Small and Medium-Sized Enterprises Essay -- International Development

INTRODUCTION1.1IntroductionSmall and medium-sized enterprises (SMEs) have been identified as one of the growth engines for various countries in the world, since SMEs make up oer 90 percent of all enterprises. For instance, United States, 99.7 per cent (Heneman, Tansky, & Camp, 2000), China, 99 per cent (Cunningham & Rowley, 2008), Europe, 99 per cent (Andreas Rauch & Frese, 2000), Holland, 95 per cent, Philippines, 95 per cent and Taiwan, 96.5 per cent (C. Y.-Y. Lin, 1998) as good as Malaysia, 99.2 per cent (Man & Wafa, 2007 National SME increment Council (NSDC), 2009 Saleh & Ndubisi, 2006). The figures above show that countries all over the world recognized SMEs as a key business sector. Besides, Asia-Pacific economical Cooperation (APEC) (2002) pointed out that SMEs are deemed as a supporter to larger enterprises as well as an important foundation in expanding business activities and sustaining economic growth. SMEs so far provide more jobs than large companies (APEC, 2002 Dep artment of Statistics Malaysia (DOSM), 2007 NSDC, 2009). In sum, SMEs move a vital role and contribute to the economy and are likely to be progressively important as the economy becomes more global.In Malaysia, SMEs are considered as the backbone of industrial development (NSDC, 2009) and give meaningful contributions to the national economy. Hashim (2010) stated that SMEs play a significant role in generating more employment, economic outputs, income generation, export capabilities, training, encouraging competition, innovation and promoting entrepreneurship and supporting the large-scale industries (LSIs) as well. Moreover, Jaswant Singh, Malaysian Industrial Development Authority director in Australia (MIDA Australia), informed that the grow... ...t improve efficiency and effectiveness (J. Barney, 1991 Wernerfelt, 1984).However, in examining other variables, researchers found a significant relationship between HRM practices (Jimenez-Jimenez & Sanz-Valle, 2008 Nasution, Mavond o, Matanda, & Ndubisi, 2010) and EO (Nasution et al., 2010) towards organizational innovation. Other studies also found that there is an inconclusive result on the relationship between organizational innovation and organizational performance (Rosenbusch, Brinckmann, & Bausch, 2010). These findings propose that strength researchers could study the mediating effect of organizational innovation on the relationship between HRM practices, EO and organizational performance. It is also suggesting that, there also have a moderator effect (managerial ties) on the relationship between organizational innovation and organizational performance.