Participation Of Small And Medium-sized Enterprises Research Articles

Data Science in Promoting the Participation of SMEs in Public Biddings in Santa Catarina State, Brazil: The Case of BIEL

This paper addresses public bidding from the perspective of developing small and medium-sized enterprises (SMEs). It aims to present a prototype, BIEL, to make it easier for suppliers to locate notices to participate in, increasing their competitiveness and access to public bidding. The context of this research is SMEs’ participation in public biddings in Santa Catarina (SC) State, Brazil, in which suppliers use the SC Purchasing Portal to seek bidding notices. Diagnosing the problem situation requires simplifying the search for notices and allowing suppliers to find those notices that correspond to the items they work with efficiently. The intervention consists of developing an application using web scraping techniques with a dashboard that allows suppliers to search for specific items and obtain a list of corresponding notices. The paper contributes to applying these technologies in public bidding, facilitating SMEs' access to bidding processes. The developed prototype demonstrates promising results, although some limitations can be overcome to improve search accuracy. Making the application's source code available in a public repository on GitHub also contributes to transparency and collaboration in developing technological solutions in the public sector.

Do firms submit fewer tender bids with high inflation? An analysis of firms’ participation in public procurement in the EU

PurposeThis paper aims to explore the effect of sustained high inflation on public procurement participation in the European Union, both in terms of the average number of bids submitted and in the proportion of bids by small- and medium-sized enterprises (SMEs) out of all submitted bids.Design/methodology/approachRegression modelling, using contract award notices in the Tender Electronics Daily database between 2018 and 2022, at quarterly intervals.FindingsEach inflation point increase is associated with a decline in the average number of offers received per tender by 0.43%. A more marked reduction of 8.6% in the average number of offers and a decrease in 3.4 percentage points in the SME participation rate are observed for firms operating in sectors that experienced very high levels of inflation (>20% year-on-year rate of change), compared with a situation of low inflation (0–5%).Social implicationsClaims about difficulties in delivering public contracts for the set price should be taken with a grain of salt, unless businesses operate in sectors experiencing very high inflation levels. Measures to foster competition could also reduce price pressures.Originality/valueTo the best of the authors’ knowledge, this is the first study to quantitatively assess the association between high inflation and public procurement participation. Two methodological novelties are introduced: the operationalisation of sectoral-level inflation down to two-digit NACE codes, based mainly on producer prices; and a matching between two-digit NACE codes for inflation and the common procurement vocabulary codes to classify calls to bid for public contracts by economic activity.

Technological and market sensing capabilities as drivers of SME participation in public procurement: an empirical test of the moderating role of financial capability

PurposePublic procurement presents substantial market opportunities for small- and medium-sized enterprises (SMEs), which can contribute to their economic growth. However, limited dynamic capabilities often pose challenges for SMEs to participate effectively in public procurement markets. Drawing on dynamic capability (DC) theory, this study explores whether financial capability (FNCP) influences SMEs’ ability to leverage their technological capability (TECC) and marketing sensing capability (MKSC) and actively engage in public procurement.Design/methodology/approachData for this study were collected from 248 SME managers in the Ilala District, Tanzania, using a cross-sectional questionnaire survey and stratified random sampling technique. The proposed hypotheses were tested empirically through confirmatory factor analysis (CFA) and the Hayes PROCESS macro.FindingsTECC and MKSC demonstrated significant positive associations with SME participation in public procurement (SMPP). Moreover, the interaction between TECC and FNCP as well as the interaction between MKSC and FNCP demonstrate a significant positive effect, suggesting that FNCP strengthens the impact of TECC and MKSC on SMPP.Research limitations/implicationsThe scope of this study was limited to SMEs in the Ilala District of Tanzania, hence affecting the generalizability of the findings to other contexts. More importantly, the study findings enrich the understanding of DC theory, signifying that the integration and reconfiguration of MKSC, TECC and FNCP add significant value to SMPP.Practical implicationsThe findings suggest that policymakers, support institutions and SME managers should focus on enhancing SMEs' MKSC and TECC to improve their participation in public procurement. In addition, improving SMEs' access to financial resources can further strengthen these effects, enabling more inclusive participation in public procurement.Originality/valueThe study contributes to the literature on SMPP by highlighting the critical roles of MKSC and TECC. It also underscores the importance of FNCP as a moderator in these relationships, which has not been addressed in the existing literature. By integrating these factors, the study offers a comprehensive framework for understanding the dynamics that influence SMPP from financial, technological and marketing perspectives, particularly in developing economies like Tanzania.

Assessing trade supply chain vulnerability and trade participation of SMEs in India: insights from a comprehensive analysis

PurposeThis study presents the impact of Economic Policy Uncertainty (EPU)-induced Trade Supply Chain Vulnerability (TSCV) on the Small and Medium-Sized Enterprises (SMEs) in India by leveraging the World Bank Enterprise Survey data for 2014 and 2022. Applying econometric techniques, it examines firm size’ influence on productivity and trade participation, providing insights for enhancing SME resilience and trade participation amid uncertainty.Design/methodology/approachThe econometric techniques focus on export participation, along with variables such as total exports, firm size, productivity, and capital intensity. It addresses crucial factors such as the direct import of intermediate goods and foreign ownership. Utilizing the Cobb-Douglas production function, the study estimates Total Factor Productivity, mitigating endogeneity and multicollinearity through a two-stage process. Besides, the study uses a case study of North Indian SMEs engaged in manufacturing activities and their adoption of mitigation strategies to combat unprecedented EPU.FindingsResults reveal that EPU-induced TSCV reduces exports, impacting employment and firm size. Increased productivity, driven by technological adoption, correlates with improved export performance. The study highlights the negative impact of TSCV on trade participation, particularly for smaller Indian firms. Moreover, SMEs implement cost-based, supplier-based, and inventory-based strategies more than technology-based and risk-based strategies.Practical implicationsPolicy recommendations include promoting increased imports and inward foreign direct investment to enhance small firms’ trade integration during economic uncertainty. Tailored support for smaller firms, considering their limited capacity, is crucial. Encouraging small firms to engage in international trade and adopting diverse SC mitigation strategies associated with policy uncertainty are vital considerations.Originality/valueThis study explores the impact of EPU-induced TSCV on Indian SMEs’ trade dynamics, offering nuanced insights for policymakers to enhance SME resilience amid uncertainty. The econometric analysis unveils patterns in export behavior, productivity, and factors influencing trade participation during economic uncertainty.

The role of entrepreneurial networks in overcoming export barriers of small and medium-sized enterprises from developing economies

The role of entrepreneurial networks in overcoming export barriers of small and medium-sized enterprises (SMEs) varies depending on the development level of the domestic institutional environment. So far relevant literature has been dominantly focused on the effects of participation of SMEs from developed economies in different forms of domestic and international entrepreneurial networks. However, in the last two decades, the SMEs from post-transition economies (PTE), namely developing economies, have become more involved in international business which is an important challenge for them because of resource scarcity and a long period of international isolation. Starting from the entrepreneurial perspective of internationalization based on accelerated internationalization models, the paper considers modes, motives, benefits, and obstacles of establishing alternative management structures - SME entrepreneurial networks in institutional discontinuity conditions. The research aim is to indicate the importance of establishing network connections as a modus for overcoming resource and institutional export barriers of SMEs from PTE. The research is based on the analysis and synthesis of relevant literature in the field of international entrepreneurship and network approach to the internationalization of SMEs in the context of PTE. Based on conceptual analysis and the results based on previous research, pragmatic recommendations for export SMEs from PTE regarding the choice of appropriate participation modality in entrepreneurial networks are stated.

Examining Industry 4.0 through the lens of human resource and knowledge management: Implications for SMEs

Abstract The change caused by Industry 4.0 (I4.0) has fundamentally changed our lives and operations of organisations. The objective of the article is to reveal whether I4.0 implementation supports human workforces, knowledge sharing and knowledge storage in case of Hungarian small and medium-sized enterprises (SMEs). The data were obtained from 122 completed questionnaires out of 152 requests. The analysis is based on quantitative methodology, relationship analyses (Cramer’s V) were used. The study was conducted in 2021 with the participation of Hungarian SMEs’ leaders. Based on the results it can be concluded that the implementation of I4.0 technologies supports human workforces in SMEs. In addition, our study reveals that collaborative technologies and social media were implemented to support knowledge sharing in SMEs. At the same time, knowledge storage is not the primary purpose of implementing I4.0 technologies in SMEs. From a theoretical perspective, it contributes to enriching the empirical evidence on implementing I4.0 technologies and their impact on supporting human resources. From a practical point of view, the research identifies those I4.0 technologies that support SMEs in knowledge sharing. Collaborative technologies and social media can be implemented in order to advance the fields of Collaboration, Communication and Connecting. The originality of our research is given by the fact that, to the best of our knowledge, this is the first study that examines the aspects of I4.0 technologies in terms of human resource and knowledge sharing and storage in Hungarian SMEs.

INTERNATIONAL AND INTERDISCIPLINARY ∙ Policies to Stimulate Industrial Innovation by Small and Medium-Sized Enterprises:

Since the outbreak of COVID-19, Small and Medium-sized Enterprises (SMEs) have faced a heavy economic burden and uncertainty due to a contraction in resources and markets. As the world returns to normal conditions, we aim to synthesise key lessons from the pandemic and discuss which emergency actions should become routine to prevent or minimise the negative economic impact of future crises on SMEs and their innovation power. This paper reviews academic and non-academic literature on how governments can stimulate industrial innovation in SMEs based on experiences from public procurement of innovation during the pandemic. Our findings indicate that public procurement of innovation is a crucial tool to stimulate both the economy and new ideas. Against this backdrop, we propose the implementation of three related procurement policies: inter-agency and inter-governmental collaboration in the public procurement of innovation, cooperation partnerships between the government and firms, and the adoption of practices that encourage SME participation in the procurement of public innovation contracts. Keywords: small and medium-sized enterprises; innovation; emergency management; procurement of innovation

Drivers for SMEs participation in entrepreneurial ecosystems: evidence from health tech ecosystem in Northern Finland

PurposeThe entrepreneurial ecosystem (EE) literature is dominated by conceptual studies with insufficient theoretical foundations and empirical evidence on the micro-level. This study aims to explore the largely overlooked question of what the drivers that motivate small and medium-sized enterprises (SMEs) to participate in an ecosystem are.Design/methodology/approachThe study adopts a qualitative exploratory approach. The empirical data consists of 19 semi-structured interviews with top management of SMEs in the health tech ecosystem in Finland. The data were analyzed using a thematic content analysis.FindingsThis study reveals a typology of drivers that motivate SMEs to participate in an ecosystem. These include social drivers (networking and cooperation and communication and knowledge sharing), resource drivers (access to resources, formal and informal support and market access) and cognitive drivers (shared goals and common values).Research limitations/implicationsThe study contributes to the EE research by highlighting the drivers that motivate health tech SMEs to become members of the local ecosystem. It suggests that managers and entrepreneurs need to be aware of the factors related to social, resource and cognitive drivers to ensure the future success of their business.Originality/valueThe study draws evidence from a micro-level perspective which enriches the understanding of the EE phenomenon. It also explores an increasingly relevant but under-researched field, the health tech ecosystem.

Gender-responsive public procurement: strategies to support women-owned enterprises

PurposeThis paper aims to inform strategies to enhance public procurement opportunities for women-owned small- and medium-sized enterprises (SMEs). To do so, the study examines two research questions: To what extent are women-owned enterprises under-represented among SME suppliers to government; and Do barriers to public procurement – as perceived by SME owners – differ across gender?Design/methodology/approachThe study draws on the resource-based view (RBV) of the firm and on theories of role congruity and social feminism to develop the study’s hypotheses. Empirical analyses rely on comparisons of a sample of 1,021 SMEs that had been suppliers to government and 9,376 employer firms that had not been suppliers to government. Data were collected by Statistics Canada and are nationally representative. Logistic regression analysis was used to control for systemic firm and owner differences.FindingsControlling firm and owner attributes, majority women-owned businesses were underrepresented as SME suppliers to government in some, but not all sectors. Women-owned SMEs in Wholesale and Retail and in Other Services were, ceteris paribus, half as likely as to be government suppliers as counterpart SMEs owned by men. Among Goods Producers and for Professional, Scientific and Technical Services SMEs, there were no significant gender differences in the propensity to supply the federal government. “Complexity of the contracting process” and “difficulty finding contract opportunities” were the obstacles to contracting cited most frequently.Research limitations/implicationsThe limitations of using secondary analyses of data are well documented and apply here. The findings reflect only the perspectives of “successful bidders” and do not capture SMEs that submitted bids but were not successful. Furthermore, the survey did not include questions about sub-contractor enterprises, data that would likely provide even more insights about SMEs in government supply chains. Accordingly, the study could not address sub-contracting strategies to increase the number of women-owned businesses on government contracts. Statistics Canada’s privacy protocols also limited the extent to which the research team could examine sub-groups of small business owners, such as visible minorities and Indigenous/Aboriginal persons. It is also notable that much of the SME literature, as well as this study, define gender as a dichotomous (women/female, men/male) attribute. Comparing women/female and men/males implicitly assumes within group homogeneity. Future research should use a more inclusive definition of gender. Research is also required to inform about the obstacles to government procurement among the population of SMEs that were unsuccessful in their bids.Practical implicationsThe study provides benchmarks on, and directions to, enhance the participation of women-owned SMEs or enterprises in public procurement. Strategies to support women-owned small businesses that comply with United Nations Sustainable Development Goals are advanced.Social implicationsThe study offers insights to reconcile economic efficiency and social (gender equity) policy goals in the context of public procurement. The “policy-practice divides” in public procurement and women’s enterprise policies are discussed.Originality/valueThe study is among the first to use a feminist lens to examine the associations between gender of SME ownership and public procurement, while controlling for other salient owner and firm attributes.

The Internet and SME Participation in Exports

This paper analyzes the effect of the development of the Internet on the share of small and medium-sized enterprises (SMEs) in total exports. We extend the Helpman, Melitz and Yeaple (2004) model to include the opportunity for firms to pay lower fixed export costs by exporting indirectly via well-established e-commerce platforms. SMEs self-select into the indirect exporting mode. In response to the development of the Internet, fixed costs of indirect exporting fall at a higher rate than fixed costs of direct exporting. Consequently, SMEs tend to account for a larger share in total exports as the Internet develops. Using two samples from the Exporter Dynamics Database, we find supporting evidence that the development of the Internet in the exporting country has a significant and negative effect on the share of exports by the top 5% or 25% of exporters, implying a larger share of SMEs. Moreover, we find that improved submarine cable infrastructure in the exporting country also leads to a lower share of exports by large exporters. These are in contrast to the estimated positive effect of telephone development in the exporting country, which may not disproportionately benefit indirect exporting via e-commerce platforms over direct exporting. Finally, we find an imperfect substitution relationship between e-commerce platforms and traditional intermediaries.

Challenges to open innovation in traditional SMEs: an analysis of pre-competitive projects in university-industry-government collaboration

Governments are increasingly focusing their efforts on stimulating innovation within small and medium-sized enterprises (SMEs). As a result, university-industry-government collaboration is gaining importance among the agenda of policymakers to enable open innovation in SMEs. However, these inter-organisational relationships often fail to meet expectations, especially when projects are oriented to pre-competitive R&D. Nevertheless, the literature has not yet provided sufficient evidence of the challenges related to the participation of traditional SMEs (i.e., low- and medium-low tech SMEs) in this specific type of collaboration. We collected qualitative data to analyse longitudinally three pre-competitive projects, exploring the main challenges faced by traditional SMEs. We have bracketed the projects in four phases: initiation and planning phase, execution phase, closing phase, and monitoring and control phase. For each of these phases we have individuated firm- and project-level challenges, providing practical and theoretical insights for open innovation scholars.

Institutional barriers to participation in EU framework programs: contrasting the Swiss and UK cases

The aim of this study was to examine how institutional barriers arising from policy decisions influence the level of participation of third-party countries in European Framework Programs (EU-FPs). To achieve this, we contrasted the effect of EU funding restrictions following Switzerland’s 2014 reclassification as a “third country” in Horizon 2020, and the political uncertainties resulting from the 2016 Brexit vote in the United Kingdom (UK). We compared the participation patterns of Swiss and UK higher education institutions (HEIs) with control groups of similar European HEIs over time and, complementarily, analyzed changes in the participation of small and medium-sized enterprises (SMEs). Our results showed that the Brexit-induced uncertainty had stronger negative effects than the Swiss reclassification, which was, however, characterized by effective EU funding restrictions. In both cases, the negative impact of institutional barriers was stronger for the more central HEIs in EU-FP networks. These results suggest that the effect of institutional barriers is closely linked to consortium building mechanisms, where research collaboration requires stability and projection over the long term. Regarding individual grants, the impact was stronger for Marie Skłodowska-Curie actions than for European Research Council grants, suggesting that a researcher’s mobility is affected by political uncertainties. Finally, in the UK case, we observed a steep decrease in the participation of SMEs. Based on these results, we suggest that a stable framework of participation and a clear ruling on relationships with the EU for what concerns people’s mobility and economic relationships are key to fostering the participation of third-party countries.

Dynamic capabilities for SME participation in public procurement

PurposeAlthough small- and medium-sized enterprises (SMEs) play major roles in most economies in terms of job creation, innovation and contribution to national income, they are often underrepresented in public procurement markets. This paper aims to explore how the dynamic capabilities theory can improve SME participation in public procurement.Design/methodology/approachThrough a systematic literature review, the paper identifies common barriers to the effective participation of SMEs in public procurement and explores the applicability of the dynamic capabilities theory in addressing these barriers.FindingsA theoretical analysis was conducted to identify possible relationships between the factors reported in the literature as barriers to SME participation in public procurement and different components of the dynamic capabilities of firms (i.e. sensing, seizing, reconfiguring and learning). Seven key propositions were generated to guide future research.Research limitations/implicationsDespite its contributions, this paper is based solely on a systematic literature review and theoretical analysis. Future studies could use meta-analysis to review multiple studies relating to the nexus between SMEs and public procurement, hence improving methodological rigour.Practical implicationsThe paper contributes to the ongoing debate about whether and how SMEs can leverage their resources and capabilities to develop self-help strategies to improve participation in public procurement, an area yet underexplored in the literature.Originality/valueThis is one of the few studies examining the implications of firm-level capabilities of SME activity in public procurement markets. The findings may be beneficial to SME managers/owners, particularly regarding firms' ability to leverage resources and capabilities to participate effectively in public procurement.

Normative Environmental Configuration of SMEs within the Sustainable Development Discourse in South Africa: An Empirical Study

This paper investigates the role of normative environmental configuration forces on small and medium-sized enterprises (SMEs) adopting sustainable development practices in South Africa. A research survey was performed, and data were gathered from SMEs utilizing owners and managers as respondents. Non-probability sampling at the hand of the convenience method was utilised and 220 respondents constituted the final sample. The analysis of data constituted factor analysis and hypotheses were tested through the structural equation modelling technique. The study hypothesised that normative forces have an impact on the participation of SMEs in the extents of sustainability practices, namely social, environmental and economic. The results led to the supporting of all the hypotheses postulated in the study. Thus, the major recommendation was to support the training, networking and professional affiliations of SMEs in sustainable development issues in order to ensure proliferation of sustainable development amongst these firms.

Lending technologies and access to finance for SMEs in the hospitality industry

Small and Medium-Sized Enterprises (SMEs) in the hospitality industry play a pivotal role in local economic development. However, lack of adequate access to financing may prevent a larger participation of hospitality SMEs. A possible reason for the limited availability of access to financing could be the presence of information asymmetries between borrowers and lenders that lead to credit rationing. Lending technologies, suitable for external sources of finance, are designed to reduce information asymmetries for lenders. Using Brazilian firm-level data, the purpose of this study was to examine the impact of lending technologies, such as fixed asset lending and financial statement lending, on access to financing for SMEs in the hospitality industry. While our results confirmed the role of lending technologies to mitigate information asymmetries, and increase a firm's likelihood of access to financing, we found a differing impact of these technologies on SMEs’ access to financing. Results suggest that fixed asset lending was the preferred lending technology. We also discuss implications of our findings on industry practice and policy discussion.

Relations of GDP growth and development of SMEs in Poland

Micro, small and medium enterprises play a very important role in economic development of a country, what is the reason that they are subject to so many studies and analyzes. In addition to contributing to the creation of the Gross Domestic Product, they also play a key social role as they reduce unemployment.The aim of the article is to evaluate the relations between the components of gross domestic product (GDP) and the development of small and medium-sized enterprises (SMEs) in Poland in the years 1996-2016. To achieve this goal, we conducted a literature review, presented statistical data confirming the importance of these enterprises in the development of the economy, such as: entrepreneurship indicator (calculated as the number of SME enterprises per 1000 inhabitants), SME participation in total employment and SME participation in generating value added. We have presented this data for selected EU countries. In the further part of the work, we conduct a statistical analysis of data collected for Polish SMEs, which allowed us to verify the hypotheses set in the article. The results are presented at the end of the article.

The role that small and medium‐sized enterprises play in sustainable development and the green economy in the waste sector, South Africa

AbstractThe South African government is actively promoting small and medium‐sized enterprises (SMEs), particularly in the waste sector, where it is envisaged that the waste sector will contribute to the green economy through SMEs participation in waste management activities. Collectively, SMEs have the potential to exert significant pressure on the environment through the use of finite resources and generation of pollution and waste. Case studies, where interviews and documentations were used as data collection methods, on waste management supply chains are provided. Many SMEs are responding to supply chain pressure in terms of the Broad‐Based Black Economic Empowerment Act and participating in social responsibility activities. However, the majority of SMEs are not environmentally responsible and larger corporations should consider managing environmental responsibility in the supply chain as part of an effective risk management strategy. Findings support the government's vision of the creation of employment, the promotion of small business within the waste sector, and the role that SMEs play in environmental responsibility. The later through extended producer responsibility in waste management and recycling of larger business and thus, sustainable development in South Africa.

Eco-innovation determinants in manufacturing SMEs from emerging markets: Systematic literature review and challenges

Abstract The debate on eco-innovation is a recent and emergent topic between practitioners and in the academy. Especially in developing economies, such as in Brazil, this topic is very incipient mainly in Small and Medium-Sized Enterprises (SMEs) context. Hence, the purpose of this study is to identify what are the determinant factors for the successful adoption of eco-innovation in Brazilian SMEs. The findings reveal several similarities/differences and intersections/overlaps resulting in a list of sixteen primary determinants. Results also demonstrated that eco-innovations in SMEs may be enabled by breaking away from the immediatist culture, by the participation of SMEs in cooperation networks, by considering the regulations affecting the sector where the SME operates and the applicable legislation, by investing in R&D of innovative technologies in conjunction with external agents, by qualified professionals planning for and implementing eco-innovation and by reinforcing the financial condition of the SMEs. The practical contribution of this study is a consolidated comprehensive framework of eco-innovation to Brazilian SMEs providing important insights and challenges to academics, policy makers, and practitioners, improving the diffusion of eco-innovative practices. Furthermore, others emerging economies will benefit from the findings of our research.

The Role of SMEs and Startups in Standards Development

Small and medium-sized enterprises (SMEs) and startups are widely recognized as playing an important role in the global economy. They are traditionally known to be responsible for generating the majority of jobs and disruptive innovation. To achieve continued economic growth, SMEs and startups must be able to meaningfully contribute to the development of new technologies that will advance technology standards that bring much sought after network effects. Global standards development, however, involves hundreds of companies, and often requires heavy and upfront investment in research and development, as well as the cost of attendance in standards groups. This has led some policy makers and commentators to express concern about whether SMEs and startups are meaningfully able to contribute to and leverage the standard-setting process in traditional standards development organizations. This paper addresses this issue empirically and concludes SMEs and startups have been able to participate in and contribute to leading technology standards, although there is a continued need to promote and encourage such activities. By focusing on information from a rich dataset of the 3rd Generation Partnership Project (3GPP), that is responsible for developing global second, third, and fourth generation (2G, 3G, 4G) cellular standards, this paper estimates the participation and technical contribution by 3GPP members. The empirical findings establish that although SMEs and startups contribute up to 15% of the overall participation in the creation of 3GPP standards, the likelihood that such technical contributions will be accepted is similar to contributions from non-SMEs or non-startups. This result indicates that the rules governing 3GPP and similar open, voluntary SSOs afford effective means for active participation of SMEs and startups in the important process of standards development. Therefore, policy makers should encourage efforts by SSOs to adhere to traditional concepts of open and balanced voluntary participation for all standards development stakeholders, and also increased SME and startup participation in - and contribution to - standards efforts, in the knowledge that these entities will be in a position to earn fair returns on their investments to develop technologies and contribute them to standards, which may then be successfully implemented.

Government Performance in the Eyes of Business: An Empirical Study of SMEs in China

ABSTRACTIn countries where evaluation of government performance is closely linked with economic growth, business perceptions of government and the business environment are critical to the local government. However, in the field of public administration, businesses’ perceptions of government performance and its determinants are largely overlooked. This article explores whether perceptions of small- and medium-sized enterprises (SMEs) of the business environment will be influenced by government’s effort to engage the business sector. SME participation and involvement in the policymaking process is likely to result in more connections with government officials and better understanding of government decisions that have a positive impact on firms’ perceptions of their business environment. Using data collected from 2,662 SMEs in China in 2013, it is found that SMEs tend to have a better view of the local business environment if they can participate more in public policymaking processes.