1. PROPOSAL: SME CLUSTER Noor Hazlina Ahmad, PhD School of Management Email: hazlina@usm.my hazlina@usm.my Date: 7 th May 2009 1

2. Contents  Definitions of SMEs  Unique Features of SMEs  Importance of SMEs  Some Facts and Figures  Current SME Projects @ SOM & GSB  Transdisciplinary Agenda: Avenue for future SME- related research  Towards SME Sustainability  Triple Bottom Line Agenda of SMEs  Some Neglected Issues  Potential SME Research 2

3. Definitions of SMEs 3

4. Unique Features of SMEs 4  have an owner/manager with few generic business skills or a particular technical expertise  have personal assets committed as security for the business  operate flexibly rather than on a strict observance of regulations  have a vision and outlook that is bounded by the skills and experience of the founder/owner and tight resource constraints  operate in provincial areas, be a key part of the social fabric of the community

5. Importance of SMEs 5  The significance of SMEs is associated primarily with their role in stimulating economic growth.  Other significant contributions of SMEs:  Because they are labour-intensive, SMEs create employment opportunities.  SMEs enhance regional development and create more equitable income distribution due to their location and ongoing expansion throughout the broader community.

6. Importance of SMEs 6  SMEs play a vital complementary role in relation to larger firms--as suppliers and distributors.  SMEs serve as a training ground for developing the skills of workers and entrepreneurs.  The presence of SMEs curbs the monopoly power of larger firms and provides the structure of the economy with greater flexibility.  Thus, a country can reduce its vulnerability to financial crises by strengthening its SMEs.

7. Some Facts and Figures 7  A total of 99.2% (552,849 companies in operation) of all manufacturing and service businesses are SMEs and the majority of SMEs (86.6%) are in the services sector.  Employment- SMEs accounted for 56.4% of the total workforce.  GDP-SMEs contributed 33% of the total output.  Total Export-SMEs contributed 19%. (Ref: SMIDEC 2009)

8. Contribution of SMEs to Gross Domestic Product, Employment, and Export by Sector in 2005 8

9. Composition of SMEs in Malaysia Based on Census on Establishments and Enterprise 2005, out of 99.2% of SMEs, the services sector comprise 474,706 (86.6 per cent), followed by 39,376 (7.2 per cent) in the manufacturing sector and 34,225 (6.2%) in the agriculture sector.

10. 10 Contribution of SMEs in Services Sector, 2005 * Health include hospital, medical, dental and veterinary services, herbalist, homeopathy and foot reflexology

11. 11 Contribution of SMEs in Manufacturing Sector, 2005

12. 12 Contribution of SMEs in Agriculture Sector, 2005

13. Current SME Projects @ SOM & GSB 13 GOVERNANCEFINANCIAL MARKET BASED RESEARCH WORK VALUES  International Financial Reporting Standards  Preventive Measures  Corporate Social Responsibility  Quality Service Delivery  Financial Model  Financial Structure  Financial Performance  Islamic Banking  Key Success Factors  Sustainable Development  Safety and Health SME - BUSINESS SOLUTIONS CONSUMER MARKET BASED RESEARCH TECHNOLOGY MANAGEMENT INTERNATIONALIZATION  Internet Marketing  Perception Analysis  SSME  Time Series Modeling  E-Business Adoption  Internationalization of SME

14. Titles of SME projects @ SOM & GSB 14  A Study of Top SMEs in Malaysia: Key Success Factor vs Government Support Program  What CSR programmes are relevant for SMEs that will influence their success and sustainability?  Womens’ Participation in Sustainable Development: SME’s Entrepreneurship in Ecotourism for Value Creation Services  Effective Implementation of Occupational Safety and Health Acts Requirements in Malaysian SMEs  In Search of a Win-win Approach to SME Lending: Building a Business Financing Model for SME Business Development  Financial Structure and Performance of SMEs in NCER  Financial Performance and Stability of SME through Islamic Banking: A Study on NCER  Locally produced food products: Perception Analysis: Connecting Technical Quality Parameter with Consumer Preferences  The Evolution and Complexity in the Supply Chain with a Focus on Demand and Supply

15. Titles of SME projects @ SOM & GSB 15  Internet Marketing: Building Competitive Advantage in E-Business Adoption among SMEs  Social Capital and Internationalization of Malaysian SME  Compliance with International Financial Reporting Standards for SMEs  Corporate Social Responsibility and SMEs  Quality Service Delivery of Non-Audit Services and Compliance with International Standards on Quality Control (ISQC) of SMEs Practitioners  Determining Capability and Capacity of SME in Using and Providing e- Business to SMEs in NCER  Internal Control, Risk Management, and Implementation of Petty Crime Prevention Measures in SMEs  Antecedents and Outcome of Managerial Skills in Service-Based SMEs: An Exploratory Study on SSMEs Discipline  Time Series Modeling of International Tourists Arrival in for Prediction and SME Business Planning  e-Business Adoption in Malaysia: Improvement in Supply Chain for SMEs  Technology Adoption Among SMEs: Towards an Integrated Model

16. Transdisciplinary Agenda: Avenue for Future SME Research 16  Transdisciplinary research is crucial in the context of sustainable development research that emphasizes on the integration among SMEs, the society, and the environment in which they operate.  Evidently, the fields of SME and entrepreneurship have lagged behind other disciplines when it comes to including sustainable development concepts in their research agenda, especially in the context of emerging economies (Shaper, 2002).

17. Towards SME Sustainability: A Transdisciplinary Agenda 17  Need to solve the equation between economic growth and SME competitiveness on one hand, and social and environmental issues on the other hand.  HOW??? Encourage fusion between sciences and arts to meet the economic, social, environmental agenda of SMEs— the principle of “THE TRIPLE BOTTOM LINE”.

18. Triple Bottom Line Agenda of SMEs 18 ECONOMIC SOCIALENVIRONMENTAL Transdisciplinary research to generate successful and sustainable SMEs A concept that acknowledges the importance of economic, social, and environmental agenda (Colbert & Kurucz, 2008). SOM/GSB-study on the behavioral aspects, perceptions, as well as the practices of SMEs in regards to the 3 bottom lines…

19. Some neglected issues… 19  SMIDEC and other government agencies: - concern on financial assistance and other direct support mechanism to assist SMEs. -focus on operational solution.  Neglected Issues? social and environmental issues, culture (changing the mindset), globalization, sustainability etc.  HOW to tackle these issues… encourage transdisciplinary research on the following research areas…

20. Potential SME Research 20 1.Economic Agenda  The impact of macro-economic factors on SMEs  The role of engineering & computer technology  Developing broader markets for rural manufacturing and processing SMEs  The role of local government in local economic development  Leadership, social capital, and succession planning  Developing financial literacy in SMEs  Downsizing/rightsizing and the effects of economic recession

21. Potential SME Research 21 2. Social Agenda  Corporate Social Engagement (CSE)  SMEs and social inclusion  Social constructionism and SMEs  Ethical and socially responsible SME entrepreneurs  Social entrepreneurs  Ethnic and women SMEs  Workforce issues in SMEs  Safety and Health issues

22. Potential SME Research 22 3. Environmental Agenda  SME ecopreneurs  Green SMEs  Energy Conservation in SMEs  Waste Recycling Activities in SMEs  Use of Renewable Energy Resources in SMEs  SME Environmental Management  Storage, Treatment, and Disposal of Toxic and Hazardous Wastes in SMEs

23. THANK YOU… 23