Small And Medium-sized Enterprises Owners Research Articles

Which Factors Determine the Upgrading of Small and Medium-Sized Enterprises (SMEs)? The Case of Egypt

Many low- and middle-income countries have many micro and small but only a very few medium-sized and large enterprises. Micro and small firms seem to have difficulties growing into medium-sized companies. This is problematic because it is medium-sized companies that tend to be the main creators of higher quality and better-paid employment, motors of innovation and economic diversification, and future exporters.Companies grow for various reasons that are beyond their control, such as an increase in demand or failures of competitors. However, the only strategy that an enterprise can control is growth through innovation, which we term ‘upgrading’.A large strand of literature discusses the factors that favour or hamper the upgrading of small and medium-sized enterprises (SMEs): entrepreneur characteristics (education, gender, behaviour, etc.), firm characteristics (sector, location, workforce characteristics, etc.), inter-firm linkages (integration into value chains, clusters or business networks) and the business environment (macroeconomic and political stability, regulation, availability of finance, etc.). However, only a few studies provide empirical evidence for determining the most significant factors for SME upgrading in low- and middle-income countries.This study is meant to fill this gap thereby referring to Egypt. It is based on enterprise panel data from 2004 and 2008, a survey conducted by the authors in early 2012 among 102 SMEs and interviews with experts on private-sector development. It draws five main conclusions: – The scarcity of medium-sized enterprises in Egypt is not only due to the difficulty of SMEs to upgrade but also to their challenges in remaining medium-sized – or large.– In Egypt the main determinants for upgrading are the entrepreneur’s: (i) human capital (quality of education, work experience and international exposure), (ii) motivation and readiness to take risks, (iii) investment in human resources, (iv) market research, (v) access to finance and (vi) ability to deal with persistent deficits in the rule of law. – SMEs in Egypt are also constrained by the business environment, notably problems in state–business interactions such as licensing, taxation, inspections and competition control. But these problems are mainly due to deficits in law enforcement rather than what these procedures cost in time and money.– While integration into value chains and clusters might help SMEs to upgrade, the great reluctance of Egyptian entrepreneurs to co-operate with each other means that they cannot benefit from the advantages of vertical or horizontal business linkages. – The success of an SME largely depends on the owner’s capabilities. All SME owners in Egypt are constrained by structural factors such as deficiencies regarding education, skilled workers, market information, access to finance and law enforcement. However, a few SMEs man-age to circumvent these obstacles.To enable more SMEs to upgrade, the government of Egypt should improve its educational and vocational training system, help entrepreneurs conduct human resource development and market research, ease SME owners’ access to finance and strengthen the rule of law.

The impact of work experience of small and medium-sized enterprises owners or managers on their competitive intelligence awareness and practices

Background: Information technology has assisted in globalisation, which then assisted in making international trade easier. Consequently, businesses no longer compete with local competitors only but also with international ones, leading to intense competition in all business sectors. Businesses will hardly practice what they are not aware of and therefore needs to know about their competitive landscape. Competitive intelligence (CI) gathers information from both the internal and external business environments, and analyses these for use by decision makers. Whilst awareness of the importance of CI is wide, it is not practiced optimally, making the need for creating awareness of the benefits of CI important.Objectives: The objective of this research was to establish the influence of owners’ and managers' working experience of CI practice and awareness in the small and medium-sized enterprises (SMEs) environment.Method: This research was quantitative in nature and a questionnaire was used to collect data from SMEs owners and managers in The City of Tshwane Metropolitan Municipality.Results: This research indicates that SMEs in the study are aware of CI through education and training. Moreover, the study reveals that the working experience of owners and managers has a great influence on awareness and practice of CI and one should implement training programmes in this domain to assist with building competitive advantage.Conclusion: Small and medium-sized enterprises owners or managers’ years of working experience has a greater influence on awareness and practice of CI. Put differently, years of working experience is a great predictor of CI awareness and practice.

Intent to be a Socially Responsible Small or Medium-sized Enterprise: Theory of Planned Behavior and Leaders’ Actualizing

A review of the academic research in corporate social responsibility shows little work on small and medium sized enterprises (SMEs) in the U.S. whereas considerable work in this domain has been conducted in the European context. This study seeks to make a contribution to the research void by addressing one particular area of social responsibility in the U.S. context. Specifically, we employ Ajzen’s reasoned action approach to begin to build an understanding of what promotes leaders of SMEs to reduce waste. This study addresses several questions: What are the attitudes of owners and managers of SMEs toward waste reduction practices for their organizations? How are stakeholder interests toward waste reduction perceived? And, are leaders of SMEs influenced by their industrial environment? The authors utilized an email survey directed to owners and managers of SMEs with greater than 5, but less than 500 employees in the telephony, construction, pulp and paper products, textiles, and agriculture industries. 377 emails were opened and 104 completed surveys were obtained. The survey instrument was developed from the theoretical perspective of Isaac Ajzen’s (1991) Theory of Planned Behavior in Organizational Behavior and Human Decision Processes, 50, p. 179-211. Results from a partial least squares analysis of the data suggest that there is a strong and significant relationship between the normative, attitudinal, and control constructs with an individual’s intention to be a socially responsible SME. This finding suggests that efforts to influence SME owners and managers to implement waste reduction activities need focus on changing individual attitudes.

How Do European SME Owner–Managers Make Sense of ‘Stakeholder Management’?: Insights from a Cross-National Study

The vast majority of empirical research on stakeholder management has traditionally focused on multinational corporations. Only in recent years, scholars have begun to pay attention to the stakeholder management concept in relation to small- and medium-sized enterprises (SMEs). The few existing studies in this area, however, discuss SMEs as a context free category or remain focused on single country analysis. This cross-national empirical research investigates SME owner–managers’ perceptions of stakeholder management in six European countries. The comparative analysis is followed by a discussion of how institutional, cultural and linguistic contexts can influence owner–managers’ sensemaking of stakeholder management. Our study questions the universality of specific management terms and proposes that more attention should be paid to the institutional, cultural and linguistic environments that shape economic activity in different parts of Europe.

Investing in R&D: small- and medium-sized enterprise financing preferences

This work adds to our understanding of financing decisions among owners of small- and medium-sized enterprises (SMEs), with particular reference to SMEs that conduct research and development (R&D). The work examines, conceptually and empirically, the forms of financing that are preferred by primary owners of SMEs that invest in R&D relative to preferences of owners of SMEs that do not conduct R&D. The work develops a conceptual rationale as to why SMEs engaged in R&D might hold particular preferences with respect to preferred sources of financial capital. Empirical analysis draws on large-scale survey data of actual applications for financing (as opposed to financing received) as reported by business owners and controls for systemic factors that include firm size and sector. Findings include that financing preferences do not follow a ‘one-size-fits-all’ prescription. Rather, preferences vary according to growth goals, the nature of ownership, age of firm, firm size and sector; however, it was also clear that firms that invest in R&D are much more likely to seek equity financing than otherwise comparable firms that do not invest in R&D.

Does ownership type cause any difference in the perception of Malaysian SME owners/managers towards corporate social responsibility?

This study aims to measure the perception of owners/managers of small and medium-sized enterprises (SMEs) towards corporate social responsibility (CSR). It also seeks to examine whether ownership type causes any difference in the CSR attitudes of small firms' owners. The findings of this study revealed that majority of Malaysian SME owners have a philanthropic view towards CSR followed by modern view. Besides, it was found that ownership type causes a significant difference in the perception towards CSR's cost/benefit between sole proprietorship firms and private limited enterprises. The main limitation of this research is related to the geographical distribution of the sample and the issue of social desirability.

Motivations for Success

Small- and medium-sized enterprises (SMEs) have been playing an important role in the U.S. economy for a long time. The contribution of SMEs to the textile and apparel industry has been intensified in the global economy. Yet, little is known about what motivates SMEs for success. An understanding of motivations for success is critical to SMES' business strategies and performance. This study explored SMEs' motivations for success through the theoretical framework of Maslow's (1943) theory of human motivation. Results of the content analysis of two prominent small business magazines suggested that Maslow's theory provided a reasonable framework, and that textile and apparel SME owners explained filling the niche as physiological needs, financial security as safety needs, building intimate relationship as love needs, recognition and respect as esteem needs, and being good global citizen as self-actualization needs for their success. The study concludes with contributions, implications, limitations, and future research opportunities.

Information and knowledge sharing trends of small and medium-sized enterprises in the Western Cape, South Africa

Background: Small and medium-sized enterprises (SMEs), especially in the Western Cape Province of South Africa, are currently facing various financial and other obstacles, which may threaten their survival. Globalisation, the lowering of trade barriers and the reduction of import tariffs have resulted in increased international competition. Businesses are thus forced to undertake continuous improvements and innovation in order to survive, to keep abreast of change and to excel.Objectives: Effective knowledge sharing and consequent knowledge management (KM) have been identified as definite approaches to enhancing competitive advantage. The research therefore aimed to establish to what extent small enterprises embrace their knowledge sharing activities and whether their knowledge sharing activities are managed at all. Furthermore, it examined how their knowledge sharing can contribute to their competitive advantage.Method: A case study approach was followed for this research. Selected SMEs from the engineering sector were the subject of the case study and SME owners, directors and managers of consulting civil engineering firms were interviewed to determine whether there are mechanisms in place to ensure better knowledge sharing within SMEs.Results: In general, respondents had stated that they possessed special factors that set them above their competitors:• The company strategy and good reputation of completing projects within the required timeframe. In other words, they were well known for their track record in terms of service delivery. • Their specialty in terms of different focus areas, namely structural and civil engineering, water supply and storm water design, transportation, sewer design and storm water traffic. • The fact that they operated in silos. This means that the specialists in their specific fields operated independently in groups, separately from everyone else in the company. • Their good relationship with local authorities and other companies in the field. • Their multidisciplinary approach in incorporating all spheres of civil engineering, which gave them a niche in the market. • The vast knowledge and experience of the owners and directors.Conclusion: Each of the companies interviewed had unique skills that they can apply to their advantage. They were also found to be implementing KM processes such as sharing, creating and leveraging of information and knowledge, albeit in the absence of formal policies. It was therefore deduced that SME successes depend on how well they share their tacit and explicit knowledge; this will determine whether they would excel above their competitors.

An empirical investigation of the financial growth lifecycle

Purpose – This paper aims to empirically examine the financing of small and medium sized enterprises (SMEs) through a financial growth lifecycle model.Design/methodology/approach – Data in publicly available databases are generally unsuitable to examine the financial lifecycle model, thus a questionnaire survey was employed to collect data. Because of the well‐documented reticence of SME owners to reveal detailed financial information, data were requested in percentage form. This innovative methodology was successful, as 92 per cent of respondents disclosed detailed financing data. A response rate of 42.6 per cent across six industry sectors provided data to employ parametric techniques. Reporting and analysing the large primary data set across six age categories, a number of statistical tests were conducted to test the financial growth lifecycle model.Findings – Analysis of respondents' capital structures across age groups indicates distinct changes in sources of finance employed by firms over time. Fina...

Aligning teaching and practice: a study of SME marketing

PurposeThis study aims to explore the role of marketing in small and medium‐sized enterprises (SMEs) and to consider how amendments can be made to the UK higher education (HE) teaching curriculum to inform marketing teaching and learning around a small business context.Design/methodology/approachA qualitative, exploratory approach using semi‐structured in‐depth interviews amongst ten owners of SMEs in the East Midlands region of the UK was used.FindingsMarketing in SMEs is centred on customer engagement, networking and word of mouth communication. HE academic institutions should take account of these findings and work towards introducing SME‐specific marketing material in its teaching and learning curricula.Research limitations/implicationsThis study uses a small number of SME companies in one region and therefore the generalisability of the findings may be limited. Further research could extend the number of SME companies and to other regions of the UK.Practical implicationsThe findings have a bearing on the UK HE marketing curriculum. This study offers insights into how the marketing curriculum in HE needs to be adapted in light of the findings to ensure marketing graduates are equipped to enter SME employment.Originality/valueStudies aligning how marketing in SMEs is practiced compared to HE teaching curriculum are limited. This research contributes to the body of literature by further exploring the characteristics and marketing activities of SMEs and highlighting the need to align teaching and practice of marketing in UK HE institutions.

Information and communications technology adoption and use in small and medium businesses

PurposeThe purpose of this paper is to examine the influence of Hispanic ethnicity on the adoption and use of information and communication technology (ICT) tools by small‐ and medium‐sized enterprises (SMEs) in a southwestern renewal community (RC).Design/methodology/approachThe paper investigates the influence of ethnicity on the adoption and use of information and communications technologies in small and medium enterprises using a sample from the RC of a large southwestern metroplex.FindingsResults point to a continuing digital divide among Hispanic and non‐Hispanic SME owners. Non‐Hispanic SME owners were found to be much more likely to adopt a wider range of ICTs and to use them for both administrative and analytical purposes. Hispanic SME owners not only failed to adopt a full range of ICTs but also they were less likely to use ICTs for long‐term strategic analyses.Originality/valueThe differences presented in this paper suggest that Hispanic SME owners may not be exploiting ICTs in order to achieve optimal operating efficiency and strategic effectiveness. The outcomes are particularly alarming because SMEs in RC areas have been the target of federal efforts to raise business productivity and profitability. The continuing digital divide may be undermining the very polices designed to enhance business operations in these relatively disadvantaged urban areas.

Approaching digital equity: is wifi the new leveler?

PurposeRecent reports suggest the shape and size of the digital divide may be changing. This exploratory study aims to examine the relationships between demographic and situational variables and small and medium‐sized enterprise (SME) owners' intentions to adopt and use free public wifi technology.Design/methodology/approachA survey study of 158 SME owners in the urban renewal community (RC) of a large Southwestern metroplex investigated the influence of known digital divisors – gender, ethnicity, age, education, and experience – on the adoption and use of wi‐fi technologies. Partial least squares was used to test the hypotheses.FindingsContrary to previous research, gender, age, education, and experience were not related to the intention to adopt wifi technology. Ethnicity was significantly related to intent to adopt, but the relationship was small. Ethnicity and age were found to be somewhat related to wifi usage. In marked contrast from earlier research, education, gender, and experience were not significant predictors of usage.Practical implicationsThe findings suggest that access to high‐speed wifi has the potential to reduce and/or eliminate the digital divide. The projected changes in the digital divide can be expected to make a significant impact on SME productivity and performance.Originality/valueThis study is one of the first to examine the influence of the adoption and use of public wi‐fi technologies by SME owners on the digital divide.

Business challenges and strategies for development of Small- and Medium-sized Enterprises (SMEs) in Malaysia

Despite their significant role in both the developed and the developing economies, Small-and Medium-sized Enterprises (SMEs) are faced with the greater risk of business failure with past statistics indicating that over half of all new ventures will not enjoy long-term success. They face various types of difficulties and business challenges. This paper attempts to examine the issues, and explain how the business owners of SMEs in Malaysia strategise their operation to overcome the failure. The study highlighted several challenges faced by the firms, and to overcome these issues, SMEs have followed numerous strategies. The study revealed that business success is a result of implementing a mix of business, operation and management strategies. The paper concludes with the possible remedies, recommendations and future enhancements.

The Impact of Investment Readiness on Investor Commitment and Market Accessibility in SMEs

Raising the level of investment readiness in small and medium-sized enterprises (SMEs) is seen as one of the most important strategies in public policy for promoting entrepreneurship and SME growth in Europe. This paper analyzes the impact of investment readiness on investor commitment and market accessibility in Swedish SMEs. The empirical base for the paper is a survey answered by 459 SME owners. We have analyzed the data using the lineaz structural relations (LISREL) method, a structural equation modeling technique. The analysis indicates that an increased level of investment readiness in SMEs results in closer working relationships with financiers and a higher level of commitment by the investors, which in turn leads to greater mazket accessibility for SMEs. This study supports public policy focused on programs that alleviate the problems associated with the lack of investment readiness in SMEs.

Failure factors in small and medium-sized enterprises: qualitative study from an attributional perspective

The objective of this study is to identify factors for poor performance and failure faced by small and medium-sized enterprises (SME) and to investigate a potential bias between real causes and attribution for stranding. In order to achieve this objective, we have adopted entrepreneurial personal story explorations in eight Portuguese SME. Our research reveals that the most important factors are limited access to finance, poor market conditions, inadequate staff, and lack of institutional support, as well as co-operation and networking. Hereby, at a first glance, external factors were more often cited, but qualitative analysis revealed that internal factors are imminent and not satisfactorily recognized. Even though some owner–managers showed a certain awareness regarding their internal weaknesses, many problems such as lacking strategy and vision, low educational levels, and inadequate social capital are not sufficiently recognized. Therewith, we found a strong attribution error when SME owner–managers judge the causes of their ventures’ unsuccessful performance and failure. Finally, we draw conclusions and suggestions for policymakers, small business owners, consultants, and researchers.

SME internationalization as a challenge to interpersonal communication competence

This paper investigates how the internationalization of small and medium-sized enterprises (SMEs) poses a challenge to the interpersonal communication competence of SME owners, managers and employees. Interpersonal communication competence is discussed particularly in the contexts of networking and business collaboration. Collaborative arrangements even with competitors are needed in today’s global business world. Through collaborative interaction it is possible, for instance, to reduce development and production costs or channel resources to creating new innovative products (Stohl & Walker 2002: 237). The expansion of business activities across international borders, in particular, requires networking and collaborative interaction regionally, nationally and internationally. Based on the literature of interpersonal and intercultural communication competence, interpersonal networks and collaborative interaction, this paper provides an analysis of the interpersonal communication competence specific to and needed in the context of SME internationalization.

Creating a clearly differentiated SME brand profile: The case of Montana A/S

Business and academic literature frequently focuses on large companies and well-known brands. However, most businesses are actually small- and medium-sized enterprises (SMEs) that do not have the marketing budgets available to global giants such as Coca-Cola, NIKE or McDonald's. There is a need for owners and managers of SMEs to build strong brands that compete locally and globally, in both the short and long term. SME owners and managers could benefit enormously from a clear set of guidelines to help them develop a competitive brand and market position within their budgetary constraints. This paper demonstrates that, if correctly implemented, corporate branding really does work, and can be achieved within a limited marketing budget. This approach requires managers and owners to start thinking of branding as a long-term process that needs consistent, continuous communication to succeed. In this paper, we cite the example of a Danish furniture manufacturer, Montana A/S, but we strongly believe this case is applicable to many businesses worldwide.

SME Owner Involvement and Business Performance: Financial Security Rather Than Growth

This paper examines how the level of owner involvement in Small and Medium Sized Enterprises (SMEs) affects financial performance, as suggested by Jensen and Meckling (1976). We find significant relationships between the degree of owner involvement and profitability, leverage and liquidity, even when adjusted for size. No significant relationship was found between the degree of owner involvement and growth. We conclude that increased owner involvement creates a financially safer and more profitable firm with no relationship to growth. This supports the financial contentment hypothesis of Vos, Yeh, Carter and Tagg (2007).

Exploring Internet Adoption Drivers in SMEs

Abstract Government policy worldwide is to assist small and medium‐sized enterprises (SMEs) to become e‐enabled, yet it is unclear what impact this has. There is evidence that customers drive e‐adoption due to the need to integrate information in the supply chain. There is also evidence that SME owners drive adoption, primarily as a response to perceived benefits. However, there is little exploration of the role of government initiatives in influencing e‐adoption strategies in SMEs. This paper uses network agency theory to investigate Internet adoption in SMEs. The research identifies five influence networks: expert – primarily in IT firms; industry‐led – SMEs working in collaboration with sector organizations; and customer‐led – driven by customer requirements. The drivers of these three networks are primarily strategic. The other two networks, ICT support and novice, are driven by the SME owner. The key difference is the maturity of internal IT. This research demonstrates that government policies and st...

Why traditional business continuity thinking does not work for SMEs: A new approach for managers and their advisers

This paper begins by tracing recent events that have increased awareness of risk and vulnerability among small and medium-sized enterprises (SMEs). It then describes how the traditional business continuity methodologies and tools, due to their sources and utilisation sectors, do not meet the needs of SME owners, managers and their advisers (including local authorities fulfilling their Civil Contingencies Act responsiblities). An analysis process is then described as a better alternative for SMEs, and the process is discussed in detail. The paper ends with a discussion of the benefits and advantages to SMEs of this new process.