Growth Strategies among Small and Medium Enterprises in Malaysia

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Growth Strategies among Small and Medium Enterprises –
Case of Malay Entrepreneurs

Ummi Salwa Ahmad Bustamam[1]
(Graduate School of Management, La Trobe University, Melbourne, Australia)

Abstract

Small business operators are the backbone of economic activities in many countries. Interest in entrepreneurs often tends to revolve around high fliers like Warren Buffet and Bill Gates or, in Malaysia’s case such as Syed Mokhtar Al-Bukhary. Many businesses will never reach the heights of Syed Mokhtar Al-Bukhary but their contribution is still significant to their communities and to their country. In any businesses, entrepreneurs may confront particular challenges and barriers which impede business growth. This paper presents one case of a medium-sized Malaysian enterprise. The case attempts to analyze strategies used for preparing this business for growth. The case analysis is set within several contexts: entrepreneurship, the nature of ethnic small businesses, barriers and challenges of business growth and strategies for growth undertaken to overcome barriers and challenges. This paper concludes with a discussion of the lessons and implications as well as the accomplishments of this particular entrepreneurial venture.

Keywords: small and medium enterprise, small business growth, barriers, Malay entrepreneur

Introduction

Small and Medium Enterprises (SMEs) are a vibrant and growing sector in most economies in the world. According to Department of Statistics of Malaysia (DOS) (2005), the census of establishments and enterprises showed that SMEs accounted for 99.2 per cent from a total of 552,804 establishments. Notwithstanding the varied definitions of SMEs, the high percentage of SMEs in Malaysia reflects a similar position compared to some other economies of the world; Japan (99.7%), Republic of Korea (99.8%), Taiwan (97.8%), Thailand (99.6%), Philippines (99.6%) and Indonesia (99.9%) (DOS, 2005). Consequently, growth of SMEs contributes to employment and job creation (Smallbone & Wyer, 2000). Further, growth typically equated with high performance. Thus, growth offers the opportunity for financial gain, return on investment (ROI) and also increased chances for survival (Davidsson & Delmar, 1997; Taylor & Cosenza, 1997).

There is a huge body of knowledge on SMEs which explain the growth of these small and medium enterprises from many perspectives (see, example; Smallbone & Wyer, 2000; Storey, 1994; Gibb & Davies, 1990; Dobbs & Hamilton, 2007). Although much has been written about the business growth, Gibb and Davies (1990) claim that there is no single theory which can adequately explain it. Moreover, many of these prior studies have addressed the issue concentrated on developed and western countries such as the UK, the US and Australia (Smallbone et al., 1995; Boardman et al., 1981; Chaston & Mangles, 1997; McMahon, 1999). Thus, there are demands for more studies of entrepreneurship in other countries to contribute in the research field.

Although the Malays dominated 60 per cent of the total population of Malaysia (DOS, 2008), the economic activities especially in the entrepreneurial sectors is monopolized by other minority ethnics. According to Ahmed et al., (2005), the development of entrepreneurship in Malaysia is influenced by the policies of colonial power and by the mixture of ethnic backgrounds. Similarly, other authors such as Gomez and Jomo (1997) and Shukor (2006) support this statement. Historically, during British colonialism in 1945, they implemented ‘command friction’ where the Malays were forced to settle in provinces and practise traditional agriculture and fisheries. The Indian community worked in rubber plantations, whereas the Chinese were placed in urban areas, working as traders (Ahmed et al., 2005).

As a consequence, the Chinese have dominated the business sector and becoming rich, whereas, the Malays, who lived mostly in rural areas, were relatively poor. The principle of...
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