Growth Of Small And Medium Enterprises Research Articles

SMEs agglomeration and its contribution to socioeconomic transformations in peri-urban area (Case study: Semarang City)

The rapid growth of Semarang City has triggered an agglomeration of small and medium enterprises (SMEs) in peri-urban areas. In addition to its impacts on the socio-economic state of the local community, the SMEs growth also affects to spatial transformation in the same area. Red brick industry in Pedurungan Kidul Village represents this phenomenon. Since 1990, its production activity has positively impacted on the local community’s welfare improvement through increasing employment opportunity and household income. However, it also has threatened the existing spatial development change. By using sequential mixed method approach, the purpose of this research is to investigate the contributions of red brick industry growth towards peri-urban development, both spatially and socio-economically.

Navigating Precarious Livelihoods: Youth in the SME Sector in Zimbabwe

Since the late 1990s, Zimbabwe has experienced a protracted socioeconomic and political crisis. This crisis was marked by unprecedented unemployment rates, company closures, retrenchments, and rapid informalisation. In the face of employment uncertainties, many youth joined the burgeoning small and medium enterprises (SME) sector. This article explores private SME growth in Harare and shows how it enables young people to navigate the unemployment crisis. Based on the lived experiences of youth working in the retail and clothing SME sector in Harare, the article argues that young people deploy their agency and resourcefulness in grappling with unemployment by devising creative and inventive ways of ‘getting by’ through engagement with SMEs. Although SME sector growth can help create employment for youth, the nexus is complex. Both the number and quality of jobs created remain problematic. The SME sector is also politically sensitive, so young people have to navigate partisan politics as well.

Investigation of the Factors Influencing SME Failure as a Function of Its Prevention and Fast Recovery after Failure

AbstractThis paper presents a conceptual framework for investigation of the factors influencing the failure of small and medium enterprises (SMEs) as well as the level of their recovery. Based on the review of literature, all the factors are classified either as individual characteristics of entrepreneurs or non-individual characteristics, that is, characteristics related to SMEs. Having in mind various factors identified by different researchers in their studies, the authors of this paper formed a basic hypothetical framework as well as a qualitative framework for evaluation of the most significant factors influencing SME failure and recovery. Accordingly, a preliminary questionnaire was designed in order to collect the attitudes of entrepreneurs regarding the impact of particular factors. The results of the survey were used for further quantitative analysis and as a base for the formation of a structural equation model for testing the proposed hypotheses.Using the structural equation model to derive results, the authors have found that all the analysed factors except the factors related to private time activities of entrepreneurs/owners of SMEs have a statistically significant influence on SME success, with external non-individual factors having the greatest influence. Furthermore, the results indicate that the level of recovery, business life cycle stage and the sector of a failed SME impact on the ranking of the factors leading to SME failure. The study points to the necessity of improving the conditions under which SMEs operate, primarily by removing the obstacles that hinder growth and development of SMEs as well as by developing the appropriate system of support for entrepreneurs. In addition, having a clear vision of the factors of failure can help SMEs to become more resistant to the adverse effects of these factors and deal with them more effectively.

Aligning business process maturity level with SMEs growth in Indonesian fashion industry

PurposeThis study aims to develop a business process maturity model, especially on operation processes, based on the characteristics of each organisational growth stage, to increase small and medium enterprises (SMEs) growth. With this information, SMEs can identify their needs and priorities for business process improvement based on the characteristics that are inherent in the organisation.Design/methodology/approachThe proposed model was developed by reviewing the literature on previous studies related to the organisational life cycle and its characteristics, as well as a business process maturity model. Furthermore, historical case studies were conducted to validate the proposed model. Case study objects in this research were fashion industry companies that have grown from an SME scale to national level.FindingsThe results of this research indicate that the characteristics of each growth stage are different, which led to increased complexity and maturity of business processes run. Therefore, SMEs should pay attention to their growth stages, as a basis to improve their business process maturity, especially on the critical processes, which are evaluate products performance, design products and services and monitor sales. Through this model, SMEs can determine the business’ current growth stage and use the proposed model as guidance for business process improvement to accelerate organisational growth.Research limitations/implicationsValidation of the proposed model was done by conducting a historical case study. To generalise the model, it is recommended to survey similar industry and test quantitatively using statistical methods. However, further research can be used in other industries that might yield different results. Besides, this research can also be developed in the supporting process categories.Practical implicationsThis study provides a practical guide for SMEs to identify their current growth stage, and implement the measurement of business process maturity level. Maturity level standard at every growth stage can be used in determining the priority of business process improvement to drive organisational growth.Originality/valueThrough this research, the BPMM method was developed to enable SMEs to implement a self-evaluation process without seeking external assistance and assess their needs through a clear and understandable scale allowing for further development of the business. By using this method, SMEs can manage their business processes maturity level to encourage its growth.

Sustainable Growth in SMEs: A Review from the Malaysian Perspective

The importance of Small and Medium Enterprises (SMEs) contributions to the nations’ economies in the world is an undebatable fact. The same applies to Malaysia with 98.5% of the total business establishments being SMEs; contributing to 65.3% of total employment and 36.3% of GDP. Supports from the Government are never fading with huge allocations of budget every year but yet registering high failure rate. Sustainable growth of SMEs is long overdue. The awareness of the importance of sustainable growth of SMEs has resulted in the presence of various definitions and concepts of sustainable growth. This paper seeks to explore the literature on long-term and sustainable growth for SMEs and the enhanced knowledge on this area willbe aguidance to the policy makers, supporting agencies, advisors, entrepreneurs and academicians to seriously develop an all-encompassing model for sustainable growth of SMEs. This paper suggests an integrated sustainable growth model of SMEs with four dimensions of the economic factors.

Review and Analysis of issues related to the implementation of Knowledge Management practices in Indian Automotive SMEs

In the present era of knowledge economy, knowledge embedded within an organization is a great source of sustainable competitiveness. Growing importance of knowledge-intensive industries makes KM a strategic tool in the growth and success of all businesses. Hence, Knowledge Management (KM) is considered as a critical input in the growth of any organization and more so in the case of Small and Medium Enterprises (SMEs). KM is considered as indispensable for competitive and sustainable growth of SMEs. Hence, an incisive approach for KM in SMEs is a requisite in the recent situation. SMEs should be conversant with and insightful of the issues that will impact the achievement of a Knowledge Management (KM) activities. The successful execution of KM in SMEs is managed and invigorated by certain originating issues. Hence in order for KM initiative to be successfully implemented, all these issues must be taken into consideration and be systematically and thoroughly investigated. Thus, taking a holistic view, we investigate KM issues in automotive component manufacturing SMEs in India and focusing on the impact of each issue in an SME on KM implementation.

Influence of self-motivation and intrinsic motivational factors for small and medium business growth: A South African case study

Background: This study investigates the influence of intrinsic motivational factors for small and medium enterprise (SME) growth in the eThekwini District Municipality in South Africa (SA). Aim: It examines whether self-motivation of business owners operating in the furniture manufacturing sector has an influence on SME growth. Setting: Of the 127 SMEs operating in the eThekwini District Municipality, 112 participated in the study representing 88% of the target population. Methods: Descriptive, chi-square and correlative analyses were used to test the two objectives. That is, to determine the influence of self-motivation of business owners for SME growth, as well as to establish the intrinsic motivational factors that stimulate creativity for SME growth. Results: The study revealed that the intrinsic motivational factors of business owners do influence SME growth in SA. These factors include exerting effort for business growth interest, finding new solutions to business problems to achieve growth, growing business for recognition, belief to produce the desired outcomes, taking responsibilities for business expansion, the need for advancement, and growth aspiration that enables the business owner to take risks in order to grow the business. Conclusion: The outcome is that a self-motivated business owner has the ability to grow the business. The study provides valuable data relating to intrinsic motivational factors. Such factors are the enablers of creativity and business growth. It provides initial baseline data upon which to base future work.

Entrepreneurial skills and growth of Small and Medium Enterprise (SMEs): A comparative analysis of Nigerian entrepreneurs and Minority entrepreneurs in the UK

The significance of Small and Medium Enterprises (SMEs) to an economy development of a country cannot be ignored. Therefore, the growth of a business depends on the development of abilities needed to execute a smooth running of day to day business activities. Research established the fact that the flat economy growth of region relies on the extent of trade activities in the area. Given this importance of enterprise, this present study aims at developing an understanding of the influence of entrepreneurial skills on SMEs in Nigeria compare with the UK, as perceived by SME owners. The research will benefit the researcher, SME owners in Nigeria, Policymakers, and other researchers. Data collection was through an online survey questionnaire, and it was administered to a population of 38 SME owners both in Nigeria and in the UK. The research followed judgmental sampling techniques to explore their experience, beliefs, and attitudes to entrepreneurial skills because of the limited time frame. Moreover, this survey was used to validate the study conceptual framework and establish an insight on the opinion of business owners of the context. The study findings were that entrepreneurial skills have a significant influence on the growth of SMEs in Nigeria and the UK. However, the respondent in Nigeria and the UK agreed that creative thinking, Problem solving and communication skills are critical for increase sales and competitive advantage. Moreover, the respondent in Nigeria strongly agrees that high level of creative thinking with a bit of problem solving and communication skills will SMEs growth. By contrast, UK minority entrepreneurs argue that great creative thinking and a balance of problem solving and communication skills are critical to SMEs growth.

Impact of bank finance on the survival of small and medium enterprises in Nigeria

Banking industries play an important role in the survival of Small and Medium Enterprises (SMEs) and it is known to provide a good business environment or investment climate that encourages private firms to be well managed, efficient, create jobs, increase the rate of economic growth and reduce poverty. The degree of backwardness of small and medium enterprises in Nigeria is not only associated by the poor management of the enterprise but also other complimentary services such as financial assistant of banking industry that would see businesses through their teething stages. Yet little or nothing is known about the impact of financial institution on the survival of SMEs in Nigeria.Hence this study analyzed the impact of bank finance on growth of small and medium Enterprises in relation to GDP growth. Secondary data was used for this study. The secondary data spanning from 1999-2013 was obtained from the World Bank’s Development indicators for 1999- 2013, and all other variables were obtained from the National Bureau of Statistics annual report, 2013 and Central Bank of Nigeria bulletin for 2013. The data collected was analyzed using Multiple Regression and Co-integration Model.The long-run results indicate that finance, credit from private sectors, fiscal deficit and management of accounting information have a significant and positive effect on SMEs growth in Nigeria. Gross fixed capital formulation has an insignificant effect on GDP growth in the long run. An increase of 1 percent in finance will, on average, lead to an increase of about 8 percent in SMEs growth. This implies that the Nigerian economy has been enhanced by the SME sector, possibly through innovations leading to employment generation, job creation, and poverty alleviation. The lag length of the long-run model was selected on the basis of the AIC.. The F-statistic value of the long-run model is also significant and implies that all the independent variables are jointly significant. The Durbin–Watson (DW) test statistic shows an absence of autocorrelation in the model.Keywords: Bank, finance, SMEs, Survival, Nigeria

Strategic Cost Management for Sustained Growth-A Study of SME's in India Dr.

Indian economy is projected to develop as one of the top economies in the world and is expected to become a $ 5 trillion economy by 2025. In this context, it is good to note that Small and Medium Enterprises (SMEs) of India have been contributing significantly to the growth of Indian economy. It is said that SMEs contribute nearly 45% to the GDP of the economy. It is prudent to ask to what extent the SMEs can continue to contribute towards this projection because, it is reported that sustenance of SMEs has been a major source of concern for the last few years. According to the one of the surveys conducted by IFC, it is learnt that nearly 24% of SMEs close shop in two years of their inception and nearly 53% of them go out of the market totally in about four years for various reasons like poor cost management, bankruptcy and business loss. A report of a National Research Study (2013) opines that SMEs fail to survive on account of lack of competency in cost management and failure to forecast rising cost. Hence, managing the cost of their products or services in SMEs with a strategic focus becomes very important to respond to the challenging economic times faced by business today. The present paper is an attempt to discuss growth of SMEs in India, analyze the current cost management practices adopted by SMEs with specific emphasis on Strategic Cost Management (SCM) Practices adopted and how these practices impact their Business performance.

Enabling private sector adaptation to climate change in sub‐Saharan Africa

AbstractThe private sector is increasingly recognized as having important potential to help society adapt and become more resilient to climate change. Yet there is limited research examining how to promote and facilitate private sector adaptation in developing countries and in particular how governments can create an enabling environment to stimulate and incentivize domestic private sector adaptation. In this paper, we address this gap through a review of the key factors required to provide an enabling environment for the private sector denoted by existing adaptation literatures. We do this with a focus on adaptation by small and medium enterprises (SMEs) in sub‐Saharan Africa (SSA). To advance this review, we draw insights from a much larger, yet generally independent, literature on enabling environments for private sector development. This literature disaggregates the private sector and highlights key constraints to the development and growth of SMEs in SSA, including deficient infrastructure and evidence of an African gap in access to and use of finance. Both areas of scholarship are then combined in a framework identifying key “building blocks” constituting enabling conditions for private sector adaptation. The framework could be applied in many ways including to focus strategies to enhance private sector adaptation and to identify trade‐offs and interactions between policies or initiatives surrounding private sector development. By combining these literatures, we call for a more holistic approach to develop enabling environments for SME adaptation and climate resilient development that addresses the broader structural deficits that condition vulnerability and barriers that limit adaptive capacity.This article is categorized under: Vulnerability and Adaptation to Climate Change > Institutions for Adaptation

Large Enterprises Neglect Supporting SMEs in Mozambique

<p><em>It is globally accepted that support to Small and Medium Enterprises (SMEs) at their birth and during growth is essential to nurture them in order to avoid premature deaths. Support to SMEs can come in many forms, but large enterprises support to SMEs, especially manufacturing ones is crucial to enable them to enhance their organizational structure, adoption of new technology and gaining financial stability. The objective of this research was to find out the impact of large firms support to SMEs and how the two sectors interact in the Mozambican economy. </em><em>Using a sample of SMEs from Greater Maputo to represent the country as a whole, the study was carried out</em><em> involving three sectors, manufacturing, services and commerce sub-sectors. The research used quantitative methodology applying face-to-face questionnaires, based on structured close ended questions. The study found that there was very little support to SMEs coming from large firm in Mozambique. It was recommended that more incentives and encouragements be given to large firms in order to increase their participation in SMEs development and growth in the country.</em></p>

A Study of Effect of Financial Access on the Growth of SMEs with Special Reference to Sports Industry in India

SMEs form a large part of private sector in many developed and developing countries, there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance, potentially explaining the lack of SMEs’ contribution to growth. Financial and institutional development helps alleviate SMEs’ growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes. Small and Medium Enterprises (SMEs) plays a crucial role in any developing economy. Although there is an increase in the SMEs but there are also numerous challenges associated with the growth. This research paper explores the Effect of Financial Access on the Growth of SMEs and specific challenges encountered by the SME's in financing and developing. In this study convenience sampling was adopted with the data sample size of 80 SME's, the data was collected with the help of structured questionnaire. The data is analyzed through frequency analysis with graphs & tables and Chi-Square Test of association. This study shows that SMEs are still facing some challenges in raising funds from Commercial Banks due to some difficulties in unavailability of funds like; Quantum of loan, disbursement of funds and delay in delivery of loan. The results revealed that the improvement of financial access has great effect on the growth of SMEs.

The Competitiveness of Small and Medium Enterprises in Adverse Economic Environments

Small and medium enterprises (SMEs) are the backbone of most economies and in particular of the economies of the European countries. They represent 99% of all businesses in the European Union. They considered in total one of the biggest employers as they provided two thirds of the total private sector employment in the European Union (EU), where by EU we refer to the 28 countries of the European Union. These are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. Furthermore, SMEs have a significant contribution from a social perspective; they provide employment to the vulnerable members of the society, such as less experienced, less educated and lower income workforce. However, SMEs were hit by the financial crisis with a notable number of them going out of business and suffering job losses. The latter were heavily concentrated in the Member States which were affected the most by the sovereign debt crisis. At the same time, compared to the large enterprises, SMEs appeared to be more resilient than large enterprises, particularly regarding employment. Consequently, a question that arises is how can SMEs weather the crisis and maintain their competitiveness in adverse economic environments. In this paper an attempt to address the issue of SME competitiveness in adverse economic environments is made, by investigating the relationship between the appropriate enterprise competitiveness metrics, as measured by their capacity to compete (quantity and cost requirements, time requirements, certification and standards, competitors), to connect (ICT requirements, linkages with customers, linkages with businesses, linkages with institutions) and to change (financing requirements, skills requirements, intellectual property requirements, innovation requirements) and country statistics, including the competitiveness of each particular country, as measured by the unemployment rate, the unit labor cost, the total employment growth, the GDP (in billion USD), the GDP growth, the GDP per capita (in USD) and the competitiveness indicators (in terms of relative consumer prices and relative unit labor costs). The methodological approach relies on the use of linear regressions. In doing so, we expect to derive the country policies and dynamics that can help SMEs maintain their competitiveness and comparative advantages in periods during which the economies are not performing as well. This is quite important, in securing not only the viability but also the growth of SMEs, taking into consideration the importance of their contribution to the economies of their countries of domiciliation as exhibited above.

The Impact of SMEs on the Economic Development of Pakistan

Pakistan is a country where the expansion of the industrial sector is necessary, and in this process, the relative significance of the Small and Medium Enterprises (SMEs) sector cannot be overstated. SMEs comprise approximately 90% of total businesses in Pakistan; nearly 80% of the workforce other than the agriculture sector is employed by the SMEs; and approximately 40% of GDP is contributed by the SMEs.1 Though, the growth of SMEs is constrained by financial and other resources that is not faced by Large Scale Manufacturing (LSM) sector. From the facts and figures presented in this paper, it can be concluded that SMEs perform a dynamic role in the growth of all the related sectors of the economy. This study empirically analyzes the effect of innovation and activities of SMEs on economic growth of Pakistan over the span of 19732017. The study concludes that the activities of SMEs do influence the economic development of Pakistan.

FACTORS AFFECTING THE INVESTMENT CLIMATE, SMES PRODUCTIVITY AND ENTREPRENEURSHIP IN NIGERIA

In Nigeria, most of businesses operate in the form of Small and Medium Enterprises (SMEs). SMEs play a significant role in the economic development of many nations. This paper employs current perspectives to examine the factors affecting investment, productivity and growth of SMEs by employing the World Bank Enterprise Survey in Nigeria. It explored five main factors affecting investment and productivity in Nigeria as follows: education of the labour force, access to infrastructure, access to finance, size of firms and other business climate variables. Other business climate variables are insecurity, bribe or corruption, the amount of time that businesses spend dealing with government regulation, poor power availability, etc. In a survey of 2,676 firms, access to finance (33.1%), access to electricity (27.2%) and the level of corruption (12.7%) were the most ranked obstacles for business owners. By employing the World Bank Enterprise Survey, this paper presents and analyses the business environment challenges at the national level. Keywords: SMEs, Enterprise, Productivity, Sustainability and African Business Environment.

Small and Medium Enterprises towards Indonesia’s Significant Role in G20 and Economic Sustainable Development

This study is a qualitative desk research. The research’s goal is to enhance the understanding of important influence of Indonesia Small and Medium Enterprises (SMEs) among G20 member countries. Using ten design principles for industrial policy by Rodrik (2004), this research identified how SMEs could be a big influence for Indonesia’s economic sustainable development. A survey by OECD informed that Indonesia is in the fourth position for its Growth Domestic Product (GDP) and economic development among G20 member countries. The SMEs' development contains with Rodrik’s model, one of ten designs is to give incentive programs to subsidize SMEs, so they can improve their productivity and opportunities. Government of Indonesia has given incentives since 2007 to help Indonesia’s SMEs activities. The contribution SMEs to GDP has increased from 57.84% to 60.34% in the last five years per 2016. Those facts lead to the conclusion that in achieving sustainable economic development, Indonesia should constantly determine to push the growth of SMEs. Some lacks are still happened. But, by giving more innovative programs and implement supportive policies, the role of Indonesia in G20 will be stronger and the long-term effect will strengthen Indonesia’s SMEs.

Obstacles for the Growth and Development of Small and Medium Enterprises in Sri Lanka: Case of North Western Province

The backbone of the Sri Lankan economy is formed by Small and Medium Enterprises (SMEs) which is an essential component in a competitive and efficient market. New SMEs’ role in the economy is vital as it addresses the issues of sustainable development; job creation, economic growth, competitive market pressure and the overall stimulation of the country’s economy. SME failure rate in Sri Lanka is quite as high as 45%. Therefore, the primary objective of this study was to examine both internal and external organizational factors which are acting as obstacles for the growth of new SMEs in Sri Lanka. Thirty four major variables were identified as obstacles through Focus Group Discussions and literature review. Principal Component analysis (PCA) with Varimax Rotation was used to reduce the identified variables into five components. The most perceived obstacle was termed as Finance which is largely internal to the firm with an Eigen value of 8.17 and a percentage variance of 24%, while the other obstacles determined by PCA were Management (internal), Market (external), Infrastructure (external) and Economic (external) in descending order. The PCA has emphasized the stringency of providing collaterals/guarantees to obtain bank loans as the most impeding obstacle for the growth of new SMEs in Sri Lanka. Therefore, the study suggests that it is needed to revisit the micro finance accessibility of SMEs in the North Western Province (NWP) and to support them in formulating effective financial management plans within their early years from the inception to avoid failures.

Factors Influencing Family Business Continuity in Indian Small and Medium Enterprises (SMEs)

Most of the research on family business continuity is based in the western world. Continuity of family business is affected by social and cultural factors on one hand and on the stage of growth of the economy on the other. This paper focuses on the continuity concerns with reference to (1) the Eastern context and (2) the developing economy’s context, by studying Indian family businesses, with (3) specific focus on Small and Medium Enterprises (SMEs). Data were collected from SME business families using a questionnaire. The impact of various factors was examined on the family, the business and the inductee. This empirical study validates some of the drivers of effective succession identified so far in the literature. It sharply identifies the variables that can be more relevant and can directly affect the outcome in terms of positive impact on the business, family and the inductee. The findings of the study will be of great help in successful succession planning for the growth and development of SMEs that contribute significantly to economic growth.

Effect of legal and regulatory framework on SMEs growth in the Accra Metropolis of Ghana

Entrepreneurship has been generally recognized as one of the most important dynamics leading to development. However, promoting entrepreneurship depends on an enabling business climate. The study sought to explore the effect of legal and regulatory frameworks on small and medium enterprises (SMEs) growth in Ghana. The study was quantitative and primary data comprised 382 owners who were conveniently sampled for the study. The results were analysed using structural equation model-partial least square. Bureaucracy, unstable policy climate, unfriendly customs and trade regulations, tight monetary and credit policies, corruption, and excessive tax regimes, workforce and labour regulations were found to negatively affect SMEs growth in Ghana. It is concluded that for SMEs growth to thrive, sound legal and regulatory systems are needed. The government must create relaxed credit policies that support the development of entrepreneurship by simplifying loan conditions, ease the registration processes for SMEs, lower and reform the tax systems, engineer effective price stabilization policy and create flexible customs and port regulations, while maintaining transparency and accountability among public officials in charge of SMEs regulation. The study adds to the few works conducted in sub-Saharan Africa, especially in Ghana. The new empirical insights are significant to SME and entrepreneurship development in Ghana.