Growth Of Small And Medium-sized Enterprises Research Articles

Digital transformation in SMEs: Understanding its determinants and size heterogeneity

Digital transformation plays a vital role in the success of firms, especially for small and medium-sized enterprises (SMEs). The business landscape is becoming more challenging for small businesses and they must navigate this complexity by adopting digitalization. However, many of them fail in this process. Our study aims to understand the main determinants of digital transformation, and the effect of size heterogeneity within SMEs. To this end, we apply the resource-based view, the technology-organization-environment framework and the technology acceptance model to a statistically representative sample of Spanish SMEs. We show that the manager's academic background, internationalization and firm size have a positive impact on digital adoption. Knowledge resulting from professionalization and an international context plays a critical role in overcoming SMEs' limitations and achieving digital transformation. Moreover, the positive effect of size is moderated by the levels of managerial education and internationalization. We go beyond the comparison between SMEs and large companies, by providing evidence about size heterogeneity within SMEs. Our findings provide valuable guidance for SMEs' digital transformation journeys, encouraging managers to embrace new knowledge and capabilities. Additionally, SME growth can facilitate digital transformation. Policymakers should develop programs aimed at promoting SME professionalization and international expansion.

Organizational ambidexterity in young SMEs? The incompatibility of entrepreneurial orientation and process improvement

ABSTRACT Organizational ambidexterity describes firms’ ability to pursue exploration and exploitation strategies simultaneously. It is, however, unclear if young SMEs should seek to develop organizations with this ability or if they are better off focusing on just one strategy. To shed light on this matter, this paper investigates the interaction between entrepreneurial orientation (EO) (organic organizing) and process improvement (mechanistic organizing) in relation to firm growth in young SMEs (small and medium-sized enterprises). We hypothesize that both types of strategies can produce growth for young SMEs but that, due to their incompatibility, young SMEs do not have the resources needed to successfully pursue them both. We test these hypotheses on a sample of 257 young Danish SMEs. Our results confirm that both EO and process improvement have a positive effect on firm growth. The results further show that while process improvement has a considerable positive effect in low EO firms, for high EO firms, this effect is minimal. Thus, high EO firms may waste important resources by putting too much effort into process improvement initiatives.

The Role of Adaptive Management in the Resilience and Growth of Small and Medium Size Enterprises

Small and Medium Size Enterprises (SMEs) are the backbone, and the main stimulus of development, and studies demonstrate that these businesses play an essential role in the economic growth of the global economy. Adaptive management is a crucial approach for enhancing the resilience and growth of SMEs in today's dynamic and unpredictable business environment. The purpose of this study is to determine the role of adaptive management in the resilience and growth of SMEs. A qualitative technique was employed as the research method in this study to collect and analyze data to ascertain the role of adaptive management in the resilience and growth of SMEs. The population of this study constitutes SME owners and managers within South Africa and a straightforward random selection process was used to choose the 20 of them to participate in the study. Atlas ti was used to code and analyze transcripts, produce network diagrams, and visualize data. It is evident from the findings of this study that poor management in an enterprise would inevitably result in the failure of the business. This implies that SMEs that embrace adaptive management principles demonstrate a higher capacity to navigate through uncertainties and capitalize on emerging opportunities, thus fostering resilience and sustainable growth. This suggests that for small businesses to succeed, SME owners and the government should collaborate to find solutions to most managerial problems faced by businesses so that the enterprises can grow and be sustainable.

Digital Transformation of Small and Medium Sized Enterprises (SMEs): Current Status, Dilemmas, and Strategies

With the rapid advancement of information technology, the digital transformation of SMEs has emerged as a critical topic in the development of the digital economy. The advantages offered by digital technology provide novel opportunities for SME growth. Digital transformation not only serves as a pivotal route for fostering innovation and high-quality development within businesses but also stands as an imperative choice in addressing market competition and uncertainties. However, compared to large corporations, SMEs encounter an array of unique dilemmas and obstacles during their digital transformation journey. These dilemmas frequently include a lack of digital awareness, insufficient funding, weak foundations, and talent shortages. This paper begins by examining the current status of SME digital transformation in terms of exploration phase, geographical distribution, and industry distribution. It then delves deep into the reasons behind the dilemmas faced during the digital transformation of SMEs and proposes a set of countermeasures in response.

Entrepreneurial Exposure Effect

The paper investigated whether prior entrepreneurial exposure moderated the effect of entrepreneurial leadership and learning orientation on small and medium-sized enterprises (SMEs) growth. A cross-sectional survey research design was utilized to retrieve data from 471 owners/managers of SMEs in South-West Nigeria. The simple random sampling technique was applied. The results from the pilot study were used to determine the test of reliability and validity of the adapted questionnaire. The partial least squares structural equation modeling (PLS-SEM) analysis findings showed that entrepreneurial leadership and learning orientation effect on SME growth is not significantly moderated by prior entrepreneurial exposure in South-West, Nigeria [(βiz= 0.002, t = 22.771, p>0.05)], although it has a positive effect. SME owners and managers should leverage their entrepreneurial insights and experiences to inform strategic initiatives, foster innovation, and drive growth. Additionally, creating opportunities for knowledge exchange and collaboration among individuals with diverse entrepreneurial backgrounds could enrich the organizational learning process and fuel innovation. Nevertheless, there are no guarantees that prior entrepreneurial exposure would affect firm growth.

Impact of E-Commerce as a Business Tactic on Sales Growth of SMEs in Nairobi

In recent years, the global business environment has experienced a paradigm shift, with technological advancements influencing consumer behavior and reshaping traditional modes of commerce. E-commerce, encompassing online platforms, electronic payments, and digital marketing, has emerged as a game-changer for businesses, providing them with a dynamic channel to connect with a wider audience. For SMEs in Nairobi, often characterized by resource constraints and intense market competition, adopting E-commerce strategies becomes imperative to navigate the contemporary business terrain. The surge in technological advancements and the widespread adoption of digital platforms have significantly transformed the business landscape, particularly for Small and Medium-sized Enterprises (SMEs) in Nairobi. While the integration of e-commerce is often viewed as a strategic business tactic with the potential to enhance sales growth, there remains a gap in understanding the nuanced impact of this approach on SMEs in the Nairobi region. Therefore, there is need to bridge this research gap by conducting a thorough investigation into the impact of e-commerce as a business tactic on the sales growth of SMEs in Nairobi. The theoretical framework for this study draws upon the Technology-Organization-Environment (TOE) framework, coupled with elements from the Diffusion of Innovations theory. The research design for this study employed a quantitative research method to provide a comprehensive understanding of the phenomenon. Stratified random sampling was employed to ensure representation from different sectors. Statistical analysis was employed to examine the relationships between adoption of e-commerce and sales growth using SPSS. The findings reveal a diverse landscape of adoption of e-commerce among SMEs in Nairobi, with notable representation across different industry sectors. The findings resonate with existing literature that emphasizes the positive association between e-commerce adoption and sales growth for SMEs.

What drives the performance of the SME sector? Evidence from selected European countries

Small and medium-sized enterprises (SME) are highly important for economic development of every nation. Recently, many experts and policymakers have been trying to measure the performance and efficiency of these businesses. However, the methods used so far are often idiosyncratic, subjective, or static. This paper suggests a new way to measure the success of these businesses using a data-driven method. More specifically, we combine decision-making techniques (namely, TOPSIS) and preference learning techniques. This innovative approach is flexible and can adapt to changes over time by iterative preference elicitation and TOPSIS calculation. As a part of the case-study of the proposed approach, we found that Ireland is a great example to follow and that the ?think-small-first? principle is the most important driver of the SME growth. The findings can help government officials and analysts, especially when they are planning policies for small and medium-sized enterprises.

A study on analysis of financial challenges of Small and Medium Sized Enterprises (SMEs) in international markets with special reference to blantyre commercial Center-Malawi, Central Africa

Small and Medium-Sized Enterprises (SMEs) play a pivotal role in economic development, particularly in emerging markets like Malawi. However, these enterprises face significant financial challenges when venturing into international markets from hubs such as Blantyre Commercial Centre. This study examines the multifaceted financial barriers that impede SMEs' ability to compete effectively in global trade. This study employs a mixed-methods approach, incorporating quantitative data analysis from SME financial records and qualitative insights gathered through interviews with key stakeholders, including SME owners, financial institutions, and government officials. The study focuses on identifying and analyzing the primary financial challenges encountered by SMEs in Blantyre, Malawi, including limited access to finance, high transaction costs, exchange rate volatility, and stringent regulatory environments. Findings reveal that SMEs in Blantyre face substantial hurdles in accessing financing due to high collateral requirements and exorbitant interest rates imposed by traditional financial institutions. Moreover, the high costs associated with currency conversion, international shipping, and compliance with diverse regulatory frameworks amplify the financial burden on SMEs, constraining their capacity for international expansion and competitiveness. The study underscores the urgent need for tailored financial solutions and supportive policies to address these challenges effectively. Recommendations include developing specialized financial products that cater to SME needs, negotiating preferential trade agreements to reduce transaction costs, and enhancing SME capacity in financial risk management and regulatory compliance. By addressing these financial barriers, stakeholders can foster a more conducive environment for SME growth and internationalization in Blantyre Commercial Centre, thereby contributing to sustainable economic development and inclusive prosperity in Malawi and Central Africa.

A sectoral perspective on the sustainable growth of SMEs. Empirical research in the V4 countries.

Research background: The present article concerns small and medium-sized enterprises (SMEs), their attitudes towards sustainable growth, and their social and environmental impact in V4 nations. In the current economic situation, it is imperative to understand the SMEs' perception towards sustainability aspects, not only about understanding but also believing they are significant for the firms' sustainability. Purpose of the article: The paper aimed to define the important attributes of SMEs' sustainable growth and compare the attitudes within the three most important business sectors in the V4 countries. Methods: The empirical research, which surveyed SMEs' attitudes, was conducted in June 2022 in the V4 countries. Data collection was carried out by the external agency MNFORCE using the "Computer Assisted Web Interviewing" (CAWI Research Method). The questionnaire could be completed by the owner or the top manager of the SME. The sample consisted of the Visegrad countries' three most important business sectors. The total number of respondents in the sample was 995. The statistical hypothesis was tested through descriptive statistics and Z-score at α = 5% significance level. Findings & Value added: The empirical research showed that SMEs in the V4 countries (within the sample set of the three most important business sectors) are concerned with the issue of sustainable growth in business because they not only understand the concept but also agree that sustainable growth should pursue not only the economic interests of firms but also the positive impact on the social system and environmental aspects. SMEs in the sample confirmed that they care about their business's social and environmental impacts. The results of the empirical research confirmed that there were no statistically significant differences in the positive responses of the respondents.

COMPARATIVE REVIEW OF TECHNOLOGY INTEGRATION IN SMES: A TALE OF TWO ECONOMIES - THE UNITED STATES AND NIGERIA

In the rapidly evolving digital landscape, Small and Medium-sized Enterprises (SMEs) are increasingly relying on technology integration to drive growth and competitiveness. This paper proposes a comparative review of how SMEs in two contrasting economies, the United States and Nigeria, are navigating the digital transformation journey. The core objective is to explore the dynamics, challenges, and prospects of technology adoption in these distinct economic contexts, offering valuable insights into the global patterns of SME digitalization. The United States, representing a developed and technologically advanced economy, presents a scenario where SMEs are leveraging cutting-edge technologies to enhance operational efficiency, market reach, and customer engagement. This review will explore the range of technologies being adopted, from cloud computing and AI-driven analytics to sophisticated e-commerce solutions. It will also delve into the challenges faced by US SMEs, such as cybersecurity threats and a competitive landscape dominated by tech giants. Furthermore, the review will assess the impact of supportive government policies and the digital skills landscape on SME technology integration. Contrastingly, in Nigeria, an emerging economy with distinct challenges and opportunities, SMEs are also embracing technology, albeit in different forms and scales. The review will examine the uptake of mobile technology, fintech, and digital platforms, particularly focusing on how these technologies enable Nigerian SMEs to overcome infrastructural limitations and access broader markets. Additionally, it will address the challenges unique to the Nigerian context, including erratic power supply, limited access to funding, and regulatory hurdles. The role of government initiatives in promoting technology adoption among Nigerian SMEs will also be a focal point. By drawing parallels and highlighting contrasts between these two economies, the paper aims to shed light on the multifaceted nature of SME technology integration. It will underscore how contextual factors like economic development, infrastructure, and policy environments shape the technology adoption pathways for SMEs. The review will also prognosticate future trends, identifying potential technological innovations that could revolutionize SME operations in both developed and developing economies. This comparative review is pivotal in understanding the global digital SME landscape. It offers practical insights for policymakers, business leaders, and technology developers, guiding them in creating tailored strategies and solutions that foster SME growth and resilience in an increasingly digital world.
 Keywords: Technology, SMEs, USA, Nigeria, Technology Integration, Digital Landscape, Economy.

Mobile Money and SME Growth: A Zambian Perspective

Purpose: An in-depth analysis of how mobile money services influence the growth and development of Small and Medium-sized Enterprises (SMEs) in Zambia. This research explores the expanding realm of mobile money in Zambia, a region experiencing swift technological uptake alongside the growing small and medium-sized enterprise (SME) industry.
 Methodology: Using a blend of qualitative and quantitative research methods, data was gathered from 150 SMEs across various industries in Lusaka. The study examines key factors such as transactional efficiency, access to financial services, cost reduction, and enhanced financial management facilitated by mobile money platforms. It also explores the challenges faced by SMEs in adopting these digital financial tools.
 Findings: The findings reveal a significant correlation between the use of mobile money services and SME growth, characterized by increased operational efficiency, broader market access, and improved financial management.
 Unique contributor to theory, policy and practice: This study not only underscores the important role of mobile money in transforming the economic structure for SMEs in Zambia but also provides valuable insights for policymakers and financial service providers aiming to boost the SME sector through technological innovation. The research contributes to the growing body of knowledge on digital finance and its impact on emerging economies, highlighting the unique dynamics and opportunities within the Zambian context.

The Use of Social Media Platforms for Competitive Information and Knowledge Sharing and Its Effect on SMEs’ Profitability and Growth through Innovation

Traditionally, corporations obtain competitive information via marketing reports, trade journals, newspapers, and competitors’ websites. That information was secondary and limited. With the widespread usage of Web 2.0 technologies, social media platforms (SMPs) are used by micro, small, and medium-sized enterprises (SMEs) to search for information about their customers, competitors, and markets. SMEs are the engine of economic growth and effective solution to poverty and unemployment. There is also a growing use of SMPs to facilitate knowledge sharing, which leads to developing new ideas and sharing new knowledge, boosting creativity and efficiency, and assisting in achieving goals. This study aims to examine the effect of those uses of SMPs on Saudi SMEs’ performance growth and profitability through innovation. To evaluate 220 valid online questionnaire responses, we used SmartPLS 4 through a PLS-based structural equation model. The results show the positive direct effect of using SMPs for customer information and knowledge sharing on SME innovation in emerging economies and the indirect effect of those uses on SME performance growth and profitability. As a result, Saudi SME decision makers are advised to improve their effectiveness in using SMPs to acquire customer information and use it for knowledge sharing because those uses will positively influence innovation and increase SME growth and profitability.

Digital transformation and SME internationalisation: unravelling the moderated-mediation role of digital capabilities, digital resilience and digital maturity

PurposeThis study has two main objectives. First, to examine the indirect effects of digital platform capability and digital resilience on digital transformation (DT) outcomes for small- and medium-sized enterprises (SMEs), and second, to investigate how digital business model maturity influences these indirect effects.Design/methodology/approachThe study adopts a quantitative design and collects data through a self-reporting survey from individuals in the technological industries. The Partial Least Squares-Structural Equation Modelling (PLS-SEM) and PLS multi-group analysis examine the measurement and structural models and the significance of differences in indirect paths based on the digital business model maturity level, serving as a moderator.FindingsThe findings of this study provide valuable insights into the internationalisation of digital SMEs. They indicate that digital platform capability and resilience fully mediate, connecting digital resources to SME growth. The study also confirms the digital business model maturity’s positive and significant moderating effect on these indirect relationships.Originality/valueThis research contributes to the existing literature by focusing on the international outcomes of platform ecosystems in developing markets. It explores how digital platform capability and resilience support the digital transformation of SMEs, considering their vulnerability due to their small size. The study also fills a research gap by investigating the relationship between big data, digital leadership and the international growth of digital platforms. Lastly, it explores the role of digital maturity in the relationships between antecedents, determinants and outcomes of digitalisation.

Charity can still begin at home: Examining the drivers and boundary conditions of Africa-to-Africa outward foreign direct investment (OFDI)

Recent studies on ‘Africa Rising’ and ‘Africa-to-Africa Internationalization’ have propelled conversations on how African Small and Medium-Sized Enterprises (SMEs) can continue to internationalize within African countries. From the tenets of the institutional theory and the dynamic capabilities perspectives, this study proposes and tests a framework of how and when dysfunctional competition drives SMEs' outward foreign direct investments within African countries. Analysis of a survey data from 196 Ghanaian SMEs operating across the African continent indicates that cross-border open innovation mediates the relationship between dysfunctional competition and SMEs' intra- Africa OFDI activities. Further analysis revealed that SMEs' strategic agility plays a double-edged sword moderating role in enhancing the effects of dysfunctional competitions and cross-border open innovation on intra-Africa OFDI. These findings have significant implications for the international business and finance literature as well as the management and growth of African SMEs.

ANALISA IT/IS STRATEGIC PLANNING TERHADAP ADOPSI TEKNOLOGI INFORMASI DALAM KONTEKS KINERJA ORGANISASI PADA UMKM

The research objectives to analyze the impact of Information Technology/Information Systems (IT/IS) strategic planning on the adoption of Information Technology (IT) within the context of organizational performance in Small and Medium-sized Enterprises (SMEs). In the continually evolving digital era, the ability of SMEs to integrate and effectively leverage IT is crucial for their sustainability and growth. The research methodology involves surveying and analyzing data from a range of SMEs that have implemented IT/IS strategic planning. The findings indicate a positive correlation between IT/IS strategic planning and the level of IT adoption in SMEs operations. SMEs with mature IT/IS strategic planning are more likely to efficiently implement and utilize information technology, thereby enhancing organizational performance. Factors such as budget allocation, technological literacy, and understanding the benefits of IT play a significant role in this relationship. This research contributes significantly to understanding how IT/IS strategic planning can act as a catalyst for successful IT adoption among SMEs. Practical implications of the research include recommendations for policy formulation, human resource training, and the development of technology empowerment strategies for SMEs. Thus, this research holds substantial relevance in supporting the growth and competitiveness of SMEs in the digital era.

Employment growth and profitability in European SMEs: the 100% speed limit

ABSTRACT We investigated the relationship between employment growth and profitability and propose that small and medium-sized enterprises (SMEs) hire employees, they experience an increase in profitability due to their acquisition of additional human capital. These benefits, however, are limited by the firm’s ability to efficiently integrate the newly recruited employees and adjust its internal managerial practices and organization accordingly. Using a large sample of SMEs in the European Union, we examined the relationship between employment growth and profitability as a quadratic function with an inverted U shape. The empirical results strongly supported our prediction as we observed that profitability decreased when SMEs exceeded a 100% growth rate in employment. Importantly, we observed strong homogeneity in our results across various industries. This paper empirically documents the ‘maximum’ speed at which firms should grow and highlights the homogeneity of this result across industries.

SMEs growth and profitability, productivity and debt relationships

PurposeThis study aims to seek to analyse the relationships between profitability, productivity, external debt and growth in SMEs. The authors also analyse firm size and age as explicative variables of small and medium-sized enterprise (SME) growth.Design/methodology/approachIn this paper the data were collected for 3309 SMEs for the period 2010–2019. The authors estimate the model using the system generalised method of moments dynamic estimator.FindingsThe results show that after a certain level of profitability, this determinant positively impacts SME growth. Productivity influences positively the firm growth. There is a positive effect of external debt on SME growth, which can be explained by the insufficiency of internally generated funds. The authors obtained a negative signal between size and firm growth, contradicting Gibrat's Law (1931). Moreover, the results suggest that SMEs grow less after a certain age, suggesting that small firms grow less after reaching the minimum scale of efficiency.Practical implicationsFor SME owner-managers, this study enhances the importance of profitability and labour productivity for firm growth. For policymakers, the results suggest the need for favourable conditions for SMEs in accessing external finance.Originality/valueProfitability negatively impacts on SME growth. However, the authors found that above a certain level of profitability, probably, as firms accumulate retained earnings, profitability has a positive effect on SME growth. Moreover, this study shows that labour productivity and debt positively impact on SME growth, evidencing the importance of the availability of financial resources to sustain the growth of these firms.

Key factors influencing the sustained growth of high-tech SMEs in South Korea: the perspectives of founder owner-managers

PurposeThis paper explores key factors influencing high-performing, sustained growth, high-tech small- and medium-sized enterprises (SMEs) in South Korea.Design/methodology/approachA qualitative study is adopted to explore seventeen founder owner-managers of high-tech SMEs who sustained consistent employment growth, greater than the industry average, for seven years. Within the sample, those with higher (10% or over) employment compound annual growth rates (CAGRs) over this period are also compared to those with lower rates.FindingsThe study suggests that proactive approaches, such as flexible organization, risk management, fast decision-making and international market entry, are seen as important contributing factors to sustained growth. These findings contribute to a better theoretical and empirical understanding of sustained high-tech SME growth, in a country with a strong entrepreneurial and internationally competitive information technology sector. Also, collaboration across the SME was perceived as making an important contribution to staff development and growth, consistent with stewardship theory.Research limitations/implicationsThe sample is based on successful high-tech SMEs, so there are limitations in extrapolating results to other types of firms, sectors or countries.Practical implicationsKey factors identified in this study can be considered by entrepreneurs seeking to achieve sustainable business. These also provide improved understanding for policymakers into the complexity of factors related to sustained and high growth of technology-based SMEs, which many countries are keen to foster to aid national economic growth.Originality/valueThe research provides new evidence exploring the diverse perspectives of founder owner-managers, on the sustained growth and failure in South Korean high-tech SMEs, and how these have changed since the inception of their business.

Does Supply Chain Finance (SCF) alleviate funding constraints of SMEs? Evidence from China

Financing constraints have always been a common problem for small- and medium-sized enterprises (SMEs) around the world, but the emergence of supply chain finance (SCF) has largely helped to ease such constraints on their bank financing. This research expands the cash-cash flow sensitivity model and examines the effect and mechanism of SCF on alleviating the financial constraints of 740 firms listed in the SME Boards and Growth Enterprise Market (GEM) of the Shanghai and Shenzhen Stock Exchanges from 2010 to 2017. The results show that SMEs in China overall suffer from financial constraints, and the degree of the constraints is greater for private SMEs than state-owned SMEs. Furthermore, the constraints faced by SMEs in the central and western regions are more severe than those in the eastern region, the constraints in the tertiary industry are more severe than those in the primary or secondary industry, and the constraints for innovative SMEs are more severe than non-innovative SMEs. It is also found in this paper that SCF more mitigates the financial constraints on SMEs, particularly private SMEs, innovative SMEs, and those locating in the central and western regions, than on state-owned SMEs, non-innovative SMEs, and those locating in the east regions. These findings provide important policy implications for governments, financial institutions, and firms alike.

DİJİTALLEŞME VE SÜRDÜRÜLEBİLİRLİK AÇISINDAN TÜRK KOBİ'LERİNİN DÖNÜŞÜM SÜRECİ

Digitalization and sustainability are no longer contentious topics in today's world. Digital innovation and ecological actions constantly evolve, affecting a company's strategy, structure, operations, and performance. These developments are particularly important for growing economies such as Türkiye. Small and medium-sized enterprises (SMEs) are essential to the Turkish economy, providing 72 % of employment. The utilization of digital innovations and sustainability approaches is having an increasingly positive impact on the growth of SMEs in today's business environment. This article focuses on the transformative process of Turkish SMEs toward sustainability and digitalization. The data were from the Flash Eurobarometer 486, which compares the average of 27 EU countries to Türkiye. As a result of the study, it is understood that sustainability and digitalization continue to be underused in Turkish SMEs, primarily due to high investment requirements and a scarcity of financial resources.