Research Proposal on The Importance of SMEs and its Impact on Performance of Economic Development: A Case of Sustainable Development in Developing Countries
The Importance of SMEs and its Impact on Performance of Economic Development: A Case of Sustainable Development in Developing Countries
The economic developed is the result of the openness of the countries in the importance of SMEs and its contribution for the economy. Given the globalization issues, flexibility, speed and innovativeness of SME, the study can examine the development that had been nursed by developing countries.
Small and medium business types are well-known for its strong roots and foundation. Through the experience and aid coming from the financial institutions, the small and medium enterprise can compete in both domestic and international market. Apparently, the impact of globalization and the influence of the economic trends can affect the business’s performance. Furthermore, the economic development is also associated in SME because of its recognizable contribution in the economy.
In the study, the discussion of the SME’s performance and its contribution in the economic development is the main focus. The problems that part of the discussion are outlined as follows:
1. The importance and role of SME in economic development
2. The actions for the continuous sustainable development, particularly among the developing countries
3. The contribution of SMEs towards the sustainable economic development
The underlying principle in the study is prior to the various investigations of the past researchers regarding the impact or influence of SMEs in developing the market. Therefore, there is a growing interest in picturing the development of the national economy. This very same interest triggered on describing the possible ways that SMEs can contribute to ride along the flows of economic trends through the use of its performance. Since the developing countries became the center of the research topics, the study will also focus on how to support their journey towards the total development.
The objectives of the study is divided into there interrelated cores. First is to describe the SME and the performance in the developing countries. Second is to recognize the position of SMEs in the market and even in the competition, and detailing the recent benefits that the SME can deliver for the developing countries. And third is to discover the other possible contribution of the government or financial institutions in strengthening the SME and its performance.
Specific Research Questions
In order to align the study in obtaining the necessary information, there are five questions that should be satisfied.
1. What is the behavior of SME in the market?
2. If the SME/s is entitled to operate abroad, what are the effective modes of entry?
3. What are recognizable challenges that holding the SME in reaching its greatest potential?
4. What are developmental approaches utilized by the SME that is appropriate in its performance?
5. What are the contributions that SME can gain in the association of the foreign investments?
Scope and Limitation
The study recognized its scope as well as the limitation. The scope of the study is to describe the SME environment and the market that the SMEs are moving. Also the policies and the theories that involved in the development are emphasized. As part of the limitation, the study may not describe the financial statuses of the SMEs although the strategies are unraveled.
SMEs development is not a new concept; the importance of the SME has been tested following the influence of the crisis. The promotion of the SME and the support towards it enhancement might be accountable on SME’s efficiency and performance. In Thailand, the study revealed that SME’s advantages may possess the desirable characteristics (including the labor, capital, allocation of resources and investment) which are appropriate in maintaining the rural development (Decker & Zhao, 2004). However, the low productivity in the industrial sector might affect the total growth of the economy. Even though the developing countries emphasized the importance of SME and its development, still there are no enough policies that can enforce unlike in large enterprises (Hayashi, 2003). Therefore, the recent researchers suggested that the government should emphasize the planning and planning formulation particularly in developing countries. This is possible through the investigation of the success path or factors that contributes in the success of the East Asian countries. Globalization played in generating the attention to the essential roles of SMEs; therefore, the developing countries can use the globalization as the new adopted concept of economic development (Huang, 2003).
The suggested method in the study is the use of comparative case studies. It is a great opportunity for the study to utilize the sources to compare the behavior and modes of actions of SMEs in the developing countries. Since the developing countries are the most popular users of SMEs, there is a possibility for the study to describe the recent changes and aims of the developing countries. In fact, the researchers’ findings on the contribution of the SME are addressed in the analysis of the study. As an addition, through the investigation of the related literature, the study can draw the gaps in the development of the SME.
Decker, R., & Zhao, X., (2004) SMEs’ Choice of Foreign Market Entry Mode: A Normative Approach, International Journal of Business and Economics, 3(3): 181-200.
Hayashi, M., (2003) Development of SMEs in the Indonesian Economy [Online] Available at: http://rspas.anu.edu.au/economics/publish/papers/wp2003/wp-econ-2003-01.pdf [Accessed 08 July 2010]
Huang, I., (2003) Importance of SMEs Development in Thailand, Forum of International Development Studies, 23:159 [Online] Available at: http://www.gsid.nagoya-u.ac.jp/bpub/research/public/forum/23/07.pdf [Accessed 08 July 2010].