Key Success Factors for Malaysian SMEs Companies Entrepreneurial Leader

Key Success Factors for Malaysian SMEs Companies’ Entrepreneurial Leader Presenter: Prof. Dr. Zainal Abu Zarim Graduate School of Management Multimedi...
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Key Success Factors for Malaysian SMEs Companies’ Entrepreneurial Leader Presenter: Prof. Dr. Zainal Abu Zarim Graduate School of Management Multimedia University, Malaysia

CONTENTS KEY OF DISCUSSIONS Abstract Introduction Review Of Literature Methodology Findings Of Data Discussions And Conclusions References 2

ABSTRACT

The vast expansion of the SME has lead them in becoming one of the greatest contributor to the Malaysian economic Growth by considering the country’s GDP per year.

This study investigated success factors of an entrepreneurial leaders at SME companies in Malaysia.

Data has been collected from top 50 SME award winning companies. From these 50 SMEs, only 25 accepted the interview request where one entrepreneur from each SME answered the questions.

These results has deemed that entrepreneurs in many aspects possessed the leadership characteristics of risk averse and determine, and are eager to work on continuous improvement in a financially strong company. 3

INTRODUCTION  89.3% of the SMEs in Malaysia are the manufacturing sectors that started to grow in year 2000. The production is expected to be worth RM120 billion for a total production in year 2020 (SMIDEC, 2004).  In the year 1970s the government of Malaysia has introduced the New Economic Policy in order to ensure a success development of the SMEs.  To fulfill the overall development of the SMEs, the government had also captured the second Industrial Master Plan (IMP2) in year 2005, the third Industrial Master Plan (IMP3) from year 2006 until the achievement of the country’s vision of 2020 (MITI, 2010).

SME Corp functions as the central point of reference for information and advisory services for all SMEs in Malaysia 4

• Objectives of the study The primary objective of this study is to analyse the success factors of entrepreneurs in the Malaysian SMEs in the urge to discover their entrepreneurial and leadership traits and skills. • Significant of the study The study is deemed important and relevant to the field of entrepreneur and human resource development as it is one of the research work that focuses on deliberating the importance of investigating success factors of an entrepreneurial leaders at SME companies in and across Malaysia. • Gap of the Study

Understanding that most scholars focus on studying only the success factors of a firm just by itself, this study has made the effort to study the relationship of key success factors of Malaysian SMEs together with the characteristics of a leader in an entrepreneurs. 5

REVIEW OF LITERATURE

• A successful entrepreneurs are those who took any possible opportunities to start a business even before no business like existed, established for at least five years with at least eight employees (Pelham, 2000). • Hornaday, J. A. (1982) introduced the 42 characteristics of an entrepreneurs where entrepreneurs are diverse in characteristics and are not only limited to being a businessman.

• Storey (1994) focused on the birth, growth and death of small firms in the measurements of key success factors. Key Success Factors of SMEs

Characteristics of Entrepreneurs

• Nurul Indarti and Marja Langenberg (2005) identified components such as characteristics of the entrepreneurs; the characteristics of the SMEs; and the contextual elements of SME development for the business success of SMEs.

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Works on SMEs Success Factors    



 



Westhead (1995) studied factors influencing the survival of 227 high-technology small firms. Ghosh and Kwan (1996) made a cross national intersectoral study of the key success factors of 152 SMEs in Singapore and 164 SMEs in Australia. Ghosh and Kwan (1996) made a cross national intersectoral study of the key success factors of 152 SMEs in Singapore and 164 SMEs in Australia. Kauranen (1996) carried out a follow-up study of 37 new manufacturing firms in Finland and studied the determinants of the future success of the firm in the short term and in the long term. Yusuf (1995) explored critical success factors for small firms in several industry sectors based on the perceptions of 220 South Pacific entrepreneurs. Wijewardena and Cooray (1996) explored the importance of a set of success factors by studying a sample of 300 small manufacturing firms in Japan. Gadenne (1998) investigated the effect of various management practices on small firm performance by studying 369 small businesses in the retail, service, and manufacturing industry in Australia. Pelham (2000) explored the relationship between market orientation and the performance of manufacturing SMEs in eight industry sectors. 7

Characteristics Often Attributed to Entrepreneurs

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Confidence Perseverance, determination Energy, diligence Resourcefulness Ability to take calculated risks Dynamism, leadership Optimism Need to achieve Versatility; knowledge of product, market, machinery, technology Creativity Ability to influence others Ability to get along well with people Initiative Flexibility

15. Intelligence 16. Orientation to clear goals 17. Positive response to challenges 18. Independence 19. Responsiveness to suggestions and criticism 20. Time competence, efficiency 21. Ability to make decisions quickly 22. Responsibility 23. Foresight 24. Accuracy, thoroughness 25. Cooperativeness 26. Profit orientation 27. Ability to learn from mistakes 28. Sense of power

29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42.

Pleasant personality Egotism Courage Imagination Perceptiveness Toleration of ambiguity Aggressiveness Capacity for enjoyment Efficacy Commitment Ability to trust workers Sensitivity to others Honesty, integrity Maturity, balance

Source: John A. Hornaday, “Research about Living Entrepreneurs,” in Encyclopedia of Entrepreneurship, ed. Calvin Kent, Donald Sexton, and Karl Vesper, © 1982, 26–27. Adapted by permission of Prentice8 Hall, Englewood Cliffs, NJ.

METHODOLOGY 50 selected SMEs in Malaysia with only 25 participating SMEs (Company is not to be disclose) Using qualitative methodology, participants were facilitated on a one-onone basis to ensure confidentiality and pursuant open and frank views Interviews: Interviews comprising questions based around issues of performance, work culture, decision making, responsibility, commitment, courage and other entrepreneurial leaders traits.

Data Collection

Ensure confidentiality and to run analysis of the test 9

FINDINGS The result shows that:

• Amongst the 25 successful SMEs, about 20 SMEs were in a strong financial control. The stabalisation of human assets and other assets also contributed to the establishment of financial control. This has led to constant improvements in all facet of the company’s operations. • The remaining five (5) companies were focused more on the quality of its product, services and safety.

• The SMEs are also successful due to (1) strong financial control, (2) continuous improvement, (3) product quality and product safety as top priority, (4) hard work and team work, and (5) eagerness in taking challenges.

• Characteristics of Entrepreneurs shows that they are confident, determine, diligent, flexible, responsive to challenges, responsible, foresight, courageous, aggressive, and committed.

 Entrepreneurs in many aspects are also leaders that are risk averse and determine, and are eager to work on continuous improvement in a financially strong company.

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FINDINGS (Cont..)

Confident Commited

Aggressive

Determine

9 Characteristics of SMEs Entrepreneurial Leader

Courageous

Diligent

Flexible

Foresight

Responsive to Challanges

The outcome of this study has identify several Success Factors of SME which then contributed to identifying the characteristics of entrepreneurial leaders among the existing entrepreneurs

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CONCLUSIONS

Inter-organizational climate framework

Success factors of SMEs

The initiative of conducting such research has led to an outcome of understanding the key success factors and the characteristics possessed by business entrepreneurs.

Entrepreneurs Characteristics

Positive link of relationship between success factors of SME with the characteristics of an entrepreneurial leaders. Entrepreneurial Leadership

**This indicates that entrepreneurs are not just a laymen who do business but also are leaders whom possess the criteria to lead and instruct their workers. Entrepreneurs are also leaders that are Confident, Determine, Diligent, Flexible, Reponsive to challanges, Foresight, Courageous, Agressive, Commited Process flow that link success factors to the creation of 12 Entrepreneurial Leader

Future Research Engagement

Further research catering all organizational sectors in Malaysia and all over the world is deemed to be future research engagement into comparing, and solving services and organizational problems.

This study is hoped to contribute to the management, human resources, entrepreneurs, and also operational field. The limited number of studies on the Malaysian SMEs in relation to entrepreneurial leadership can lead to future research endeavor.

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KEY REFERENCES • • • •

• • • • • • •

Carland, J. W., Hoy, F., Boulton, W. R., & Carland, J. A. C. (1984). Differentiating entrepreneurs from small business owners: A conceptualization.Academy of management review, 9(2), 354-359. Cunningham, J. B., & Lischeron, J. (1991). Defining entrepreneurship. Journal of small business management, 29(1), 45-61. Hornaday, J. A., & Aboud, J. (1971). CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS1. Personnel psychology, 24(2), 141-153. Indarti, N., & Langenberg, M. (2005). A Study of Factors Affecting Business Success Among SMEs. Empirical evidences from Indonesia. MITI, 2010. Ministry of International Trade and Industry. Pelham, H. R., & Rothman, J. E. (2000). The debate about transport in the Golgi—two sides of the same coin?. Cell, 102(6), 713-719. Saleh, A. S., & Ndubisi, N. O. (2006). An evaluation of SME development in Malaysia. International Review of Business Research Papers, 2(1), 1-14. SMIDEC, 2002 & 2004. Policies, Incentives, Programmes and Financial Assistance for SMEs in Malaysia. SME Corp, 2013. Annual Report Storey, D. J. (1994). Understanding the small business sector. University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship. Ucbasaran, D., Westhead, P., & Wright, M. (2001). The focus of entrepreneurial research: contextual and process issues. Entrepreneurship theory and practice,25(4), 57-80. 14

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