Measuring perceptions of business challenges: the case of Malaysian SMEs



Publication Details

Saleh, A. S., Caputi, P., Harvie, C. & Kuppusamy, M. (2012). Measuring perceptions of business challenges: the case of Malaysian SMEs. Journal of Asian Business, 24 (3), 35-56.


This paper develops and applies a survey instrument to discover what small and medium sized enterprises (SMEs) in Malaysia see as their primary business challenges, using a sample of 138 firms. An exploratory factor analysis yields five key factors: respondents' perceptions of government policies, human capital, availability of infrastructure, business competition, and financial issues. Reliability and item analyses provide support for the internal consistency of these factors and the discriminatory power of survey items that constitute the factors. In particular, this study finds that perceptions of government policies and infrastructure availability have the highest mean scores, suggesting that these factors are viewed as the primary business barriers. On the other hand, respondents did not perceive financial issues as being a major barrier. A key finding from the empirical results presented is that the Malaysian government must play a pivotal role in the further development of the SME sector. However, this will require considerable improvement in a number of policy areas as well as a change in emphasis if the SME sector is to make a substantive contribution to the country attaining developed economy status by 2020.

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