At the firm level, intense competition under the global economic framework requires small and medium enterprises to reconsider their competitive position vis-à-vis their rivals, amongst others, through innovation. This justifies why innovation, in the last two decades, becomes a centre stage in small business literature, reports and government policy. Little attention, however, has been given to the possible impact of various dimensions of innovation on firm performance. Enriching the literature, this paper evaluates the impact of various innovation dimensions on the performance of SMEs. A total of 284 samples were collected from SMEs in the food and beverage, textiles and clothing and wood-based sub-industries throughout Malaysia. The data were analysed using a hierarchical regression analysis. The findings confirmed the hypotheses that product innovation and process innovation influenced firm performance significantly, where the impact of the former was stronger than the latter. Besides consolidating the existing theory on the importance of innovation for explaining a variation in firm performance, the findings also inform SMEs and policy makers that innovation is a critical factor in today's entrepreneurial activities. Further studies should look into how SMEs could calculate cost-benefit ratio of innovation and how they could opt for internal or external sources of innovation before actual innovation is undertaken.
A large number of studies have been conducted on small business performance. However, potential influence of managerial competencies on small business growth, particularly among microfinance participants is hardly existent. In fulfilling the literature gap, this study provides some insight into the relationship between managerial competencies and small business growth. Using data collected from microfinance participants in Kelantan and Terengganu and applying the Structural Equation Modelling approach, this study found that all the managerial competency dimensions – technical, generic and conceptual skills – had positive and significant impacts on small business growth. While consolidating the theories that managerial competencies explain business growth, this study has several limitations. Future studies should delve into, through qualitative research, why managerial skills are significant for small business growth. Sampling should also include small businesses in other parts of Malaysia, instead of Kelantan and Terengganu. Keywords: Small business, growth, management competencies, generic skills, technical skills, Conceptual Skills, Microfinance.
Small and Medium Enterprises (SMEs) can be a cushion for unstable economic condition. They are believed to be able strengthen the economic development of a country. The statistics shows that they are accounted for more than 95 per cent of enterprises across the world. Acknowledging the importance of various contributions of SMEs business performance to an economy, many studies on internal and external factors affecting business performance including entrepreneurial orientation and access to finance has been done. Business performance, however, requires more than resources. To cope with these situations, they must have enough financial access in order to finance their business development. Despite its increasing importance to the economy and individual entrepreneurs, SMEs struggle hard to access to finance. Unfortunately, there is limited study to prove that entrepreneurial orientation would increase access to finance and ultimately increase performance. Therefore, the purpose of this study is to test the relationship of entrepreneurial orientation and access to finance on SMEs performance and unearth whether access to finance can be a mediator in the relationship between entrepreneurial orientation and business performance. For start-up, this study employed a primary data set drawn from 30 SMEs and using regression analysis to test all hypotheses. By testing the mediator effect, this study advances the previous works on this area which considers this effect on business performance simultaneously. The main findings indicate that entrepreneurial orientation and access to finance are positively significant on business performance and entrepreneurial orientation would help business to get access to capital and hence its performance could be improved. Since this study is preliminary stage, the small sample size was the major limitation of this study which inhibited the comparison of the results between industry sectors. A study of this nature is vitally-important to highlight the stakeholder such as government, private bodies, NGOs, policy maker and entrepreneurs on the important of entrepreneurial orientation and accessibility to finance on business performance.
Development of Small and Medium Enterprises (SMEs) is widely recognised as crucial sectors to the growth of internal market as well as international market. Even so, the statistics showed that they depicted of high mortality rate predominantly during their first three years of start-up phase. Recognizing the requisite study to find out the causes behind this issue, numerous prior scholars have done the research about determinants of SME performance. Consequently, previous works always related performance with Resource-based view (RBV) theory, whereby, resources and capabilities in firm level is significant to retain competitive advantage and sustain performance. Motivated to RBV theory, this research purposes to examine the factors of business performance and serial mediating effect by mapping entrepreneurial orientation as capability and access to external financial as resource which could generate competitive advantage and eventually increase SME performance. A data of 284 SMEs was proportionate stratified randomly selected analysed by using Structural Equation Model (AMOS-SEM). Resulting this, this current study highlighted that the relationship between entrepreneurial orientation and SME performance was partially serial mediated by access to external finance and competitive advantage. The study stimuli the authorities such as policy makers and support systems including entrepreneurs, that entrepreneurial orientation and access to external financial resource by SME would offer competitive advantage in the firm which to conclude enhance business performance. Upcoming studies may expand this research via adding and probing either internal or external critical factors that significant to the variant of SME performance.
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