Malaysian Small And Medium-sized Enterprises Research Articles

Cash economy: tax evasion amongst SMEs in Malaysia

Purpose The purpose of this study is to investigate the relationship between tax evasion and certain demographic factors such as location, engagement of tax agent, size and type of small- and medium-sized enterprises (SMEs) industry in Malaysia. Design/methodology/approach In this study, using proprietary tax audit data from the Inland Revenue Board of Malaysia (IRBM) on the 2011 tax returns of SMEs, the authors run a multiple regression analysis to examine the impact of location, agent, type of industry, size of enterprise and type of tax evasion on SMEs’ tax evasion in Malaysia. Findings The authors find that tax evasion among SMEs in Malaysia is the highest when the business is located in a suburban environment and has no tax agent. Tax evasion is also influenced by the size of the SME (micro or medium). Originality/value This study gives insight that the IRBM can use to aid its collection department in profiling SMEs that have a higher tendency to evade paying tax.

The Relationship Between Entrepreneurial Orientation and Manufacturing Operations of Malaysian SMEs Rural Entrepreneurs

Despite numerous studies have been done on entrepreneurial orientation (EO), its relationship with manufacturing operations has yet to be determined. Thus, the purpose of this study is to identify the relationship between EO and the manufacturing operations of Malaysian rural entrepreneurs of small and medium-sized enterprises (SMEs). The survey questionnaires were distributed to 73 respondents who were rural entrepreneurs in Selangor, Malaysia. Pearson's correlation coefficient analysis was used to analyze the quantitative data obtained. The findings showed that the five dimensions of EO (innovativeness, proactiveness, risk-taking, competitive aggressiveness and autonomy) has positive relationship with manufacturing operations. Competitive aggressiveness has the highest value cfcorre~ationw ith manufacturing operations among the EO dimensions. It can be concluded that the EO has strong relationship with manufacturing operations of Malaysian SMEs rural entrepreneurs. This study provides new empirical evidence on EO and manufacturing operations relationship as well as some practical contributions to the rural SMEs entrepreneurs in Malaysia. Several recommendations have been proposed for further investigations in future studies

Impact of exploitative learning strategy on Malaysian SMEs' creativity and innovation capabilities

Small and medium-sized enterprises (SMEs) can be considered as learning enterprises due to their competitive natures. The aim of the present study is to examine the notion of exploitative learning strategy, which is practised among Malaysian SMEs to determine to which extent it will result in creativity and innovation. A questionnaire was developed and was distributed among 1,850 SMEs online from which 206 surveys were thoroughly completed and returned. A variance-based structural equation modelling technique (VBSEM) was utilised to assess the measurement as well as the structural relationships for exogenous and endogenous constructs. Results of hypothesis testing indicate that the exploitative learning strategy has a significant, positive role in improvisational creativity, compositional creativity and innovation while its indirect effect on innovation capability is also significant through compositional creativity. This study also finds that the number of employees moderates the relationship between exploitative learning strategy, improvisational creativity and innovation in SMEs.

Impact of exploitative learning strategy on Malaysian SMEs' creativity and innovation capabilities

Small and medium-sized enterprises (SMEs) can be considered as learning enterprises due to their competitive natures. The aim of the present study is to examine the notion of exploitative learning strategy, which is practised among Malaysian SMEs to determine to which extent it will result in creativity and innovation. A questionnaire was developed and was distributed among 1,850 SMEs online from which 206 surveys were thoroughly completed and returned. A variance-based structural equation modelling technique (VB-SEM) was utilised to assess the measurement as well as the structural relationships for exogenous and endogenous constructs. Results of hypothesis testing indicate that the exploitative learning strategy has a significant, positive role in improvisational creativity, compositional creativity and innovation while its indirect effect on innovation capability is also significant through compositional creativity. This study also finds that the number of employees moderates the relationship between exploitative learning strategy, improvisational creativity and innovation in SMEs.

HALATUJU DAN PERMASALAHAN PELAKSANAAN PROSES PRA PEMBANGUNAN PRODUK BAHARU: PERSPEKTIF PKS MALAYSIA

Small and medium-sized Enterprises (SMEs) form a substantial role in the development of Malaysian economy. In order to compete in market SMEs needs to develop, produce and introduce new product continuously. The literature reviews have found that there are relatively great numbers of SMEs fail in their new product within a year in market. The first objective of this study is to identify the main goal of SMEs implementing product pre-development process and the second objective is to identify the obstacles that can results failure in product pre-development process implementation especially among food and beverages SMEs in Malaysia. A qualitative approach were employed in this study. A total of 187 food and beverages SMEs involve in this study. The finding indicate that SMEs involve in product pre-development process because to producing quality product, to ensure product success in market and to prepare accurate financial budget. Meanwhile, the main barrier of pre-development process implementation is lack of careful planning, lack of skill workers and inappropriate training program. The finding in this research can be a useful guideline to food and beverages SMEs for the implementation of the pre-development process.

The role of transformational leadership in innovation performance of Malaysian SMEs

This study examines the relationship between transformational leadership (TL; idealised influence, inspirational motivation, intellectual stimulation, and individualised consideration) and innovation performance (IP) and investigates whether perceived organisational support (POS) moderates the relationship between TL and the IP of small- and medium-sized enterprises (SMEs) in Malaysia. Data on TL, POS, and IP were collected through a survey of Malaysian SMEs. The results show that idealised influence, intellectual stimulation, and individualised consideration had significant positive effects on IP. In addition, POS moderated the relationship between TL and IP in terms of idealised influence and inspirational motivation. The results are expected to encourage managers of Malaysian SMEs to stimulate their followers through their motivational and charismatic style. No study of TL and IP has considered SMEs in Malaysia, and therefore, this study contributes to the literature by providing empirical evidence of the relationship between TL and innovation as well as between TL and performance in the Malaysian SME context. In addition, although POS has been highlighted as an important variable, no study has identified POS as a moderator of the relationship between TL and IP in the context of Malaysia.

E-commerce technology adoption: A Malaysian grocery SME retail sector study

Electronic commerce (EC) has substantial potential to foster the growth of small and medium-sized enterprises (SMEs) in developed and developing countries alike. However, EC adoption by SMEs in developing countries has faced many challenges that have not been adequately addressed due to the complex nature of EC adoption in such countries. The aim of this study is to systematically examine the influence of organizational, industry, and national readiness and environmental pressure on the adoption of diverse EC technologies by SMEs in developing countries. A quantitative survey was conducted with retail SMEs within the Malaysian grocery sector to validate the proposed multi-level model. Findings indicate significant influence of environmental pressure on the adoption of various EC technologies. Organizational and national readiness have different influences across diverse EC technologies, while the influence of industry readiness is shown to be insignificant. This study extends the current understanding of the influence of micro-, meso- and macro-level factors and has important implications for researchers, practitioners, and policy makers.

Financial factors and export behavior of small and medium-sized enterprises in an emerging economy

Financial considerations play a major role influencing the internationalization of firms. However, it is not clear how integrated financial factors such as cost and capital are related to the export behavior of small- and medium-sized enterprises (SMEs). The purpose of this study is to examine financial profiles of SMEs in an emerging economy by discriminating between non-exporters and exporters. Survey data from 356 SMEs in Malaysia was analyzed to see how perceived costs, internal financial resources, and external capital constraint are associated with their export status. Through a multiple logistic regression model, it is found that exporters perceive higher internal financial resources and fewer constraints in accessing external capital. They also perceive higher export costs than non-exporters. This study offers academics, entrepreneurs, and policy-makers a comprehensive understanding of financial characteristics that explain the export behavior of SMEs in developing countries.

B2B E-Commerce Success among Small and Medium-Sized Enterprises

E-commerce (EC) success and related influencing factors have not been investigated properly in the context of small and medium-sized enterprises (SMEs), while these businesses possess very different characteristics as compared to large businesses. The purpose of this study is to provide a better and clearer understanding of business-to-business (B2B) EC value and success within SMEs, particularly in emerging economies. Rooted in the information system (IS) diffusion and success literature and organizational research background, this paper develops an integrative research model to assess the success of B2B EC among Iranian and Malaysian SMEs. To interpret the success of B2B EC, we viewed EC success dimensions and relevant determinants from the perspectives of all users at the business network unit level. The result of testing this model on 130 business network units revealed that in addition to technological characteristics of EC including information, system and service quality, different SME-related organizational determinants such as perceived usefulness of EC, top management support and commitment and EC knowledge are crucial for successful B2B EC among SMEs. The findings offer valuable insights to managers, EC/IS experts and policy makers responsible for assisting SMEs with successfully engaging in B2B EC.

Do Competitive Advantages in the Local Market Encourage Firms to Export?

Trade liberalization offers exporting opportunities for firms around the world. However, little is known if firms export as a strategy for leveraging their competitive advantages in the local market into the international level. The purpose of this study is to examine the effect of competitive advantages in the local market on the export intention of manufacturing-based small and medium sized enterprises (SMEs) in an emerging economy. In particular, we test hypotheses on generic competitive advantages of cost, differentiation, focus, and integrated advantages on a sample of 140 SMEs in Malaysia. Using OLS regression, the results depict that differentiation, focus and integrated differentiation-focus advantages encourage firms to export. However, cost advantage does not significantly affect the export intention, while integrated cost-focus advantage holds firms back from going abroad. This study contributes by defining the types of competitive advantages in the local market that encourage domestic firms in developing countries to initiate exporting.

Financial Influences on Export Status of Small and Medium-Sized Enterprises in an Emerging Economy

The purpose of this study is to understand financial and behavioural influences on the export status of small and medium-sized enterprises (SMEs) in an emerging economy. In particular, we tested the direct effects of perceived costs, internal financial resources and external capital constraint on the export status of SMEs. We also tested the moderating effect of cost sensitivity on two types of perceived export costs. Survey data was collected from 356 SMEs in Malaysia and analysed using logistic regression. The results show that exporters perceive higher ongoing costs but lower initiation costs of exporting. They also perceive higher internal financial resources, fewer constraints in accessing external capital, and are more sensitive towards costs compared to non-exporters. Furthermore, we found that cost sensitivity moderates the relationship between perceived costs and export status.

Insights into public export promotion programs in an emerging economy: The case of Malaysian SMEs

This study evaluates the impact of public export promotion programs (EPPs) among small and medium-sized enterprises (SMEs) in Malaysia. Three indicators, level of awareness, frequency of use, and perception of usefulness, were examined according to a firm's export status. The global evaluation suggests that exporters are more frequent users of EPPs and perceive them to be more useful than non-exporters. Nonetheless, both groups demonstrate higher levels of awareness, are frequent users, and perceive the programs relating to export info/knowledge are more usefulness than programs relating to financial assistance. Further analysis also reveals that the frequency of use and the perception of usefulness for most programs are positively related to export experience, but not to export turnover. This study offers insights into the effectiveness of export programs for encouraging export initiation and expansion in an emerging economy.

Branding Leadership in Malaysian SMEs

The study empirically examines the inter relationships among various branding constructs of leaders or entrepreneurs in small and medium sized enterprises (SMEs). The study employs structural equation modeling through a new branding leadership model comprises of branding leadership, challenges, implementation and performance. The results confirm significant relationships among the constructs. The major fit indices indicate good data fit to the proposed model. The findings provide meaningful insights to SME leaders. It also fill the gaps in literature by statistically validating the model of branding leadership in Malaysia that may implicate other economic zones with similar situations.

A Literature Analysis on the Relationship between External Integration, Environmental Uncertainty and Firm Performance in Malaysian SMEs

The effect of environmental uncertainty (EU) on the relationship between external integration and firm performance is examined for small- and medium-sized enterprises (SMEs) in Malaysia. Uncertainty is a changeability state of the environment including uncertain market, failure to forecast the impact of changes in environmental, and unable to expect the outcomes of a response choice. SMEs have scarcity resources in terms of financial, skills, knowledge and technology; therefore, the sustainable business successes of SMEs hinge more on suppliers’ capabilities and co-operative relationships as well as customer integration. Since SMEs operate under highly competitive environment, thus SMEs need to monitor their environment to identify potential collaborative opportunities with suppliers and customers. In addition, the close relationships with suppliers and customers allow SMEs to access to the latest process, technologies, materials and other methods of innovation. Particularly, there is a lack of studies that investigate the effect of EU on the external integration-firm performance relationship in Malaysian SMEs of manufacturing industry. As such, the implications of the three sources of uncertainty – demand uncertainty, technological uncertainty and competitive threats are discussed. Ultimately, this study could enrich the existing body of knowledge in supply chain integration, EU and performance of SMEs in the manufacturing industry.

An Empirical Study of Factors Affecting e-Commerce Adoption among Small- and Medium-Sized Enterprises in a Developing Country: Evidence from Malaysia

The purpose of this paper is to empirically examine determinants of e-commerce adoption among Malaysian small- and medium-sized enterprises (SMEs). This study tested eight hypotheses on determinants affecting e-commerce adoption with empirical data from several survey instruments: an online questionnaire-based survey, mailed survey and questionnaire collected in-person from a sample of 307 SMEs in Malaysia. The findings show that e-commerce adoption within Malaysian SMEs is affected by perceived relative advantage, perceived compatibility, managers/owner's knowledge and expertise, management characteristics and external change agents. This study contributes to enhancing the understanding of the determinants of adopting e-commerce in SMEs and provides some interesting perspective from Malaysia. Those parties interested in promoting their business online may find these results helpful in guiding their efforts.

Modelling Small Business Failures in Malaysia

Small and medium-sized enterprises (SMEs) are significant contributors to development and growth in an economy.Since SME failure is common, this study develops a failure prediction model for the small and medium-sized enterprises. By using 132 distressed and non-distressed SMEs in Malaysia during the period of 2000 through 2010 based on the logistic regression, the results for Model 1 illustrate that higher gearing and lower profitability are associated with a higher failure risk.In addition, the incorporation of the firm's age as an additional factor in Model 2 significantly improves the model's predictive accuracy.A high area under the receiver operating curve indicates that Model 2 is excellent in discriminating between the distressed and non-distressed SMEs.The Hanley and McNeil test statistic shows that both models could predict failure better than a random model. The overall prediction accuracy rate ranges from 50% to 83% and 75% to 89% for the respective Model 1 and 2 when applied to the l-year, ;?-year, 3-year and 4-year prior to distress holdout samples.Our result indicates that young SMEs rely heavily on debt and they are less efficient which led them into distressed situation. The model can detect failure as early as four years prior to the event. The developed model could be used as a refined tool to avoid possible adverse situations among the small medium-sized enterprises, creditors and investors. To the SMEs, the model could assist in early detection of distress situation; whereas to credit providers the predictors could be included in the score card for better credit decision making. Investors could potentially use the model to assess the financial well-being of companies to safeguard their interests.

Adoption of Innovative Information Systems by SMEs: Comparing The Role of Firm’s Enacted Capabilities of Active Adopters and Non-Active Adopters

The adoption of innovative information systems (IS) by small-and medium-sized enterprises (SMEs) across heterogeneous culture, locales, and markets are a critical and an ongoing challenge. Such challenge requires more than just good ideas and extensive resources. It requires organisational capabilities that can be labelled as “enacted capabilities”. This study defines enacted capabilities as the firm’s ability to mobilise and deploy IS-based resources in combination or co-present with other capabilities within SMEs. Consequently, the aim of this study is to make a contribution by empirically examining the enacted capabilities of SMEs in developing countries that may influence the success of innovative IS adoption. In line with this objective, an innovative IS adoption behaviour investigation is conducted particularly as to why some SMEs are able to be enabled for use and utilise innovative IS, while others fail to do so. A survey of 206 of the CEOs/owners from Malaysian SMEs was con-ducted. The innovative IS examined was the government’s electronic procure-ment systems. The findings are consistent with the notion that all SMEs have enacted capabilities. Some SMEs integrate and coordinate them in a different way, depending on the context of each organisation. The findings also indicate that strong enacted capabilities and perceived net benefits affect the SMEs’ ability to perform or assimilate IS related strategic change. Keyword: innovative information systems, enacted capabilities, adoption behaviour

Market Orientation, Government Regulation, Competitive Advantage and Internationalization of SMEs: A Study in Malaysia

Small and medium-sized enterprises (SMEs) make remarkable contributions to the economic growth of developing countries. As a newly industrialized country, the Malaysian economy predominantly depends on the SME sector. However, this study seeks to redress this by reporting the key drivers influencing the internationalization process of SMEs such as market orientation, government regulation and competitive advantage on internationalization of manufacturing SMEs in Malaysia. To empirically test those factors, primary data was gathered using the survey questionnaire method. The survey instrument was distributed to all manufacturing SMEs involved in exporting which are located in the Klang Valley of Malaysia and totally 257 questionnaires were received (FMM, 2012). The findings indicate the significant role of market orientation, government regulation and competitive advantage in their process of internationalization. Furthermore, the study has added to body of knowledge by introducing competitive advantage as a mediating variable between market orientation and government regulation with internationalization of manufacturing SMEs in Malaysia. The results of this research could help practitioners and managers of SMEs in the manufacturing sector to be in a better position to improve their internationalization efforts.

Audit Exemption for Malaysian SMEs: Does Ownership Matter?

Small and medium-sized enterprises (SMEs) are playing an increasingly important role in the process of industrialization in the developing world. To support SMEs, many developed countries, such as Australia, New Zealand and the United Kingdom, have implemented an audit exemption regime for SMEs, while, in Malaysia, the policy makers and regulators have announced that the audit for SMEs will remain a legal obligation that they will revisit sometime in the future. Thus, this paper aims to shed light on this issue by exploring the relationship between the ownership structure of SMEs and audit exemption. The objective is to determine whether SMEs will still opt for an audit if it becomes voluntary, and, if they do, what would be the reason for the sampled SMEs to behave in such a manner? This research is exploratory in nature and employs the questionnaire survey method to collect data from a random sample of 200SMEs in both the manufacturing and service industries. The survey results indicate that there is a significant difference between the ownership structure of firms and the decision of SMEs to opt for voluntary audit. Moreover, the lack of resources is significantly related to opting for a voluntary audit. Therefore, based on the resource-based theory, SMEs in Malaysia mainly opt for auditing, not to fulfil a mandatory obligation but to compensate for their lack of tangible (professional/qualified accountants) and/or intangible (accounting and business expertise) resources. This study provides new insights into the way Malaysian SMEs view auditing. It highlights the implications of the policy directives of the Malaysian regulators and the accounting fraternity. Furthermore, the Malaysian experience is useful for consideration by other developing nations that are contemplating moving towards an audit exemption regime.

AN EXPLORATORY STUDY INTO ADVANCED MANUFACTURING TECHNOLOGY (AMT) USAGE IN MALAYSIAN SMALL- AND MEDIUM-SIZED ENTERPRISES (SMEs)

For manufacturing companies, to gain competitive advantage in the global market is not always a simple matter of just purchasing and installing new technologies. New technologies require careful planning and persistent efforts to integrate operating and organizational systems to support these operations. It is more important for small- and medium-sized enterprises (SMEs) that have more obstacles in implementing new technologies compared to big companies. Using data collected from 30 SMEs in Malaysia, this paper assesses their situation in terms of advanced manufacturing technology (AMT) investment planning and implementation and its relationship to companies' performance and obstacles. This is an exploratory study with the purpose of providing background data to direct future research in building up a contingency study for technology management and implementation for SMEs in Malaysia. The results revealed that in spite of different levels of AMT usage, there were no significant differences between the companies in terms of performance and obstacles. The analysis outcomes implied that technology per se did not make a big difference in its users.