Small Medium Enterprises Research Articles

The Level of Engagement of Small and Medium Enterprises in Sustainable Finance

This study explores the critical role of small and medium enterprises (SMEs) in sustainable finance, focusing on their engagement across environmental, social, and governance (ESG) dimensions. Using the ESG Model as a framework, the research assesses how SMEs in Las Piñas, Muntinlupa, and Parañaque approach sustainability in their business operations. Employing a descriptive-comparative method, the researcher surveyed 130 SMEs through a meticulously crafted questionnaire, with reliability scores of 0.94 (Environmental), 0.93 (Social), and 0.91 (Governance), ensuring robust data collection. The findings reveal that most SMEs are medium-sized corporations with a primary focus on construction management, generally operating for 6-10 years and earning between PHP 750,000-1,500,000 annually. While SMEs demonstrate moderate engagement in sustainable finance, a significant number prioritize survival over sustainability investments, hindered by factors such as access to finance, knowledge gaps, risk perception, and regulatory constraints. Notably, the study underscores the pivotal role of government and financial institutions in providing the necessary support to overcome these barriers and promote more profound engagement in sustainable finance. This research offers valuable insights into the current state of SME involvement in sustainability, paving the way for targeted interventions that can drive long-term growth and responsible business practices. Keywords: Engagement, Environmental, Social, and Governance (ESG), Small and Medium Enterprises (SMEs), Sustainable Development Goals, and Sustainable Finance

POLICIES TO FOSTER ENVIRONMENTAL SUSTAINABILITY IN SMALL AND MEDIUM-SIZED INDUSTRIAL FIRMS IN EAST ASIA

Environmental sustainability is becoming crucial for development, especially in countries grappling with global warming and climate change. This study examines environmental sustainability in small and medium-sized industrial firms across seven East Asian countries from 2000 to 2021. Using the Continuously Updated Fully Modified (CUP-FM) approach, the analysis reveals a significant relationship between state-provided loans to small and medium-sized enterprises (SMEs) and increased CO2 emissions, underscoring how financial support impacts environmental outcomes. Governance quality plays a key role, with better governance linked to lower emissions, highlighting its importance in fostering sustainability. Unexpectedly, a negative correlation between inflation and CO2 emissions suggests that inflation might encourage SMEs to adopt more energy-efficient practices. Additionally, higher employment and poverty levels are associated with increased CO2 emissions, reflecting the difficulties SMEs face in balancing economic growth with environmental impact. Based on these results, East Asian countries are advised to enforce stricter regulations, improve access to green financing, enhance governance and encourage collaboration to advance SME sustainability.

Identification of Environmental, Social, and Governance Implementation in Micro, Small, and Medium Enterprises

Environmental, Social, and Governance (ESG) has become a stakeholder demand for companies today. However, not all companies have successfully integrated the concept into the business model and gained value. In Micro, Small, and Medium Enterprises (MSMEs), the implementation of ESG is considered insignificant. Therefore, this study aims to identify ESG practices and gain insight into MSME's understanding of ESG. Hence, it provides an initial overview of current ESG practices as part of non-financial activities in the MSME sector. This research is also expected to provide additional insight to regulators. Research data was obtained through questionnaires on ESG and analyzed according to the responses of each pillar. Enumerators then guided the questions to MSMEs in the Sub-districts of Nanggewer Mekar, Pabuaran Mekar, and Pondok Rajeg. MSMEs in these sub-districts were selected because Nanggewer Mekar, Pabuaran Mekar, and Pondok Rajeg are actively involved in the Ministry of Environment and Forestry climate village program. Results show that from the initial identification of ESG understanding in MSMEs, respondents know about climate change issues and their impact on the environment, society, and governance. However, respondents understanding varies according to the perceived benefits to their business. In addition, respondents have not implemented elements of the ESG concept systematically and holistically. Therefore, the ESG concept has not been integrated into their strategy or business model. The study is limited in scope and area. Therefore, research also might be developed into empirical research to support the recent findings. Further, this research studies MSME's initial understanding of ESG activities.

Determinants of E-commerce Adoption by MSMEs: An Empirical Analysis in Odisha

This article aims to examine the adoption of e-commerce by micro, small and medium enterprises (MSMEs) in Odisha. The quantitative survey approach was employed for the conduct of this research. A structured questionnaire was used to obtain the data from a sample of 100 representative MSMEs across the two administrative blocks in the Khordha district of Odisha. The relationship between the variables in this study was analysed by using binary logistic regression technique. The study found that most of the MSMEs had engaged in at least one form of e-commerce level, which is less than the desirable level. Further, the study provides an understanding of the factors responsible for e-commerce adoption by MSMEs in the district. The study found that three variables, that is, the number of staff with IT knowledge, interest to accept e-commerce and size of the business, are the major determining factors that influence MSMEs in adopting e-commerce. Significant challenges hindering e-commerce adoption among MSMEs in Khordha as identified in this study include problems with online banking, speed of the internet, lack of government support, problems in logistic support and lack of IT-qualified staff. Attention should continue to focus on improving the technical infrastructure needed to operate e-commerce and there is a need for media publicity to increase public awareness to push customers and employees to make use of e-commerce. The role of the government is also crucial in providing assistance and training that can help the use of e-commerce in the district.

Continuous learning in SMES: the mediating role of resilient dynamic capabilities across the firm life cycle

Purpose Small and medium-sized enterprises (SMEs) are critical in the global business environment, yet they face significant challenges of survival. This study aims to investigate the role of continuous learning and resilience dynamic capabilities (RDC) on SME performance. Design/methodology/approach The authors conducted a quantitative survey of leaders from 290 SMEs to examine the relationship between continuous learning and performance. Structural equation modeling (SEM) is used to test the dependent relationships in this study. In addition, the Monte Carlo Method is used to test the mediating effect of RDC. Findings The results suggest that there is a direct effect of continuous learning on firm performance, as well as an indirect effect through RDC. In other words, the effect of continuous learning on firm performance was partially mediated through RDC. Originality/value The authors also explored whether firm life cycle stage matters regarding the role of continuous learning and RDC in SMEs. The mediating role of RDC becomes more pronounced (fully mediated) as SMEs transition from the growth stage to maturity stage of their life cycle.

Mudharabah Linked Waqf: Inovasi Model Pembiayaan Berkelanjutan untuk UMKM

This study aims to formulate an innovative financing model and sustainable business assistance through the mudharabah linked waqf scheme. The method used is descriptive qualitative in the form of reviewing scientific journals, books, official news, reports and related regulations which are analyzed by content analysis. Mudharabah linked waqf is an innovation and integration of financing to Micro, Small, and Medium Enterprises (MSMEs) where the composition of the source of funds comes from commercial funds and cash waqf funds managed by Koperasi Syirkah Berkah Bersama (KSBB) through a collaboration with Indonesian Muslim Entrepreneurs Community (KPMI) chapter Surabaya. Funds will be channeled to low-risk MSME projects recommended by KPMI Surabaya with duration of fewer than six months. The surplus of cash waqf will be distributed to social, education, economy and da’wah activites in the form of sustainable business development and fiqh muamalah assistance by KPMI Surabaya and the rest distributed as an incentive to reduce murabahah margins for startups. Risk mitigation is carried out through collateral requirements, guarantor, incentive-compatible contract applications to determine cash flows and related parties in the project, as well as post-project financial audits. This model has implications for strengthening the roles of KSBB and KPMI Surabaya in encouraging literacy, inclusion, and innovation in deepening sustainable Islamic financial products, in order to strengthen the economy of ummah in the real sector. Keywords: MSMEs, KSBB, KPMI Surabaya, Mudharabah Linked Waqf, Sustainability

REDUCE—A Tool Supporting Inconsistencies Reduction in the Decision-Making Process

This paper presents REDUCE, a free online tool designed to support decision-making processes by addressing inconsistency in multiplicative pairwise comparison (PC) matrices, a key element of many multi-criteria decision-making (MCDM) methods, including the analytic hierarchy process (AHP). AHP relies on pairwise comparisons to assign weights to decision criteria or alternatives, but human-generated PC matrices often exhibit inconsistencies. Consistency is evaluated using Saaty’s consistency ratio ( CR ), where a value below 0.10 is considered acceptable. Higher inconsistency levels necessitate matrix corrections, which are challenging if the original expert is unavailable or revision constraints exist. REDUCE autonomously reduces inconsistency in PC matrices using two different algorithms that require no expert intervention. The tool accommodates different PC matrices, enabling users to specify the desired CR threshold (e.g., CR≤0.10) and select the algorithm for adjustment. It ensures the resulting matrix is consistent while preserving the original preference structure to the greatest extent possible. Additionally, REDUCE calculates weights for the compared entities, making it a valuable tool for applications of AHP and related methodologies. Quantitative evaluations demonstrate that REDUCE can improve matrices with high inconsistency (e.g., CR=0.25) to acceptable levels (e.g., CR=0.08) while retaining up to 95% of the original preference integrity, depending on the chosen algorithm. By addressing the accessibility gap for small and medium enterprises (SMEs) that lack resources for costly decision-making software or expert consultants, REDUCE facilitates broader adoption of MCDM tools. This work highlights the potential of REDUCE to enhance decision-making reliability and accessibility in resource-constrained environments.

The key determinants of digital repayment performance of ultra-micro entrepreneurs in Indonesia microfinance institution

PurposeThis study aims to determine the factors that impact the success of loan repayment in the ultra-micro (UMi) program in Indonesia through the application of ordinal logistic regression. Several microfinance institutions in Indonesia have already adopted digital applications to optimize their daily operational procedures, hence facilitating efficient operations. However, the success and sustainability of microfinance institutions may be proven by their capacity to increase profitability and boost the repayment track record of borrowers. The repayment performance is categorized into five levels: collectability-1 (pass), collectability-2 (special mention), collectability-3 (substandard), collectability-4 (doubtful) and collectability-5 (loss).Design/methodology/approach A sample size of 600 was used to collect data from a non-banking financial business (NBFC) in Indonesia. The data were collected from historical transactions carried out in different locations around Indonesia 20 provinces in total.Findings The research illustrates those variables such as income, loan size, repaid scheme, loan tenure and business sector significantly influence the performance of loan repayment. However, this study clarifies that the probability of a borrower not defaulting on their loan is affected by the flexibility of the repayment method for making the payment.Practical implications The paper suggests that financial institutions in Indonesia should reevaluate their loan policy for small and medium enterprises (SMEs) and develop a more flexible credit system that considers the borrower’s characteristics.Originality/value This study enhances the current body of research on the digital repayment performance of ultra-micro enterprises in Indonesia. This observation has significance in the context of policy decision-making and policy reversal, as it underscores the need to promote and implement skill development initiatives nationwide to foster the growth of sustainable UMi enterprises. The performed research recognizes the need to take into account the comprehensive assessment of digital repayment performance. Consequently, it offered valuable information on the borrowers, loans and business characteristics of ultra-micro enterprises.

Small and medium-sized enterprises (SMEs) in Bali: Corporate social responsibility, competitive advantage and its impact on financial performance

Climate-related concerns have drastically made companies realize the need for better environmental regulations and consolidate them in corporate business strategies such as Corporate Social Responsibility (CSR). CSR improves firm performance by valuing the stakeholders' interests and substantially achieving a competitive advantage over competitors. Recognising a firm's competitive advantage in the market indicates performance and might help the company perform better. The objective of this research is to provide concrete proof related to how CSR affects competitive advantage and its effects on company performance, especially financial performance in SMEs in Bali Province. This study uses primary data in the form of questionnaires distributed to SMEs both directly and online. The sample of this research is the manager / owner of SMEs in Bali Province. Data analysis tools using SmartPLS 4.0. The study's findings indicate that CSR has a direct impact on financial performance (SMEs) and CSR indirectly affects the financial performance (SMEs) through competitive advantage. Competitive advantage was found to partially mediate the impact of CSR and financial performance (SMEs). These findings will be used by SME managers in Bali Province in order to enhance the company's financial performance by considering the use of CSR strategies and strengthening competitive advantage. Implementing CSR can help a company become more competitive and separate itself from competitors by providing an innovative product or service. Finally, corporate social responsibility (CSR) can give a company a competitive advantage by strengthening its marketing abilities, which leads to improved performance.

Strategic financial management framework to ensure performance and growth for small to medium entrprises

Zimbabwe’s Small to medium enterprises (SMEs) face worsening performance and growth-related challenges attributable to failure by owner managers to embrace Strategic Financial Management (SFM) practices capable of promoting business growth and performance. SMEs became the main contributor to the gross domestic product following the collapse of the economy due to the government’s agrarian reform of 2000. Using the quantitative design, the study investigated SFM practices by SMEs towards developing a SFM framework for Zimbabwe’s SMEs. The study revealed that SMEs lacked a conceptual framework that ensures growth despite having a clear focus and vision. Drawing from empirical data and critical review of relevant theories, the study developed a strategic financial management framework for SMEs in Zimbabwe. The framework has relevance for SMEs in Zimbabwe and other neighboring countries as they promote SMEs growth and performance.

Has generative AI become of age

Small and Medium Enterprises (SMEs) in South Africa previously faced challenges due to limited resources, restricted access to technology, and the need to constantly adapt to a dynamic business environment. The introduction of Generative Artificial Intelligence (AI) emerged as a potential solution to these issues, promising to enhance operational efficiency and strategic decision-making. As a representative of developing economies, South Africa experienced a growing interest in AI technologies. This study was conducted to explore the impact of generative AI on SME productivity in South Africa, an area which had been underexplored. Employing a qualitative methodology, the study evaluated the current state and implications of generative AI in South African SMEs. It involved in-depth interviews to gather perceptions, experiences, challenges, and benefits from SME owners and managers regarding the adoption of generative AI technologies. The findings analysed via R Statistical Software revealed significant insights into the specific areas where generative AI substantially impacted SME productivity. It also identified the challenges and opportunities associated with the adoption of generative AI by SMEs, as well as the potential long-term implications. Key findings included notable improvements in data-driven decision-making, operational efficiencies, and market expansion strategies. However, the study also highlighted barriers such as the lack of technical expertise, initial setup costs, and concerns over data security. Overall, the impact of generative AI on SMEs in South Africa was found to be predominantly positive, paving the way for further technological advancements and adoption in the sector.

The role of innovative entrepreneurship and emerging technologies in South Africa's Small, Medium and Micro Enterprises

Small, Medium and Micro Enterprises (SMMEs) are crucial to South Africa's economy, significantly contributing to job creation and innovation. However, they face challenges such as limited access to finance, skills shortages, and difficulties in adopting emerging technologies, which hinder their growth and sustainability. This study aims to explore the role of innovative entrepreneurship and technology in enhancing SMME performance. Through a systematic literature review and thematic analysis, the research identifies twelve key themes that underscore how innovative entrepreneurship can drive adaptability, improve operational efficiency, and facilitate market access. Findings indicate that innovative business models and practices are essential for SMMEs to overcome financial and operational barriers, enabling them to respond effectively to market demands. The study recommends that the South African government and private sector collaborate to enhance financial accessibility, develop targeted training programmes, and improve infrastructure. By fostering a supportive environment for innovative entrepreneurship, SMMEs can leverage emerging technologies more effectively, ultimately driving economic growth and social development in the country.

The role of work ethic mediation on the impact between job motivation on performance and knowledge sharing of SMEs in East Java

This study examines the influence of SME performance, knowledge sharing, work motivation, and the work ethic of SME proprietors. This research was conducted on Small and Medium Enterprises in East Java. The study population comprised 293 proprietors of small and medium-sized enterprises (SMEs) employing between 3 and 10 individuals. The participants in the study were owners of small and medium enterprises situated across East Java. Data collection for each variable was performed using questionnaires. Data analysis methodologies utilize descriptive analysis techniques and quantitative data analysis techniques, such as Structural Equation Modeling (SEM) with Partial Least Squares (PLS). The results demonstrated that the mediating effect of work ethics on the relationship between work motivation and company performance was insignificant. The mediating effect of work ethics on the relationship between work motivation and knowledge sharing was substantial. The correlation between work motivation, work ethics, and knowledge sharing was positive and significant; however, the influence of motivation on company performance was not significant. The motivation of employees negatively affects the performance of small and medium-sized enterprises (SMEs) in East Java. This study offers guidance to managers of small and medium enterprises on implementing work ethics to enhance employee motivation, performance, and knowledge sharing.

Desain Kemasan Online: Solusi Kreatif dan Terjangkau untuk UMKM melalui Brand PackDe

Product packaging is an important element in creating the identity and attractiveness of a product, especially for small and medium enterprises (SMEs). This research aims to develop an online-based packaging design service through the PackDe platform that offers easy access, transparent pricing, and a variety of customizable design options. The methods used include literature study, competitor observation, and social media analysis to understand market needs and current design trends. The results show that PackDe is able to provide functional and aesthetic packaging design solutions, supporting SME product branding effectively. Nevertheless, challenges such as limited human resources and marketing need to be overcome to reach a wider market. The implications of this research show that digital-based packaging design innovation can improve the competitiveness of SME products in national and global markets. PackDe is expected to be a strategic partner for SMEs in creating packaging that is not only visually appealing but also has added value to the packaged product.

Enhancing Green Economic Circular Ecosystem Growth through AI-Based Waste Management Gamification

The research emphasizes the critical role of technology in advancing the sustainable development of micro, small, and medium enterprises (MSMEs) while highlighting the importance of leadership within green organizations for effective implementation of green economy principles. This study seeks to deepen understanding of how green behaviours contribute to the sustainability of enterprises. Indonesia’s National Waste Management Information System highlights the urgency of this research, revealing that the country generates millions of tons of inadequately managed waste, leading to significant environmental challenges. To address this, the study focuses on mapping the needs of MSMEs to foster a green economic circular ecosystem. The researchers conducted in-depth interviews with stakeholders and focus group discussions with MSMEs already involved in waste management. Data were collected through online surveys and interviews, followed by content analysis to understand MSMEs’ green behaviors and sentiments. The findings indicate a strong demand for green programs that encourage environmentally friendly behaviors through gamification, such as waste banks that provide economic benefits to MSMEs. This study also contributes to the sustainable development goals by integrating community involvement in value co-creation, raising public awareness, and increasing income through waste management initiatives.

Exploring Technological Factors and Cloud Accounting Adoption in MSMEs: A Comprehensive TAM Framework

The adoption of cloud accounting technology among micro, small, and medium enterprises (MSMEs) is becoming increasingly vital for enhancing corporate efficiency and sustainability. However, the adoption rate requires enhancement due to several obstacles, including insufficient digital literacy (DLC) and technological complexity (CX). This study aims to identify the factors influencing the adoption of cloud accounting in MSMEs using TAM framework. This research encompassed 307 participants from MSMEs in Indonesia, with data gathered via surveys and analyzed with the Structural Equation Model—Partial Least Squares (SEM-PLS). DLC and compatibility (CO) substantially affect the perceived ease of use (PE) and usefulness (PU) of cloud accounting technology. Meanwhile, relative advantage (RA) positively impacts PE but does not significantly influence PU. CX greatly influenced users’ intention (INT) to embrace cloud accounting. These findings highlights the crucial role of TAM and indicate that enhancing DLC and CO alongside current business practices is essential to promoting technology adoption. This study provides practical recommendations for policymakers and technology providers to improve the use of digital technologies among MSMEs.

Demand Side Factors and Financial Inclusion: The Mediating Role of Financial Self-efficacy

Despite the recognized significance of achieving financial inclusion in Nigeria,there is limited studies in this area. This gap primarily arises from the prevailingfocus in existing literature on financial inclusion in Nigeria, which predominantlyemphasizes the supply side. Therefore, this study delved into the role of financial selfefficacyas a mediator in the relationship between demand-side factors and the financialinclusion of micro, small, and medium enterprises (MSMEs) in selected local governmentsin Oyo State. The study employed a cross-sectional survey design, the studygathered primary data through structured questionnaires and utilized a structuralequation model for analysis. The findings reported a significant positive link betweenfinancial attitude and financial inclusion (p-value: 0.000). Likewise, there was a noteworthypositive association between subjective norms and financial inclusion (p-value:0.001), as well as between personal experience and financial inclusion (p-value: 0.003). Intriguingly, financial self-efficacy emerged as a substantial obstacle to financial inclusion,acting as a mediating factor with a p-value of (0.002). By evaluating the mediationeffect, this study shows how financial self-efficacy enhance individuals MSMEs ownersto confidently undertake financial tasks and decisions and consequently, financial inclusion in relation to their attitude, experience and subjective norms respectively. Consequently,the study recommends the promotion of positive financial attitudes amongindividual MSMEs to facilitate continuous access to diverse financial services. Financialservice providers should prioritize the establishment of an effective and sustainablefinancial system that offers affordable services to MSMEs. Furthermore, communityleaders are encouraged to play a role in motivating their members to actively engage inthe formal financial sector.

Digital revolution powered by COVID-19? An analysis of the digitalisation activities of Hungarian entrepreneurs

AbstractDigitalisation presents a significant challenge for small- and medium-sized enterprises (SMEs), as they generally lack the required competencies and qualifications for a digital transformation. However, crises such as the COVID-19 pandemic have highlighted how digitalisation can improve SME efficiency and unlock new markets. This paper aims to contribute to the empirical literature by analysing the factors influencing Hungarian entrepreneurs' activities and attitudes towards digitalisation during the COVID-19 pandemic. The results are based on the quantitative analyses of Hungarian datasets of the Global Entrepreneurship Monitor (GEM) spanning 2021 to 2023, complemented by figures from a representative survey of SMEs in 2022. Our findings show that while nearly all SMEs utilise digital devices, adopting more advanced solutions remains low. Although the pandemic somewhat accelerated the digitalisation efforts, most entrepreneurs do not expect to use more digital solutions in the next six months. There is no consistent correlation between digitalisation and entrepreneurial motives, as the cluster analyses did not provide homogenous groups of entrepreneurs in the years analysed, so we can conclude that digitalisation efforts may be even among them. Thus, to overcome the challenge of digitalisation, policymakers should incentivise entrepreneurs to improve their digital skills and implement digital solutions.

COVID-19 and SMEs: An umbrella review of systematic literature (2020–2024) and future directions for entrepreneurship

AbstractThis special issue addresses the impact of COVID-19 on entrepreneurship. It builds on insights shared at the dedicated session – supported by the Hungarian Academy of Sciences' Post-COVID research grant (MTA PC-II-17/1/2022) – of the 2nd Danube Cup Conference in Belgrade in November 2023, featuring three papers presented there, along with four additional contributions. The goal of this issue is to advance scholarly understanding of post-COVID dynamics in entrepreneurship and share valuable findings with a broad academic audience. To provide a comprehensive overview of current research on this topic, we include an umbrella review examining the COVID-19 crisis' impact on small and medium-sized enterprises (SMEs) from 2020 to 2024. Drawing on 26 systematic literature reviews identified through Scopus, Google Scholar, and Elicit, this review captures key challenges, strategies, and emerging trends affecting SMEs. Major research themes identified include resilience, supply chain management, digitalization, crisis management, and the financial impact of COVID-19.

The Power of Zakat in Contemporary Development: How Islamic Philanthropy Alleviates the Economic Impact of Toll Road Projects on MSMEs

This research examines the impact of toll road construction on Micro, Small, and Medium Enterprises (MSMEs) using Creative Destruction theory and contemporary Islamic philanthropy. The construction of toll roads, although accelerating distribution and accessibility, has had a significant negative impact on MSMEs in various regions. This study explores how MSMEs, particularly in North Sumatra, Pekalongan, and Brebes, are experiencing a decline in income due to reduced vehicle traffic. In addition, this article highlights the role of zakat, infaq, and sadaqah as mechanisms to increase the resilience of MSMEs. This research uses a qualitative approach with observation methods, in-depth interviews, and a literature review, showing that Islamic philanthropy can support the adaptation and sustainability of MSMEs amidst infrastructure changes. The research results show that the negative impact of toll road construction is significant, especially for MSMEs that depend on vehicle traffic, such as dodol in Serdang Bedagai, batik in Pekalongan, and restaurants in Brebes. The turnover decline reached 70-80% in some regions. Many MSMEs were also forced to lay off their employees due to decreased income. However, this study also found that Islamic philanthropic practices such as zakat, infaq, and sadaqah play an important role in increasing the resilience of MSMEs. MSME players who regularly carry out zakat, infaq, and sadaqah can show better adaptation, including product diversification and transition to online business models. Thus, Islamic philanthropy provides short-term assistance and supports long-term positive economic changes for MSMEs.