluded with a rationale that applying the right and suitable leadership styles will influence the performance and success of Malaysian SMEs in the future.

Challenges and ways forward for the Malaysian SMEs in the Halal food industry: a systematic review

With its rich Islamic cultural heritage, Malaysia has been at the forefront of the Halal food industry, presenting opportunities and challenges for its small and medium enterprises (SMEs). This study offers a critical review of the multifaceted challenges faced by these SMEs in the competitive landscape of the Halal food sector. Through a review of 79 scholarly articles from Scopus and Google Scholar databases covering the years 2013 to 2023, we unearthed a spectrum of challenges. Key among them are inconsistent Halal standards and a labyrinthine certification process, compounded by barriers in international trade, financing conundrums, evolving marketing paradigms, innovation deficits, and branding complexities. In response, this research outlines strategies tailored for industry resilience and growth. Central to our recommendations is the imperative to bolster Malaysia's stature as a global Halal food nexus, emphasising cutting-edge branding techniques, leveraging the potential of e-commerce, and strategically positioning for increased Halal food exports. Drawing these insights, the study furnishes SMEs, researchers, and policymakers with a roadmap for industry evolution and underscores the importance of research in this domain.

Determinants of asset misappropriation in small and medium enterprises: Evidence from Malaysia

This paper investigates the factors that contribute to the occurrence of asset misappropriation in small and medium enterprises (SMEs) in Malaysia. For a theoretical basis, the fraud hexagon model, which includes pressure, opportunity, rationalisation, capability, ego, and collusion elements, is adopted to guide the study. For the analysis, 306 valid responses from individuals working in diverse SME sectors in Malaysia were obtained via a self-administered questionnaire. Based on the objectives and to test the hypotheses, this research used a quantitative approach. Correlation analysis was utilised to examine the relationship among the independent variables. In addition, multiple regressions were conducted to answer the research questions of this study. The findings show that opportunity, rationalisation, and collusion have a significant relationship with the occurrences of asset misappropriation in Malaysian SMEs, whereby collusion makes the strongest and most significantly unique contribution to explain the occurrences of asset misappropriation. Thus, the study concluded that opportunity, rationalisation, and collusion are indeed significant factors that influence the occurrence of asset misappropriation. This study provides insights for Malaysian SME business owners regarding the minimum monthly salary policy, which should be revisited and reconsidered.

Sanitation Knowledge and Practices of Malaysian Food SMEs: Addressing Current Issues and Readiness in Acceptance of Green Sanitation Technology

Sanitation is crucial in the food industry, involving cleaning and disinfection processes to ensure facility cleanliness. This study examined sanitation knowledge and practices among small and medium enterprises (SMEs) in Malaysia's frozen meat sector. It also evaluated the acceptance of eco-friendly sanitation technology, specifically an electrolysis unit producing electrolyzed water. Data was collected through an open-ended online questionnaire using Google Forms. The questionnaire comprises demographic profiles, sanitation knowledge, sanitation program design knowledge, sanitation challenges, and the acceptance of integrating a green cleaner with the current sanitation program. Results show SME manufacturers possess sanitation knowledge but face implementation challenges due to absent sanitation programs, skilled labor shortage, hot water supply issues, difficulty cleaning narrow spaces in equipment, chemical storage, and budget constraints. Due to low-temperature operations, only 73 % of frozen meat industries use hot water for sanitation. Additionally, 45 % lack wastewater treatment, leading to chemical residue discharge into municipal drainage. SMEs show interest in electrolyzed water for its dual role as a cleaning and disinfecting agent. The technology's room-temperature efficacy and environmentally friendly degradation into salt and water appeal to SMEs. Adopting electrolysis sanitation technology is expected to significantly reduce costs by utilizing only salt, water, and electricity for electrolyzed water generation.

Influence of Performance Expectancy and Government Support on Mobile Commerce Adoption among SMEs in Malaysia

In developing nations like Malaysia, where there is a huge potential market for online businesses, the adoption of mobile commerce, or m-commerce, is still in its infancy. If Malaysia fails to seize the potential presented by the adoption of m-commerce, it would be more susceptible to economic upheavals. Therefore, it is crucial to carry out research on the variables influencing the adoption of m-commerce in Malaysia. This article aims to investigate the relationship between government support for m-commerce adoption among Small and Medium Enterprises (SMEs) in the service industry and performance expectancy. This study used a quantitative methodology, and 396 SMEs in Kuala Lumpur and Selangor that had previously used m-commerce provided primary data via a self-administered questionnaire. PLS-SEM was used to evaluate the data, and the results showed that the suggested model, which is regarded as strong, explained 58.4% of the variation in the dependent variable. The outcome demonstrates that government support and performance expectations have a major positive impact on SMEs\' adoption of mobile commerce. The results of this study can help other scholars understand how SMEs in Malaysia are adopting m-commerce.

Factors Influencing Tax Awareness among E-Commerce SMEs in Malaysia: An Empirical Investigation

The rapid growth of e-commerce has introduced new challenges in tax compliance, particularly among small and medium enterprises (SMEs). This study investigates the key factors influencing tax awareness among e-commerce SMEs in Klang Valley, Malaysia. Given the online nature of these businesses, tax evasion has become a prevalent issue, with many owners assuming that their business activities may go undetected by tax authorities. The main objective of this study is to examine how tax knowledge, taxpayer attitudes, and tax penalties impact tax awareness among e-commerce business owners. A sample of 158 e-commerce SME owners was surveyed, and the data were analyzed using the Statistical Package for the Social Sciences (SPSS) version 27. The results of the regression analysis reveal a significant relationship between taxpayer attitudes and tax penalties with tax awareness. However, tax knowledge was found to have no significant effect on tax awareness. This study contributes to the understanding of the determinants of tax awareness in the digital business environment and provides valuable insights for policymakers and tax authorities in addressing tax evasion challenges. The findings can also assist e-commerce professionals in enhancing compliance and fulfilling their tax obligations effectively.

Effect of internal barriers on innovation performance in embryonic SMEs in Malaysia

Manufacturing small and medium enterprises (SMEs) need to propel their creativity and innovativeness to enhance their innovation performance in the competitive and fast-changing environment. The current environment has transformed the internal working pattern, structure, and communication system to survive the rough business ecosphere. Consequently, SMEs encountered innumerable barriers to achieve the innovation performance and the SMEs should recognise the internal barriers so that they are able to accelerate their innovation performance. Therefore, this study aims at examining the internal barriers namely constraint in financial resources, constraint in technology, and constraint in human resources that hamper the innovation performance among the Malaysian manufacturing SMEs. This study embarked on two phases of data collection. First phase includes a series of semi-structured interviews with 15 participants from 5 SMEs via snowballing technique to gather their insights on internal barriers that impede innovation performance. For second phase, the survey method was adopted, and 217 SMEs responded to the survey. All the responses were analysed using SmartPLS technique. The interview findings demonstrate that all the internal constraints are indeed important for SMEs to grasp and serve as the obstacles for innovation performance. Nevertheless, from the quantitative analysis, only financial constraints serve as the significant barrier that impede innovation performance. To summarise, this research produces insights on decisive proof regarding internal barriers that inhibit the manufacturing SMEs to achieve innovation performance.

Adoption of fourth industrial revolution 4.0 among Malaysian small and medium enterprises (SMEs)

Using Industrial Revolution 4.0 (IR4.0) technology, companies can upscale their innovation in organizing, managing, and controlling the value chain life cycle. IR4.0 is anticipated to bring challenges and opportunities to developing economies such as Malaysia, but due to its novelty to the Malaysian business community, the concept still needs clarity in its definition for proper understanding and business practice. This paper aims to examine the impact of IR4.0 adoption on Malaysian small and medium enterprises (SMEs) by analyzing the organizational readiness, relative advantage, compatibility, top management support, government regulation, and competitive pressure, and its relationship with the adoption of IR4.0 to Malaysian SMEs. This study framework is based on the diffusion of innovation theory (DOI) and technology–organization–environment (TOE) framework. The study results verified the importance of relative advantage, compatibility, competitive pressure, and top management support as significant predictors of IR4.0 adoption. The study is expected to benefit regulators and business ecosystems in understanding the challenges in implementing IR4.0 in Malaysia and formulating intervention processes and programs for successful IR4.0 adoption.