Perceptions of business challenges facing Malaysian SMEs: some preliminary results

This paper develops an instrument to measure perceptions of business barriers facing small and medium sized enterprises (SMEs) based upon a sample of 138 Malaysian businesses. An exploratory factor analysis yields five key factors covering: perception of government policies; perception of human capital; perception of availability of infrastructure; perception of business competition; and perception of financial issues. Reliability and item analyses provide support for the internal consistency of the factors and the discriminatory power of 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 perceived to be the major business barriers. On the other hand, respondents did not see perceive financial issues as being a major barrier. A key outcome from the paper is that it provides researchers with a means by which to further explore the implications of these identified business barrier factors on business performance.