SME Sector Research Articles

Sustainable business models in SMEs: The customer’s perspective


 
 
 The main purpose of the study is to identify the relationship between sustainability goals and measures of the degree of sustainable policy implementation, as well as the customer perspective as determined by the business model (BM) template of A. Osterwalder and Y. Pigneur. In the conducted research, the customer perspective takes into account five elements of the BM and each element was examined by several characteristics. The elements of the BM from the customer perspective are: customer segment, value proposition, distribution channels, customer relationships, and revenue. The study used the authors’ survey questionnaire, in which respondents, who were enterprises in the SME sector, answered questions about their own BM divided into three layers – business, social, and environmental. The results were statistically analysed using SPSS STATISTIC 28 software and a logit model was developed to verify the significance of the relationship between the binary variables studied. 303 enterprises participated in the survey, 59% of which were enterprises guided by sustainability goals (SGs) in their BMs. However, only 27% of those surveyed had measures of the degree of sustainable policy implementation.
 
 
 
 The conducted research confirmed that acting in accordance with SGs is strongly related to customer-oriented elements of the business model, such as (1) customer segregation by sex or by level of environmental awareness, (2) value proposition – an environmental orientation, (3) distri- bution channels – direct sales online, (4) customer relationships through dedicated personal assistance or automated service based on personal customer profiles, (5) revenue – sales of products and services. Slightly different results were obtained for using measures of the degree of the SD policy implementation, where the highest correlation occurred for: (1) main customers – manufacturing entrepreneurs, (2) customer segregation by end-user experience or by level of involvement in socially important issues, (3) value proposition – strengthening democracy, (4) distribution channels – wholesale stores are run by partners, (5) customer relationships through self-service or automated service based on personal customer profiles or involving customers in the product development process, (6) revenue – rental/lease/leasing or licenses.
 
 
 
 
 

SMEs in Indonesia: How do market and entrepreneurial approaches shape dynamic capabilities and performance?

This study delves into the impact of market orientation and entrepreneurship on dynamic capabilities and SME performance within the Culinary SME sector of West Java Province, Indonesia. The study utilized a quantitative-causal research methodology to gather data from a sample of 420 Culinary (SMEs) that had been operating for a minimum of 5 years. The acquired data was then subjected to analysis using Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings indicate significant potential for market orientation and entrepreneurship to bolster dynamic capabilities and subsequently enhance SME performance. Furthermore, the study found that dynamic capabilities positively influence SME performance. Importantly, the study identifies an indirect pathway through which market orientation and entrepreneurship can augment SME performance by leveraging dynamic capabilities as a mediator. Practical implications emphasize the critical importance for Culinary SMEs to cultivate robust market orientation, harness entrepreneurial potential for strategic risk-taking and innovation, and fortify dynamic capabilities. Strengthening these facets enables SMEs to effectively translate market insights into actionable strategies, thereby fostering sustainable growth in a competitive business landscape. In essence, this research provides valuable insights into the interplay of market orientation, entrepreneurship, dynamic capabilities, and SME performance, offering actionable guidance for Culinary SMEs in West Java Province and beyond to navigate challenges and capitalize on opportunities for sustainable development and competitiveness.

Non-Performing Assets: A Current Overview of Selected Indian Public Banks

This research paper provides a detailed overview of Non-Performing Assets (NPAs) in selected Indian Public Banks as of the year 2024, aiming to assess current trends, sector-specific distributions, and the effectiveness of management strategies in mitigating NPAs. Given the critical role of NPAs in determining the financial health of banks and their potential impact on the broader economy, this study seeks to identify effective strategies for NPA management within the evolving economic and regulatory landscape of India. Utilizing a descriptive analytical approach, the research analyzes secondary data sourced from the Reserve Bank of India, covering the period of April 2023 to March 2024. The data were analyzed using the Statistical Package for the Social Sciences (SPSS) to perform a comprehensive examination of NPA trends across different sectors and banks, the impact of NPAs on bank profitability, and the recovery rates of secured versus unsecured NPAs. Key findings indicate significant variations in NPA levels and recovery rates among banks, with sector-specific vulnerabilities, notably in the SME sector, highlighting the need for targeted risk management strategies. The study underscores the importance of robust regulatory frameworks and strategic NPA management in enhancing bank profitability and ensuring economic stability. The implications of these findings are significant for policymakers, regulatory bodies, and banking institutions, advocating for strengthened NPA management practices and adaptive strategies to navigate the complexities of the banking sector.

Transformation Of Economic System In Poland. The SMEs And EU Integration.

Brand-new economic system has been introduced in Poland two decades ago. The economic transformation from central planning to market system had no precedent and the theory of economics had not offered any complex model of such a makeover. So, we have been all learning by doing. And now, as we want to understand the process we aim at identifying both major agents and processes that were responsible for the results achieved. Without any doubt there has been at least one important agent of the transformation that could be easily recognized, namely: individual entrepreneurship. After 1989 we have been observing numerous small enterprises being established in Poland. The SMEs sector (small and medium enterprises) after half a century of centrally planned economy has been catching up with its developments. Nowadays - as in any other market economy - SMEs are important element of economic system in Poland, too. They account for 99.8 per cent of total number of enterprises, approx. half of both capital investment and value added and roughly 1/3 of exports. The following paper aims at identify the role of the SME sector in the process of reconstruction of market system in Poland after 1989. It concentrates on one special aspect of economic transformation, namely the integration with European Union on SME development potential. To set our reasoning in order we pose the subsequent questions: What is the role of SMEs sector in Polish economy? What changes of business environment has EU integration brought? What were the costs and benefits of the integration for Polish SME sector?

Award-Winning Women Business Operators in Kandy District of Sri Lanka: Entrepreneurial Bricolage

Women entrepreneurship has been identified as a crucial factor in closing the gender gap in the labor market and women empowerment. However, there is a significant gender gap in the SME sector in Sri Lanka. Also, Literature supports that Sri Lankan women are living in a socially and economically constrained environment. In this study entrepreneurial bricolage has been used as a theoretical lens to understand the entrepreneurial actions of women business operators because bricolage links means and ends in a resource-constrained environment. Since women business operators in Sri Lanka are in a constrained environment and operating with limited resources, the main purpose of this study to understand how Award-winning women business operators have applied Bricolage approach in their entrepreneurship process. Qualitative multiple case study research design was used to achieve the research objectives. In-depth interview method was adopted as the main data collection method and 30 women awardees were selected by using the purposive sampling method. The findings illustrate that these women business operators have used the 'Bricolage' approach in the form of 'selective bricolage'. They have used it as a one-off practice to find solutions for problems and opportunities they faced in their businesses.

Manufacturing Small and Medium Enterprises in Yemen: Hurdles of Resurgence

Purpose: The study aims to comprehensively explore the challenges confronted within the manufacturing SMEs domain in Yemen and gain a well-rounded understanding of the prevailing circumstances. Approach/Methodology/Design: This study employs a qualitative and descriptive research methodology to gain sufficient insight into the realm of small and medium enterprises in Yemen, characterized as a lower-income economy. The study draws upon publicly accessible secondary data concerning the manufacturing SMEs sector. Findings: The study found that there are two main categories of challenges faced by small and medium enterprises in Yemen: obstacles and challenges that can be solved by firms and companies and challenges and obstacles that the government can solve. Practical Implications: Hurdles prevent Yemeni SMEs from digitizing their business processes, and progress toward digitalization necessitates enterprises overcoming such barriers by augmenting such initiatives with the necessary resources and infrastructure. Managers, owners, and policymakers can benefit from the research outcome with respect to strategy adoption for better business performance. Originality/value: The study adds to the body of knowledge by presenting evidence that sheds light on the actual hurdles faced by SMEs in order to have sufficient insight into any possible opportunities for developing their performance and enhancing their survival.

The management income statement as an untapped reporting opportunity in small and medium-sized enterprises

Purpose: The main aim of the article is to present the concept of managerial account reporting for a production company from the SME sector, using case studies. The auxiliary aims were to present the systems of managerial account reporting for different sectors in the literature and to explain its absence in Polish companies. Methodology/approach: The article is based on the implementations of cost accounting in companies in different sectors. The case study method is applied in the study.Findings: The article presents case studies that describe in-house managerial account reports in companies from different sectors and the reasons for not using such solutions in Polish companies.Research limitations/implications: The consequences of the typical ʽaccountancyʼ approach in financial reporting in SMEs is the lack of and the limited usefulness of accounting as such in managing a company.Practical implications: A properly constructed in-house plan of accounts makes it possible to pre-pare a managerial account report for decision-making.Originality/value: The article constitutes a summary and a reflection on the construction and use of managerial accounting tools in company management and SME accounting.

The Mediating Role of Attitudes towards Performing Well between Ethical Leadership, Technological Innovation, and Innovative Performance

The business sector is rife with unethical managerial practices, such as blaming subordinates for organizational failings, along with the exploitation of colleagues, favoritism, and conflicts of leadership. In light of this, numerous researchers have endeavored to explain the phenomenon of ethical perspectives and concerns. It is recommended that organizations in the SME sector adopt ethical practices in order to achieve their long-term objectives. This study stresses the influence of ethical leadership and technological innovation, particularly the mediating role of a positive attitude in encouraging good performance. This study, which was conducted in the SME sector of Malaysia in the state of Selangor, employed a convenience sampling technique for data collection and reports that ethical leadership, technological innovation, and attitude significantly influence performance. A mediating role of attitude in relation to technological innovation and innovative performance is hereby reported, and attitude towards performance was found to have an insignificant effect on ethical leadership and innovative performance. This study contributes to the existing body of knowledge by explaining the role of ethical leadership and technological innovation in expressing and assessing the revolutionary business practices required to ensure organizational success.

Impact assessment of the introduction of COVID-19 quarantine restrictions on financial performance of small and medium enterprise sector of the Russian Federation

The deterioration of the economic situation in the country is certainly reflected in the financial performance of small and medium enterprise sector (hereinafter referred to as SME sector). The article attempts to study the degree of impact of forced urgent measures introduced by state authorities to contain the spread of coronavirus infection on financial performance of the sector. The authors conducted an overview study of scientific publications written by leading professional analysts on the problems of the economic situation in the Russian entrepreneurial segment, as well as on the relevance and effectiveness of government measures to support small and medium-sized enterprises. The assessment of changes in the final performance indicators of each of the three SME sector elements (micro, small and medium enterprises) over the past three years is given. When studying the dynamics of the components of the balanced financial result, horizontal analysis was used, alongside with the method of absolute differences, calculation of growth rates, and index method. The made analysis revealed a sharp deterioration in financial performance during the most severe quarantine restrictions in 2020 and an improvement in the economic situation after their partial abolition in 2021. It was noted that the risk of mass bankruptcy of enterprises in the SME sector was compensated by large-scale state support. It was determined that the protective restrictions imposed to localise the epidemic have aggravated the existing problems of small and medium-sized businesses. The article shows that the main risks of the studied segment will persist in the near future. In this regard, it is necessary to improve the tools of state regulation of SME sector development with consideration to the accumulated experience of anti-crisis management.

The performance of workers through knowledge sharing and knowledge management: A quantitative analysis of SMEs

This research aims to conduct a comprehensive review of the relationship between knowledge sharing, knowledge management practices, and worker performance in the SME sector. This research employs two primary theories, knowledge sharing and knowledge management, along with individual performance constructs, to identify correlations that serve as key findings. Comprehensive results from research are beneficial for academics and can serve as long-term references. The study employed structural Equation Modeling (SEM) and Partial Least Squares (PLS) as its methodologies. It focused on 189 SMEs located in Semarang Regency, Indonesia. Non-random sampling, specifically purposive sampling, was utilized to select participants. Data were gathered through online questionnaire distribution to the chosen respondents. The findings indicate a robust and statistically significant positive correlation between knowledge sharing, knowledge management, and the performance of SME workers. Knowledge sharing and knowledge management ensure the availability and regularity of knowledge that supports day-to-day activities, while effective knowledge access and distribution increase employees' responsiveness to changing market and customer needs. This finding provides practical implications for SME owners and managers in developing strategies to enhance their organizational performance. By implementing effective knowledge sharing and management systems, SMEs can gain a competitive advantage, increase productivity, and enhance adaptability to market changes.

Psychological Empowerment Exploration on Innovative Work Behavior: The Role of Transformational Leadership as Mediator

Research aims: The objective of this research is to explore the effect of psychological empowerment on innovative work behavior with transformational leadership as a moderator.Design/Methodology/Approach: This research was designed using a quantitative approach where data was collected using questionnaires distributed to 190 employees of export SMEs in Bali. The gathered data was examined using Smart PLS 3.2.9 software.Research findings: The research found that psychological empowerment and its dimensions positively affected innovative work behavior. In addition, transformational leadership fully moderated the link between psychological empowerment and innovative work behavior. The limitation of the research indicated bias due to self-assessment reports. Meanwhile, the practical implications contribute to expanding understanding of the role of transformational leadership as a moderator. Thus, leaders have a reference in policy making.Theoretical Contribution/Originality: The theoretical contribution of this research contributes to the knowledge of on innovative work behavior by exploring psychological empowerment.Practitioners/Policy Implications: Practical implications contributed to expanding understanding of the moderating role of transformational leadership. Hence, leaders have a reference in policy making.Research Limitations/Implications: The sample used is still limited to the export SME sectors in Bali. This research uses a causality approach. Thus, the data reported is self-assessment.

Understanding the adoption of digital payment in Indonesian SMEs using modified technology acceptance model

The purpose of this study is to assess users’ acceptance of OVO (one of the apps that Indonesians frequently use for digital payments) among Indonesian SMEs using a modified version of the technology acceptance model (TAM). A comprehensive investigation is required to understand the factors influencing the acceptability of digital payments in Indonesia, especially in the SME sector. Two hundred and forty-seven SEM actors were subjected to an offline questionnaire. This study adopted a modified technology acceptance model (TAM) with Partial least squares structural equation modeling (PLS-SEM). SmartPLS software is used to evaluate the data. The findings show that the driving force behind the use of digital payments is significantly correlated with its perceived usefulness and security. The influence of these factors on behavioural intention is affected by attitudes towards utilizing. The findings demonstrate the extent to which this digital payment mechanism is relevant and applicable to the majority of SMEs in Indonesia. This study provides information about the key factors that govern users’ consideration to use OVO (as a representation of digital payment apps that are used by SME actors). The intention to adopt digital payment in Indonesian SMEs is high if the user believes that the apps are beneficial and secure.

AN EMPIRICAL STUDY TO IDENTIFY AND WEIGH THE RISK ATTRIBUTES THROUGH THE APPLICATION OF FMEA IN THE SOFTWARE INDUSTRY WITH FOCUS ON MSME AND SME IT FIRMS IN BENGALURU REGION

Uncertain events can occur anytime during the lifecycle of software. An organization's readiness to deal with these events determines its ability to mitigate the potential losses. Risk management is an essential component of the lifecycle process and is given due diligence in a typical multi-tiered environment of the technological giants. On the contrary, small IT firms, especially the ones falling under the belt of SME and MSME sectors, often follow a reactive approach to risk management. Consequently, the probable losses incurred can be huge and sometimes even challenge the firm's existence in the market. Considering the above issue, we have put forward this paper after performing an empirical study targeting only the Bengaluru region's MSME/SME IT firms. The study was primarily conducted with two objectives (1) to identify the risk attributes and (2) to determine the effectiveness of FMEA techniques and weigh these attributes through the FMEA process. 43 failure modes were identified, which were ranked by a panel of 12 QA experts based on their past project experiences. The top ten failure modes identified by the process will be considered for future analysis and for determining the mitigation steps as a part of the risk management process, particularly for start-ups.

Integrating Green Practices and Environmental Performance; Evidence from Nigeria's SME Sector

Integrating Green Practices and Environmental Performance; Evidence from Nigeria's SME Sector

Application of Kaizen and Kaizen Costing in SMEs

Abstract The research problem revolves around an attempt to answer the questions: “Are enterprises from the SME sector interested in implementing strategic management accounting instruments, including Kaizen Costing? Is Kaizen Costing more widely used in SMEs operating in Poland?" The aim of the article is therefore to highlight the importance of Kaizen and Kaizen Costing and to draw attention to how much support these solutions can be for SMEs in the current social, economic, and environmental conditions. The article presents the results of surveys conducted in this regard. The accomplishment of the established objective of the work required conducting a review of the literature on the subject and presenting conclusions from previous own research in the above respect. The method of participant observation, critical analysis and synthesis was used in the study. According to the research results, there is little interest in these instruments in large enterprises, however, in medium-sized enterprises, the interest and degree of application of Kaizen and Kaizen Costing is negligible. The research results indicate the need for further development and broadening the dialogue on the usability and benefits which enterprises, in particular SMEs, may derive from the introduction of such innovative solutions.

Financial literacy and Performance of Women-Owned SMEs in Garissa County, Kenya

The SME sector is crucial for Kenya's government, driving inclusive economic growth, regional development, employment, and poverty reduction. Women-owned SMEs face challenges, including limited risk tolerance, hindering expansion. Financial skills, operating costs, and other issues contribute to their struggles. This paper explored the impact of financial literacy on the financial performance of women-owned SMEs in Garissa County, Kenya. The study focused on budgetary proficiency and debt navigation skills. Using a descriptive survey design and anchored on the Dual Process Theory, the research involved 399 sampled women owned SMEs out of a population of 763. The findings revealed significant relationships between budgetary proficiency and financial performance (Pearson’s r= 0.690, p<0.000) and debt navigation skills and financial performance (Pearson’s r=0.515, p<0.000). These predictors explain approximately 26.5% of the variance in women-owned SME performance (R Square = 0.265). The regression coefficients indicate that budgetary proficiency has a minimal effect (β = 0.010, p=0.027<0.05), influencing performance by 1.0%, while debt navigation skills have a moderate effect (β = 0.351, p=0.000<0.05), influencing performance by 35.1%. The study recommends strengthening financial management training, customizing financial literacy programs to address diverse gaps, and promoting inclusive budgeting practices among women-owned SMEs. Enhancing debt navigation skills is particularly emphasized for a more positive impact on the financial performance of women-owned SMEs in Garissa County.

UNLOCKING THE POTENTIAL OF INNOVATIVE HR PRACTICES FOR SUPERIOR ORGANIZATIONAL PERFORMANCE: A TRANSFORMATIVE CASE STUDY OF SMES IN OMAN

As the business landscape in Oman continues to evolve, it is becoming increasingly clear that innovative HR practices will play a key role in determining the success of SMEs. In the coming years, we can expect to see a growing emphasis on HR practices that prioritize employee empowerment, engagement, and development. It will be interesting to explore how such practices will impact organizational performance in the SME sector of Oman. A quantitative research approach was adopted to achieve this, and data was collected using a structured survey questionnaire. The survey received responses from 383 randomly selected proprietors across all regions of the Sultanate of Oman. The data collected from the questionnaires was used to evaluate the participants' feedback on different innovative HR practices and their impact on organizational performance. The findings from the data collected showed that there is a positive and significant effect of innovative HR practices on organizational performance in terms of recruitment & and selection, learning & and development, performance appraisal and employee commitment. It is concluded that Innovative HR practices are vital in every SME in Oman.
 Keywords: Human Resource, SMEs, Recruitment, Selection, Learning, Development, Reward, Appraisal, Involvement.

Private sector perspective on corruption and informality: a comparative analysis of Serbia and Croatia

ABSTRACT Corruption and informality in business are research topics that have previously received less attention among scholars, especially in Southeast Europe. To fill this gap, and to bring some clarity to the phenomena of corruption and informality in the private sector, this article addresses the extent and manifestations of corrupt and informal practices in business in two post-socialist countries of ex-Yugoslavia, Serbia and Croatia. Analysis is performed on primary data from surveys of businesspeople in both countries, with the main aim of revealing their understanding and acceptance of illicit practices and determinants of businesspeople informal behaviour in the SME sector. The acceptance of four types of informal practices, namely: treating, giving and receiving gifts, networks, and favouring, is modelled using Probit estimation technique. The results reveal that the corrupt behaviour of businesspeople in two observed countries is related to their acceptance of informal practices. Additionally, the manifestations of these practices in real business-to-business and business-to-government relations are shown.

EFFECT OF FINANCIAL INCLUSION ON GROWTH OF SMALL AND MEDIUM ENTERPRISES IN PAKISTAN THROUGH MODERATING EFFECT OF SHARIAH-COMPLIANT FINANCING

The key objective of this study is to check the impact of financial inclusion on the SME's growth by taking Shariah-compliant financing as a moderator. The sample has been based on cluster sampling, the sample comprised the SMEs operating in nine major cities of Pakistan and its size is 600 in total. Structural equation modeling has been employed on the responses of the respondents through SmartPLS4. The direct results shows that the impact of financial inclusion is positive and significant on dimensions of the SME's sales growth and workforce growth, while insignificant on profit growth and market share growth. Similarly, Shariah-Compliant Financing impacts Market Share Growth and Sales Growth positively and are statistically significant, while insignificant effect on profit growth and workforce growth. Indirect results, Shariah-Compliant Financing is moderating between Financial Inclusion and dimensions of the SMEs growth has a positive and significant effect on market share growth and sales growth. The Shariah-compliant financing could be increased by adopting effective strategies and financial knowledge. The financial institutions campaign an awareness program about the products and services offered for SME sectors, rules and regulations of loans, and loan documentation and provide financial literacy to them.

Toward a dynamic capability perspective of digital transformation in SMEs: A study of the mobility sector

Digital Transformation (DT) has been considered a critical structural change for SMEs to be responsive and agile in today's dynamic and turbulent business environments. This significance is more evident in mobility and transport systems in which the sector is undergoing radical technological changes in the context of smart cities. However, SMEs must possess some capabilities to successfully leverage DT toward better performance and gain a competitive advantage. The current research is a step forward toward achieving this goal. Using a multiple case study of mobility sector SMEs in Australia, the authors explore the nature of Dynamic Capabilities (DC) in SMEs and discover digital transformation's enablers, barriers, and performance outcomes.