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Chapter 1
Introduction
1.1 Introduction
"In Oman, SMEs used to be defined solely based on the number of employees but recently, the
Ministry of Commerce and Industry introduced new criteria that provided more nuanced
definitions that differentiate between micro, small and medium sized enterprises (Oman Daily
Observer, June 20, 2012). The two key criteria are the number of employees and sales turnover.
Micro-enterprises in Oman are now defined as establishments that employ less than 5 workers
and having annual sales of less than RO 25,000 while firms with 5 to 9 workers with annual sales
ranging between RO 25,000 and RO 250,000 are considered small. Medium enterprises consist
of 10 to 99 workers with annual sales ranging between RO 250,000 to RO 1.5 million. The
revised definitions in Oman are more in tune with the evolving characteristics of the sector in the
country in that most these firms are limited in terms of assets (Central Bank of Oman, 2014)".
"There is great interest in small and medium enterprises (SMEs) as major tool of improvement of
economy in Oman. Omani government formulated a comprehensive Industrial Policy-2015 by
putting special emphasis for developing Small and Medium Enterprises (SMEs) as a thrust sector
for balanced and sustainable industrial development in the country to help deal with the
challenges of free market economy and globalization. With multilateral trade negotiations is
often leading to improving market access and with developing countries also being a lot more
willing than before to participate in globalization, rich country government and the aid agencies
have apparently decided to focus on the SMEs as one important ingredient of private-sector
development (MoCI, 2015). Small and Medium-sized Enterprises (SMEs) have been playing a
pivotal role in terms of economic growth, employment generation, poverty reduction and
industrialization (e.g. through entrepreneurship development) in Oman. Industrialization's link to
poverty reduction is through - charging-up the growth rate of the country, enhancement of the
productivity of the worker(s) in employment, providing employment to the unemployed,
expanding consumer spending and thus the confidence level by sharing lower costs from scale
economies via lower prices. As a result SME in Oman takes several strategies to grow itself &
economy of this country. Such as Market development strategy, product development strategy,
diversification strategy etc. The Government of Oman constituted the taskforce to monitor and
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operate Small & Medium Scale Industries late in 2003. Present era is totally technology based;
there is no any scope to operate business vigorously without technology. So each and every
business sector in developed countries is using modern technology whereas our business mainly
SME is using ancient methods which are not consistent with present up rising competition. Most
of the small businesses in Oman are not able to export goods to other countries after meeting the
demand of own country. But it is also true that our SME sectors are developing day by day and it
is contributing more in economics in Oman than previous time (Central Bank of Oman, 2014)".
1.2 Research Problem
"There is no chance to deny the fact that Oman needs a sustained level of development of small
and medium enterprises (SMEs) in order to increase the development of the locals as well as the
country. Having predominance of oil-based economic activities, low level of technological
development, lack of availability of highly skilled laborers, small scale businesses have been
suitably developed in the country. Considering the country's level of economic growth,
composition of resources or natural resources, level of international integration, and growing
urbanization, industrialization there is huge scope for developing diversified and new SMEs in
agriculture, manufacturing, service sectors etc. This project will be of great use not only to Oman
but also to other GCC countries since it is aimed at finding ways to enhance the development of
SMEs. Secondly, theories by other SMEs who have succeeded will be analyzed and will be
proposed for application to benefit the SMEs in Oman. The policies and the procedures are the
major problem for the SMEs in the recent situations. The growth of SMEs also an important
factor to analyze the economic conditions of the SMEs as well as the nation’s economical
position. Hence the study attempt to know the challenges faced by SMEs in Oman and how the
SMEs promote their spread and enable them to develop further".
1.3 Value of the research
"In Oman, latest data indicate that 40 percent of the workforce is employed in SME firms with
less than 5 percent consisting of Omanis while the contribution to the GDP ranges between 15
percent and 20 percent. Given the two key statistics cited above, namely contribution to
employment and value addition to the economy, besides the proven critical role played by SMEs
in emerging and developed economies, it is clear that while this sector is still at its infancy in the
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Sultanate of Oman, it holds significant potential for growth and more so if supported by relevant
infrastructure and accessibility to financing in addition to the development of required skills and
promotion of entrepreneurship culture to name a few. Accordingly, the government of Oman
along with the Central Bank of Oman have recently introduced a number of initiatives, all aimed
at supporting and promoting the SME sector in the country. To that effect, this study provides a
comprehensive picture of the current state of the SME sector in Oman through questionnaire
surveys that targeted key issues (Hamood CBO, 2014). The face of the importance of SME
prospectus and challenges in providing the local market products, which reduces import also
save hard currency through compensation imports and contribute to the export. This sector has
emerged as a dynamic and vibrant force holds the key to economic prosperity in an economy like
create jobs, foster entrepreneurship, utilize the skills and resources and provide depth to the
industrial base. Similarly, this unit also faces problems like finance, marketing, recruitment and
etc. Hence this study will be the eye opener for the SMEs who are operating themselves in
Oman".
1.4 Objectives and aim of study
"The major issues are explored throughout the study is the social, economic and growth trend of
the Small medium enterprises (SMEs) and the solution to develop further. Therefore the
following objectives are proposed":
•
To know the growth and the performances of Small Medium Enterprises in Oman.
•
To study the socio-economic background of small and medium level entrepreneurs in
Oman.
•
To analyze the prospectus and problems faced by the selected enterprises in the study
area.
•
To suggest suitable solutions to enhance the performance of the selected sector in Oman
1.5 Scope of study
"The research design consists of the proper sketch for the collection, measurement and analysis
and interpretation of data gathered. The research design mentioned both the structure of the
research problem and the plan for exploration used to obtain empirical evidence in relation to the
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problem. For this research the conclusive research design approach has been employed. In the
first place, a descriptive research design approach is used, where conceptual model is developed,
comprising of the broad dimensions of the study. Surveys were carried out using a questionnaire
as research tool to collect the primary data".
1.6 Research Hypothesis
"The hypotheses for this research study are as the follows:
H0- Attributes are uncorrelated with influencing future expansion of SME’s
H1- Attributes are correlated with influencing future expansion of SME’
H0- There is a significant relationship between age, gender, volume of business, generation,
education, nature of business and selected variables.
H1- There is no significant relationship between age, gender, volume of business, generation,
education, nature of business and selected variables".
"[Selected Variables: E1: Easy Start up loan, E3: Tax Incentives, E4: More Funding Scheme,
E5: Availability of low cost and skilled manpower, E6: Others Economic factors, F2: No tax
incentives and concessions, F3: High rate of Interest, F4: More documentation and paper work,
F5: Delay in disbursement, F6: Others Finance factors, G2: Favorable Rules and Regulations,
G3: Encourage greater R&D expenditure, G4: Support growth and Job opportunities,
G5: Chamber of commerce, L1: Skilled labour, L3: Cost of Labour, Perquisites and Retaining,
L4: Stringent Laws and Regulations, L5: Health, Safety and welfare issues, L6: Others Labour
factors, M1: Increase of competition, M2: Managing Business tycoons challenges , M3: Global
Competition, M7: Others Marketing factors, P1: Availability of Raw material, P3: Duty and
Charges, P4: Capacity Utilization, P5: Others Production factors, Po1: Capacity expansion,
PO2: Adding new product lines, Po3: Renovation of production process, Po5: Mergers and
Takeovers, S1: Effective management of people and resources, S2: Capability to adopt the
changes, S3: Customer needs are increasing, T1: Advances in production technology.]"
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1.7 Limitations of the study
"Although it has been tried on the level best to make this report based on facts and complete
information available, there are some limitations that are inevitable. They are following":
•
This study is limited to only the prospectus and challenges of SME in Oman;
•
Primary data is collected from different SMEs' owners by questionnaires. So without trust
on owners' answers there is no way to justify these answers.
•
Most of the units do not have proper and uniform records of their business.
•
Moreover, the sector is unorganized and disclosure of accurate information by
entrepreneurs left doubt. However the researcher well managed to collect the ample
amount of information as much as possible for the purpose of data analysis with a huge
effort.
1.8 Chapter Layout
"There are five chapters in this research and each chapter state different issues that are showing
as follow":
"This chapter one provides an introduction related to the research topic that the impact of SMEs
contributions towards the growth in general. The researcher presents the industry profile,
background to the problem, the value of this research, the objectives and hypotheses of this
investigation, as well as the limitation of this study".
"The second chapter discusses the literature review which concern Small medium enterprises
prospects and problems".
"The third chapter provides the information about research methodology and procedures in this
investigation that includes designing questionnaire, method of collecting data such as
questionnaire and interviews. It also highlights the sampling method and statistical tools used in
this study".
"Chapter four discussed the data analysis by statistical tools. It includes the detail analysis about
the collected information. Statistical tools ensure the findings are reliable and valid.
The fifth chapter presents the findings and conclusions of this research study, also provides
recommendations to SMEs and future studies".
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Chapter 2
Literature Review
2.1 Introduction
"A review of existing literature was performed to support the study undertaken in this thesis. A
general survey was first performed to chronicle past research efforts in Prospects and Challenges
of Small and Medium Enterprises (SMEs) in Oman. Small and medium enterprises SMEs are
considered the backbone of economic growth in all countries. They play an important role in
Oman economic growth, as they constitute 90% of the companies in Oman. They also contribute
to national development by positively influencing the distribution of income in both functional
and nominal terms".
"In the business world, small and medium businesses form an absolute majority worldwide.
Oman as a developing country has started refocusing its attention on SME to enhance its
economic stability. Though there is no any standard definition of SME in the world, we can say
that small business is a business which starts its activities with small amount of capital, small
amount of land, few numbers of employees & to serve small numbers of customers it is known
as small business. The terms "growth", "success" are often very closely linked and are sometimes
even used as synonyms. Traditionally they are all measured by hard financial measures, such as
turnover, or by increased numbers of Employees".
2.2 Literature Review
"The challenges faced by SMEs include limited access to manufactured inputs, especially highquality imported goods and lack of skilled human capital to exploit and improve ICTs within the
business (Mutula and Brakel, 2006, p. 403) United Nations Development Programme (UNDP
2006, p. 1). In addition, lack of managerial skills, finance, market information and commercial
intelligence gathering have been identified in the continuum of challenges. SMEs are also faced
with problems of small markets, inadequate regional integration, poor infrastructure, bad
governance, legal and administrative hindrances and failure to access credit (Ongori, 2008)".
"This report tries to show the roles of SMEs for overall development of Oman. Such as economic
growth, poverty alleviation, employment generation, and the growth dimensions in three major
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sectors - agriculture, industry, and service. The study also shows the bottlenecks of SMEs and
the effect of globalization on its development in Oman to the success of SMEs in exploiting,
surviving, rapid globalization of markets. In this paper the final pursuit is to develop a
framework to illustrate a sustainable business solution that simultaneously develop economy and
accelerate economic growth through SMEs.SME takes several strategies to grow itself & as well
as economic development of Oman. Such as Market development strategy, product development
strategy, diversification strategy etc. Small and Medium-sized Enterprises (SMEs) are playing a
pivotal role in terms of economic growth, employment generation, and industrialization (Qiang
et al., 2006; Hanqin and Allison, 2007, p. 277).Many authors expressed their opinion about
SME growth in developing country like Oman. These are given below":
"Beck, et all (2015) in "SMEs, Growth, and Development states that Cross-Country Evidence"
have found a strong association between SMEs development and Gross Domestic Product in per
Capita. Actually SME helps poor people to develop their position. This report tries to shows that
the SMEs' activities & its impact on our economic growth. For developing the sense about SME
& its impact this report is based on field survey"
"Harvie (2014) in "Gulf SME capacity Building, competitiveness and Market Opportunities in a
Global Economy" postulates that developing economies are especially seeing small business as
potential instruments for the alleviation of unemployment. "The percentage of job growth
coming from enterprise expansion in rural areas is significantly higher than that of urban areas in
developing country."Above mentioned opinions of different authors show the growth trend of
SME in developing country like Oman. In our country majority percent of entrepreneurs take
decisions by their own sense. Small business brings great opportunity for small capital owners.
They can easily use this small capital & can remove unemployment".
"From Deming, W. (1999) the time government realized the need of entrepreneurship
development for economic growth. Government started to privatize it's seek industries and
introduced deregulation policies in industrial sector. New private entrepreneurs were created
with new enthusiasm. These governments introduced mixed economic system. Privatization and
deregulation policies started in some specific sectors. Selling the seek industries to private sector
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got momentous. Entrepreneurship was encouraged by formulating appropriate fiscal policies.
Governments of these periods introduced market economy to a significant extent. Initiated
policies to liberalize the trade policies. Privatization board was constituted to explore the
environmental opportunities".
"Juran, J. ( 2000) SME segment is the backbone for any developing economy. They are the
blue chips of tomorrow and are the second largest provider of employment in Oman. Despite this
SME sector faces various obstacles. Main concern for this sector is timely availability of credit.
In today's time SME sector is facing pressures in debt servicing requirements. In the wake of
realization of debtors, in the light of deteriorating financials, weakening balance sheet
particularly in the present scenario, there is a need to take proactive immediate measures to
support these vibrant segments. SME sector requires proper access to capital market, adequate
availability to funds. Main concern for this sector is timely availability of credit. Though
financial institutions like Bank Sohar and others have been able to meet their demand to some
extent but still there is a wide gap. This gap is satisfied by unorganized sector i.e. money lenders
etc. But lending from this unorganized sector comes with high servicing costs. This lays big
opportunity for the banking sector to tap this opportunity and an attractive new sector. The banks
provide SME sector with proper access, affordability and efficiency. Banks have a huge package
of products and services for SME sector. SME Banking brings accessibility, affordability and
efficiency for all the business banking requirement of Small and Medium Enterprises through its
complete package of products and services".
"Sibylle Heibrunn (2007) studied fifty-six Israel Small and Medium enterprises, to delineate the
type of assistance needed by the entrepreneurs; to explore which factor will influence the type of
assistance needed; and to investigate the actual impact of the assistance on the entrepreneurs.
Business needs of entrepreneurs were ranked in respect of their Mean and Standard Deviation
values, and identified that entrepreneurs need more assistance concerning external factors and
less assistance concerning the running of the business itself. The study reveals that level of future
intentions of the entrepreneurs influence the amount of assistance required from the Business
Development Programme. He concludes that Business Development Programmes must fit the
needs of the entrepreneurs and the development potential of the business".
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"Naveen Nicolas E. (2006) in his descriptive study brings out that creating customers is the main
purpose of SMEs and marketing is the means to achieving it. He highlights that web based
marketing has the power to expand any product or service of any SSI beyond the local market
and gives them a competitive advantage in the global market. His study concludes that web
based marketing gives the business a new strategy to conduct market research, product planning,
promotion, marketing mix, pricing and so on. Finally he states that web based marketing allows
SMEs to get closer to customer through Customer Relationship Management".
"Sahdeo Pande (1990) observed that the SMEs suffer from innumerable problems that scuttle
their growth. Unhealthy competition with large-scale industries coupled with poor financial
support further aggravates their problem. To ensure quick development of these industries their
problems are to be sorted out urgently. The new industrial policy will go a long way in salvaging
these industries from decay. In addition, SMEs face a number of other problems like nonavailability of cheap power, unchanging and irresponsive production parties, burden of local
taxes and interference by local politicians. He suggests that SSI need a comprehensive change in
the policy of Government to make them more efficient and productive. Malgavkar P.D. (1991)
in his study analysed the reservation, segmentation, sick units and the changed structure of small
industry and its needs, emphasized that these industries have to be encouraged. On the whole, the
small industry development should fit into the overall industrial development needs a fresh look
to revitalize it. Sandesare J.C. (2001) in his study analysed the new small enterprise policy. The
primary objective of the NSEP is to import, more vitality and growth impetus. The definition of
SSI is changed and a separate package for promotion of SSI sector is introduced. The third
majors change relates to equity participation and the introduction of a new legal form of
organization of business. Michael H. Morris, John W. Altman and Leyland F. Pitt (2005)
studied a sample of twenty-one Lebanon entrepreneurs of businesses founded within the recent
five years. Entrepreneurs were first asked to estimate the amount of changes that had been made
by them in each of the seven areas i.e. product or service offered, target customer profile,
distribution method, facility or space requirements, marketing approach, personnel resources and
financial requirements. They found that Mean and Standard Deviation value for the highest
degree of adaptation was in respect of product and services, personnel requirements, marketing
and facility requirements respectively".
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"Keith D Brothers and George Nakos (2005) studied the relevance of transaction mode choice
of a sample of two hundred and seven Dutch and Greek SMEs having business interest in Central
and Eastern Europe. They found that transaction cost theory could successfully explain the SMEs
entry mode choice and concluded that SMEs using transaction costs were able to predict their
mode choices and performed better than SMEs using other entry mode choices. The Logistic
Regression Analysis found that transaction costs variables to be significantly related to the entry
mode choice. The study showed that Dutch firms preferred more of non-equity investment, as
compared to Greek firms. They conclude that the managers, for making international business
decisions, could use entry mode choice as an effective tool kit.William R. Pendergast (2006)
through a literature review describes the early stage of entrepreneurial experience arising from
opportunity, uncertainty, lack of structure, resource scarcity and fluid or dynamic quality.
According to the study, certain beliefs, attitudes and behaviours are functional within the context
of the entrepreneurial processes. He concludes that the traits form a cluster in which the ability to
deal with uncertainty and a sense of personal efficacy leads to an attenuated perception of risk
and a pro-active disposition".
"Goldar (1985), in his study, estimates a frontier production function (of Cobb-Douglas form)
using firm level data from CSSI for the small scale Washing Soap industry to obtain measures of
technical efficiency. Measures of partial and total factor productivity and an analysis of technical
efficiency reveal that tiny units are inefficient compared to relatively bigger units within the
small scale Washing Soap industry. The positive relationship between unit size and efficiency,
and high capital intensity of relatively larger units suggest a trade off between output gain and
employment loss. William R Pendergast (2006) adopts a Neo-Darwinian perspective that the
entrepreneurial process includes distinctive features which “select” individuals with certain
characteristics for participation and success. According to the author these individuals are
attracted to entrepreneurial situations and their compatible traits enable them to navigate the
challenges of entrepreneurial contexts. In this paper the author identifies the traits of
entrepreneurs through a literature review. In examining these traits the author concludes that
certain beliefs, attitudes and behaviors are functional within the context of the entrepreneurial
process".
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"Ozgulbas et al, (2006) Despite that the SMEs are playing a positive role in the developing
countries through creating job opportunities for all the social classes in the community specially
the entrepreneur persons which will contribute in increasing the personal income level and a
achieving the self satisfaction partially for some goods and service necessary for the community,
in addition contribution in solving the poverty and who are looking for work problem. Also these
projects distinguished from the large firms by the low investment size which reduce its risk,
beside that it consider as a good sphere to develop the managerial, technical, productivity, and
marketing skills, and open a fertile scope for entrepreneurial individual initiatives, and enhance
the self depending culture, to the extent that reduce pressure on the public sector at creating new
job opportunities. OCCI, (2006), “SMEs are vital in developing countries, for the economic
growth and development. SMEs, through entrepreneurship help the process of economic
development, fosters economic growth, generate employment, and reduces rural unemployment
and migration”".
"Kalyani, Brinda, P. Al Yahyaee, L (2012), “According the government statistics, the number
of active enterprises stood at 118,386 in 2009. Of this, 117,914 enterprises were SMEs, and
accounts for more than 95% of the economic activity. The number of employees in these
enterprises represents about 70% of the total labour force in the country. Though a definite
estimate is not available, a rough estimate of the contribution of the SME sector to the
Sultanate’s GDP is around 20 to 25 percent. In reality, there is a meagre lack of database on the
SMEs in Oman. They work under the ministry of Commerce and Industry which introduce
Omani nationals the investment opportunities, awareness about the importance of SMEs,
motivate investors to invest in this sector, and also activate financial institutions to aid the
industry”".
"According to ‘Business Today’ magazine published from Oman, a recent World Bank report
states that there are about 15,000 to 20,000 active SMEs in Oman with a growth rate of 1.5 per
cent per annum. “The development of SMEs has always been on the priority list of the
government of Oman”, Ministry of Commerce and Industry, notes that of the 833 industrial units
with a capital investment of RO 5,000 or more, 48% are considered small. The medium sector
accounted for 43% of the industrial units while 9% were considered to be large. However, the
number of employees and the value added in these sectors, the large industrial units account for
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59% of the employment generation activities and 63% of the value added, while the medium
sector accounts for 35% of the employment and value added. The small sector accounts for only
6% of employment and 2% of the value added. Though the SME sector provides a very dull
picture yet the government has been on a constant move to provide financial support to the SMEs
in Oman through the Development Bank”. (Al-Mandhary,Z, 2002)".
"According to OCCI there is a considerable small enterprise population in Oman and the major
portion of enterprise belongs to SMEs. Around 132,000 members of OCCI are small scale
enterprises (OER, November 2007). By the assessment made by the HSBC suggests that there
are approximately around 15,000-20,000 of SMEs in Oman generating 10-20 per cent of total
employment (OER, December 2007). The HSBC estimate reflects those entities which are in
the actual business and those who approach the financial institutions. It is to be noted that there
exists no accurate data on the size of small scale industries in Oman".
"The Royal Decree No. 19/2007, establishing of the Directorate General for Development of
SMEs, in Ministry of Commerce and Industry embodies the continuous efforts exerted by the
government to develop this sector, which represents a fundamental pillar of the Omani economy.
The role of SMEs is not limited only in providing job opportunities and contributing to the
development of economic performance, but also extends to include their ability to keep pace
with the economic development and deal with the market changes or any sudden global
economic shocks. Small and medium enterprises are easy to establish and do not need large
capital or sophisticated technology. They can be established in industrial and various service
fields and are capable to adapt with local situations which sometimes suffer from the absence of
developed facilities for the infrastructure".
"Also SMEs can take advantage of the available raw material and products of other industries.
SMEs and their development is the main concern for those involved in enhancing the economic
development in all countries This interest in SMEs may be emerged as they are the appropriate
mean to achieve development in developing countries and according to a recent study issued by
the UNIDO, the small and medium enterprises are able to be pioneer investment engines in the
development march and there is a need to enormous potential of SMEs to stimulate growth and
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development, through investment and specific policies that reduce their obstacles, and finding
the initiatives to promote and develop them to become an integral part of the local economy.
Over the past period, specifically the last years of this decade, most countries with different
economy levels believed that small and medium enterprises play a crucial role in the economic
development and in achieving the main development goals. This sector has increasing role in
creating job opportunities, increasing the exports and accepting modern technologies".
"The SMEs role and contribution in the economy is generally measured by three main standards:
contribution in employment, production, and its share of the overall number of the firms in the
economy. The SMEs providing an actual and possible competition resource for the large firms
and reduce its ability to domain prices. These firms consider as the primary resources for
procuring job opportunities for developed and developing countries as it is the basic seeds for the
large companies".
"They are also differentiated in providing a fit work environment where the owner and the
employees work together to achieve their common interests. SMEs are helping in developing the
less developed regions of low income levels and high rates of persons who are looking for work.
These firms are considered as a fertile field to develop innovation and serious ideas.
Nevertheless, SMEs in Oman, as in other countries, are still facing a number of difficulties and
obstacles that are impeding and complicating their operations and growth".
"The entrepreneur is the key factor in the private enterprise sector and it can be defined as a
person who is able to look at the environment, identified opportunities for improvement, gather
resource, and implement action for those opportunities. Norton E,(1991) found that SMEs often
relied on short term loans for both industrial and banking out that the small and medium
enterprises often resorted to short-term loans, for both commercial and banking purposes".
"Cook, P. and Nixon, F(2000) posits that the interest in the role of SMEs in the development
process continues to be in the forefront of policy debates in developing countries. OCCI, (2006),
SMEs are vital in developing countries, for the economic growth and development. SMEs,
through entrepreneurship help the process of economic development, foster economic growth,
generate employment, and reduce rural unemployment and migration. Women, all over the
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world, have established success in handling small scale projects. Simultaneously, taking care of
some large-scale industries and boosting innovation, the small-scale enterprises help the business
community for the upliftment of women".
"V. van de Vrande et al.(2009)The study focuses on the perceived challenges and motives of
the open innovation methods adopted in SMEs. It was found that SMEs adopting the innovative
practices in the areas of marketing and technology had a good impact on meeting the customer
demands and overcoming the competition. Furthermore the most important challenges were
related to organizational and cultural issues since they were dealing with the external contacts".
"John Ackah & Sylvester Vuvor (2011) highlights the issue related to SMEs in obtaining the
credit loans for the general business and do undertake the expansion of the projects. It was
recommended to liberalize the loan facilities and to encourage the financial institutions to
establish factoring services, tax incentives for those lending to SMEs".
"Aziz, et al (2012) the study addresses the various issues and challenges encountered by
hospitality and tourism business under MSM. It was found that the MSM enterprises face
obstacles like lack of financial assistance, high taxes, and government support".
"Bowen, M et al (2009) Study reveals the challenged faced by SMEs in different economic
situations. It was found that the challenges are competition among the large firms, financial
constraints, lack of imports, non-security, lack of training and development. Entrepreneurship
Development programmes and education is a major thrust to business success. Further the SMEs
need to follow certain policies to overcome the barriers like; reasonable price, liberalized loan
facilities, incentives and subsidized interest rates. It was recommended that strategies should be
adopted by the government of Nairobi to achieve the business success".
2.2.1 Financial Problems
"About 80% of Small and medium enterprises are stifled because of poor financing and other
associated problems. The problem of financing SMEs is not so much the sources of funds but its
accessibility. Factors identified inhibiting funds accessibility are the stringent conditions set by
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financial institutions, lack of adequate collateral and credit information and cost of accessing
funds (Harper, 2010). Harper believes that the capital shortage problem i the small firm sector is
partly one, which stems for the uneconomic deployment of available resources by the ownermanagers. Bruch and Hiemenz (2011) in a study of SMEs in Asia observed that financing
working capital needs was the most frequently mentioned problem. Binks and Ennew (2009)
expressed the view that the funding problem of SMEs is primarily due to the behavior of banks
and imperfection of the capital markets".
2.2.2 Management Problems
"Lack of trained manpower and management skills also constitute a major challenge to the
survival of SMEs in Oman. Rogers (2012) also added that inefficiency in overall business
management and poor record keeping is also a major feature of most SMEs; technical
problems/competence and lack of essential and required expertise in production, procurement,
maintenance, marketing and finances have always led to funds misapplication, wrong and costly
decision making".
2.2.3 Socio-Cultural Problems
"Most Entrepreneurs do not have the investment culture of plugging back profits. Bala (2008)
stressed that the attitude of a typical Omanis entrepreneur is to invest today and reap tomorrow.
Also, the socio-political ambitions of some entrepreneurs may lead to the diversion of valuable
funds and energy from business to social waste. The problem of bias against made in Oman
goods is significant. Most Oman have developed a high propensity for the consumption of
foreign goods as against their locally made substitutes".
2.2.4 Strategic Planning Problems
"SMEs often do not carry out proper strategic planning in their operations. Ojiako (2009), stated
that one problem of SMEs is lack of strategic planning. Sound planning is a necessary input to a
sound decision-making".
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2.3 Conceptual Framework
"The following figure presents the conceptual model and attempts to depict the Prospects and
Challenges of Small and Medium Enterprises (SMEs) in Oman".
Figure 1: SMEs Performance framework
(Organization for Authority for SME Development)
2.4 Ethics
"The research conducted should not only be diligent and expertise, but also has to be conducted
in honesty and integrity. To make the study ethical, the rights to self-determination, anonymity,
confidentiality and informed consent were observed. Respondents’ consent was obtained before
they completed the questionnaires. A written consent was provided to the subjects informing on
their rights to voluntarily participate or decline without any penalty. Also the respondents were
informed about the study and assured that there were no potential risk or cost involved.
Anonymity and confidentiality were maintained throughout the study".
2.5 Conclusion
"This chapter has presented a practical and theoretical context for this research by outlining the
significance of SMEs to international, national and regional economies in Oman, which
establishes the need to gain a more comprehensive understanding of the nature and complexities
of SMEs. Notably, it was illustrated that the significance of the prospect and challenges to
SMEs".
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Chapter 3
Research Methodology
3.1 Chapter overview
"In this chapter the research methodology used in the study is described. Prospects and
Challenges of Small and Medium Enterprises (SMEs) in Oman where the study was conducted.
The instrument used to collect the data, including methods implemented to maintain validity and
reliability of the instrument".
3.2 Pilot study
"The pilot study was conveyed to test the legitimacy and unwavering quality of the study. A
pilot study was directed for an example of 15 organizations in three businesses. The poll for the
director’s organizations was conveyed with earlier arrangement keeping in mind the end goal to
get them allowed to answer the survey. It was found that the inquiries are straightforward and
didn't take quite a while to answer them. The rate of reaction for pilot study was 100%. The
troughs were exceptionally useful in giving subtle elements identified with profile of the
organization. A specimen size of 45 was made arrangements for the last study".
3.3 Questionnaire design:
"Small and Medium Enterprises (SMEs) plays a decisive role in any developing economy. In
Oman about 60 percent of the SMEs are the source of employment. Although there is an increase
in the SMEs but there is also innumerable challenges associated with the growth, this research
paper explores the specific challenges encountered by the SME owners. This adopted with the
data sample size of 45 SME owners and the data was collected with the help of structured
questionnaire".
Table 1 Scale Rate of Questionnaire
Strong disagree
Disagree
Neutral
Agree
Strong agree
1
2
3
4
5
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Table 2 Scale Rate of Questionnaire
Very Low
Low
Neutral
High
Very High
1
2
3
4
5
3.4 Research design
"The research design consists of the proper sketch for the collection, measurement and analysis
and interpretation of data gathered. The research design mentioned both the structure of the
research problem and the plan for exploration used to obtain empirical evidence in relation to the
problem. For this research the conclusive research design approach has been employed. In the
first place, a descriptive research design approach is used, where conceptual model is developed,
comprising of the broad dimensions of the study. Surveys were carried out using a questionnaire
as research tool to collect the primary data".
3.5 Sampling design
"Researchers use convenience sampling not just because it is easy to use, but because it also has
other research advantages. In studies, convenience sample is usually used because it allows the
researcher to obtain basic data and trends regarding his study without the complications of using
a randomized sample. This sampling technique is also useful in documenting that a particular
quality of a substance or phenomenon occurs within a given sample. Such studies are also very
useful for detecting relationships among different phenomena. For the purpose of analyzing the
research problem, researcher selected the convenience sampling method to gather data. Due to
the location factor the researcher will investigate only in three industries such as Manufacturing,
Construction and Oil & Gas Industries. In each sector fifteen companies are chosen for the study.
In total there are 45 companies are taken into the study".
3.6 Data Analysis
"The study employs the non-probability method of sampling technique to select the samples
among the total population. Based on the primary data collected through structured questionnaire
were theories and models were applied. The convenience sampling method is applied to collect
the data from the respondents. The SPSS software will be used to analyze the data collected
from the respondents by applying various statistical tools. In analyzing data, percentage analysis
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and statistical techniques such as Correlation analysis, Factor analysis and One –way ANOVA
were used to deduce the association among variables in order to reach conclusions".
3.7 Validity and Reliability
"According to Leedy and Ormrod (2005), reliability and validity are essential characteristics of
research because they ensure the adequacy of research and the validity of conclusions. The
ability to repeat tests over time with the same degree of accuracy and precision is one of the most
important parts of research design and instrumentation. Reliability is the internal consistency of
the measurement, which is the degree of inter-correlations among the various items in the
instruments that constitute the scale (Nunally, 1978). Reliability means ‘repeatability’ or
‘consistency’. Reliability analysis helps in analyzing whether the same set of items would reduce
the same responses if the same questions are re-administered to the same respondents. Validity
of a measurement is defined as the extent to which the instrument measures what it is supposed
to measure. Reliability is defined as the extent to which a score ensures an underlying construct
with stability and consistency (Singleton & Strait, 2005)".
"One of the most common ways of computing the correlation values among the questions on the
instruments is by using the Cronbach's alpha (Cronbach, 1951), which is numerical coefficient
of reliability. According to Schuessler, (1971) Cronbach’s Alpha value greater than 0.60
suggests a good reliability. For our research purpose, Cronbach’s Alpha value greater than 0.6
has been considered satisfactory for measurement of the reliability estimates".
3.8 Conclusion
"Is all about research methodology and this methodology is a ladder to explore this dissertation.
This chapter comprises of Pilot study, Questionnaire design, Research design, Sampling design,
Data Analysis and Validity and Reliability".
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Chapter 4
Data Analysis Interpretations
4.1 Chapter overview
In this chapter, the statistical descriptions of quantities and data were analysis and presented.
Furthermore, results from hypothesis testing were also provided.
4.2 Frequency
"A representation, either in a graphical or even arrangement, which shows the quantity of
perceptions inside of a given interim. The interims must be totally unrelated and thorough.
Recurrence conveyances are normally utilized inside of a factual setting".
4.2.1 Age
Table 3 Frequency Distribution of Respondent by Age:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
below30
3
6.7
6.7
6.7
30-40
16
35.6
35.6
42.2
40-50
19
42.2
42.2
84.4
above 50
7
15.6
15.6
100.0
Total
45
100.0
100.0
(Source, primary data)
Figure 2 – Age
In this table 3 shows Frequency Distribution of Respondent by Age, depicts age group of SME in
Oman. The larger respondent group was in the age group of 40 to 50 in the rate of 42.2, closely
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followed by the age group of 30-40 in the rate of 35.6 %. The less age of SME in Oman
below30, the reason for this is the questionnaires were distributed randomly to SME willing to
participate on the survey unbiased of age. And found the number of Owners SME age group of
40 to 50.
4.2.2 Area
Table 4 Frequency Distribution of Respondent by Area:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
urban
33
73.3
73.3
73.3
semi urban
12
26.7
26.7
100.0
Total
45
100.0
100.0
(Source, primary data)
Figure 3 – Area
In this table 4 shows Frequency Distribution of Respondent by Area. The maximum Owners
SME in Oman area of residence from Urban in the rate of 73.3 %, and compare great come semiurban areas by 26.7%. Owners SME in Oman from area Urban because thinking about the work
of small and medium enterprises, increased competition including in the project work and
provide a suitable environment.
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4.2.3 Gender
Table 5 Frequency Distribution of Respondent by Gender:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
Male
37
82.2
82.2
82.2
Female
8
17.8
17.8
100.0
Total
45
100.0
100.0
(Source, primary data)
Figure 4 – Gender
In the table above 82.2% of male owner SME in Oman and 17.8% of female. The reason for
increase the male because Men have more confident in the work of small and medium projects.
Also the confidence of the people in the projects more men than women and obligations of life.
4.2.4 Educational qualification:
Table 6 Frequency Distribution of Respondent by Educational qualification:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
School
7
15.6
15.6
15.6
Graduation
19
42.2
42.2
57.8
post-graduation
8
17.8
17.8
75.6
Engineering
6
13.3
13.3
88.9
Others
5
11.1
11.1
100.0
Total
45
100.0
100.0
(Source, primary data)
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Figure 5 - Educational qualification
Educational qualifications for the Owner SME in Oman, There are Educational qualification
school, graduation, post-graduation, engineering and others. The higher Educational qualification
it graduation by 42.2% because Resort graduates to the work of small-scale projects it cannot
provide jobs appropriate. Followed by post-graduation by 17.8% and the school close to the ratio
by 15.6%.
4.2.5 Generation of entrepreneurship:
Table 7 Frequency Distribution of Respondent by Generation of being entrepreneur:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
First
23
51.1
51.1
51.1
second
14
31.1
31.1
82.2
Third
6
13.3
13.3
95.6
Fourth
2
4.4
4.4
100.0
Total
45
100.0
100.0
(Source, primary data)
Figure 6 - Generation of entrepreneurship
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The Owner of SME in Oman Varies from any generation. After the poll, the results of the
questionnaire the First generation come the top in the rate 51.1% closely followed by Second
generation in the rate 31.1%. The reasons of owner SME in Oman for first generating and second
because the generation More experienced in the work of small projects and Mature intellectually.
4.2.6 Inducing factor to become entrepreneur:
Table 8 Frequency Distribution of Respondent by who induced you to become entrepreneur:
Frequency
Valid
Percent
Valid
Cumulative
Percent
Percent
Parents
3
6.7
6.7
6.7
Friends
2
4.4
4.4
11.1
Circumstances
13
28.9
28.9
40.0
Own initiative
20
44.4
44.4
84.4
Relatives
7
15.6
15.6
100.0
Total
45
100.0
100.0
(Source, primary data)
Figuer 7 - Inducing factor to become entrepreneur
In this Table 8 shows who induced you to become entrepreneur and the choices Parents, Friends,
Circumstances, Own initiative and Relatives. The Own Initiatives stands high at the rate of
44.4%. The second position is occupied by Circumstances with 28.9% because the circumstances
that call for people to do small projects to earn other income to enhance the Living situation and
to improve living standards.
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4.2.7 Reason for selecting industry:
Table 9 Frequency Distribution of Respondent by Reason for selecting industry:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
Chamber
3
6.7
6.7
6.7
Banks
5
11.1
11.1
17.8
Seminars
7
15.6
15.6
33.3
Experience
2
4.4
4.4
37.8
Profit high
15
33.3
33.3
71.1
less compe
13
28.9
28.9
100.0
Total
45
100.0
100.0
(Source, primary data)
Figuer 8 - Reason for selecting industry
The multiplicity of factors to choose the type of industry to work SME in Oman. The selection
Industrial show higher profit by 33.3% because increasing of demands. Followed by Less
competition margin by 28.9 because to Earn a profit, excellence in the industry and Earn
Customers because increasing of demands. Followed by Banks/Financial Institutions and
Campaign/Conferences/Seminars at the ratio comes close by 15.6% and 11.1%. The less factors
Chamber of Commerce/Trade Associations and Previous experience by 6.7% and 4.4%.
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4.2.8 Years of Business
Table 10 Frequency Distribution of Respondent by Years of business:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
less 5
25
55.6
55.6
55.6
5-10
12
26.7
26.7
82.2
10-15
5
11.1
11.1
93.3
15-20
2
4.4
4.4
97.8
Above 20
1
2.2
2.2
100.0
Total
45
100.0
100.0
(Source, primary data)
Figure 9 – Years of business
In this table 10 shows The Number of years of doing business, the more enterprises that appeared
to less 5 years by 55.6% because it New and spread. Followed by 5-10 years by 26.7%, it less
than less 5 years. The less one more than 20 years by 2.2%.
4.2.9 Category of organization
Table 11 Frequency Distribution of Respondent by Category of organization:
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
micro
8
17.8
17.8
17.8
small
23
51.1
51.1
68.9
medium
14
31.1
31.1
100.0
Total
45
100.0
100.0
(Source, primary data)
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Figure 10 - Category of organization
In this table 11 shows Category of organization. The more Category of organization is the Small it
came by 51.1% because More small businesses in Oman annual sales ranging between RO
25,000 and RO 250,000. Followed by Category of organization medium by 31.1% because need
a large capital and annual sales ranging between RO 250,000 to RO 1.5 million. The less
Category of organization micro by 17.8% because more that employ less than 5 workers and
having annual sales of less than RO 25,000.
4.2.10 Nature of activity
Table 12 Frequency Distribution of Respondent by Nature of activity:
Frequency
Valid
Percent
Valid
Cumulative
Percent
Percent
Manufacturing
15
33.3
33.3
33.3
Construction
15
33.3
33.3
66.7
Oil & gas industries
15
33.3
33.3
100.0
Total
45
100.0
100.0
(Source, primary data)
Nature of the activity to the work of small and medium projects in Oman is taken for the study
itself equal of 15 from Manufacturing, Construction and Oil & gas industries.
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4.2.11 Volume of Annual sales (OR):
Table 13 Frequency Distribution of Respondent by Volume of Annual sales (OR):
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
below 50000
14
31.1
31.1
31.1
50001-100000
17
37.8
37.8
68.9
100001-150000
6
13.3
13.3
82.2
above 150000
8
17.8
17.8
100.0
Total
45
100.0
100.0
(Source, primary data)
Figure 11 - Volume of Annual sales
In this table 13 shows Volume of Annual sales (OR) of the selected enterprises. The majority of
the enterprises comes under the category of Volume of Annual sales between 50001-100000 O.R
by 37.8% More prevalent in Oman. Followed by below 50000 OR by 31.1% and the less
institutions of the Volume of Annual sales 100001-150000 O.R by 13.3%.
4.3 Correlations
Relationship is a factual measure that demonstrates the degree to which two or more variables
change together. A positive relationship shows the degree to which those variables increment or
diminishing in parallel; a negative connection demonstrates the degree to which one variable
increments as alternate abatements.
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4.3.1 Correlations between age and selected variables
Table 14 Correlations between age and selected variables
Age
Age
Pearson Correlation
S4
S4
Pearson Correlation
Sig. (2-tailed)
N
P4
Pearson Correlation
Sig. (2-tailed)
N
L3
Pearson Correlation
Sig. (2-tailed)
N
L4
Pearson Correlation
Sig. (2-tailed)
N
L6
Pearson Correlation
Sig. (2-tailed)
N
M1
Pearson Correlation
Sig. (2-tailed)
N
M2
Pearson Correlation
Sig. (2-tailed)
N
L3
L4
L6
M1
M2
-.277
-.333*
.400**
.361*
.376*
.346*
-.304*
.066
.025
.006
.015
.011
.020
.042
45
45
45
45
45
45
45
45
-.277
1
.121
-.063
.001
-.275
-.013
.563**
.427
.683
.994
.068
.931
.000
1
Sig. (2-tailed)
N
P4
.066
45
45
45
45
45
45
45
45
-.333*
.121
1
.041
-.272
-.118
-.229
-.121
.025
.427
.791
.070
.439
.129
.428
45
45
45
45
45
45
45
45
.400**
-.063
.041
1
.357*
.210
-.061
-.029
.006
.683
.791
.016
.166
.691
.847
45
45
45
45
45
45
45
45
.361*
.001
-.272
.357*
1
.267
.522**
.062
.015
.994
.070
.016
.076
.000
.687
45
45
45
45
45
45
45
45
.376*
-.275
-.118
.210
.267
1
.056
-.248
.011
.068
.439
.166
.076
.717
.100
45
45
45
45
45
45
45
45
.346*
-.013
-.229
-.061
.522**
.056
1
-.181
.020
.931
.129
.691
.000
.717
45
45
45
45
45
45
45
45
-.304*
.563**
-.121
-.029
.062
-.248
-.181
1
.042
.000
.428
.847
.687
.100
.234
45
45
45
45
45
45
45
.234
*Correlation is significant at the 0.05 level (2-tailed).
**Correlation is significant at the 0.01 level (2-tailed).
29
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S4: Others Socio-Cultural, P4: Capacity Utilisation, L3: Cost of Labour, Perquisites and
Retaining, L4: Stringent Laws and Regulations, L6: Others Labour, M1: Increase of competition,
M2: Managing Business tycoons challenges
A Pearson correlation coefficient is computed to assess the relationship between the age and the
selected variables. Each factor in
is taken to find out the relationship with age of the
entrepreneur. The following are the findings from a Pearson correlation. There is a positive
correlation between age and labour cost (r= .400, n = 45, p = 0.006), law and regulations (r=
.365, n = 45, p = 0.015) other labour issues and reasons (r= .376, n = 45, p = 0.011) and Increase
of competition (r= 0.346, n = 45, p = 0.020). There was a negative correlation between the age
and managing the business competitions (r=-0.304, n = 45, p = 0.042). Overall, there was a
positive correlation between age and selected variables. The socio and cultural factor is having p
value > is 0.066, which means there is a statistically significant correlation between two
variables (i.e. increases or decreases in one variable do significantly relate to increases or
decreases in second variable).
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4.3.2 Correlations between gender and the selected variables
Table 15 Correlations between gender and the selected variables
Gender
Gender
E2
.300*
.287
.023
.021
.050
.037
.045
.056
45
45
45
45
45
45
45
Pearson Correlation
.338*
1
.261
.061
.197
.035
.213
Sig. (2-tailed)
.023
.084
.693
.195
.819
.159
1
45
45
45
45
45
45
45
Pearson Correlation
.343*
.261
1
.005
.251
.110
-.162
Sig. (2-tailed)
.021
.084
.973
.096
.472
.287
45
45
45
45
45
45
45
-.294
.061
.005
1
.030
.094
-.139
.050
.693
.973
.845
.538
.362
45
45
45
45
45
45
45
-.311*
.197
.251
.030
1
.009
.127
.037
.195
.096
.845
.954
.405
45
45
45
45
45
45
45
Pearson Correlation
.300*
.035
.110
.094
.009
1
-.207
Sig. (2-tailed)
.045
.819
.472
.538
.954
45
45
45
45
45
45
45
Pearson Correlation
.287
.213
-.162
-.139
.127
-.207
1
Sig. (2-tailed)
.056
.159
.287
.362
.405
.173
45
45
45
45
45
45
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
M5
N
po1
po1
-.311*
N
L5
M5
-.294
N
P1
L5
.343*
N
E4
P1
.338*
Pearson Correlation
Sig. (2-tailed)
E2
E4
N
.173
45
*. Correlation is significant at the 0.05 level (2-tailed).
E2: Globalization Environment, E4: More Funding/Lending Scheme, P1: Availability of Raw
material, L5: Health, Safety and welfare issues, M5: Customer Satisfaction, PO1: Capacity
expansion
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A Pearson correlation coefficient is computed to assess the relationship between gender and the
selected variables. Each factor in
is taken to find out the relationship with gender of the
entrepreneur. The following are the findings from a Pearson correlation. There is a positive
correlation between gender and globalization environment (r= .338, n = 45, p = 0.023), more
funding scheme (r= .343, n = 45, p = 0.021) and customer satisfaction in the marketing aspects
(r= 0.300, n = 45, p = 0.045). There was a negative correlation between the gender and
availability of raw materials (r=-0.294, n = 45, p = 0.050) and health, safety and welfare issues
(r=-0.311, n = 45, p = 0.037). Overall, there was a positive correlation between gender and
selected variables. The capacity expansion is having p value > is 0.056, which means there is a
statistically significant correlation between two variables (i.e. increases or decreases in one
variable do significantly relate to increases or decreases in second variable).
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4.3.3 Correlations between volume of sales and selected variables
Table 16 Correlations between volume of sales and selected variables
Volum
volum
E3
-.286
.310*
.010
.002
.152
.050
.038
45
45
45
45
45
45
Pearson Correlation
.379*
1
.469**
.103
-.220
-.068
Sig. (2-tailed)
.010
.001
.502
.147
.657
1
45
45
45
45
45
45
.451**
.469**
1
.195
-.148
.002
.002
.001
.200
.333
.990
45
45
45
45
45
45
-.217
.103
.195
1
-.083
-.064
.152
.502
.200
.590
.675
45
45
45
45
45
45
-.286
-.220
-.148
-.083
1
.175
.050
.147
.333
.590
45
45
45
45
45
45
Pearson Correlation
.310*
-.068
.002
-.064
.175
1
Sig. (2-tailed)
.038
.657
.990
.675
.251
45
45
45
45
45
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
F2
Pearson Correlation
Sig. (2-tailed)
N
M3
M3
-.217
N
E6
F2
.451**
N
E5
E6
.379*
Pearson Correlation
Sig. (2-tailed)
E3
E5
N
.251
45
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
E3: Tax Incentives, E5: Availability of low cost and skilled manpower, E6: Others Economic,
F2: No tax incentives and concessions, M3: Global Competition
A Pearson correlation coefficient is computed to assess the relationship between volume of sales
and the selected variables. Each factor in
is taken to find out the relationship with volume of
sales. The following are the findings from a Pearson correlation. There is a positive correlation
between volume of sales and tax incentives (r= .379, n = 45, p = 0.010), availability of low cost
33
BUSUMD8
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and skilled manpower (r= .451, n = 45, p = 0.002) and global competition (r= 0.310, n = 45, p =
0.038). There was a negative correlation between the volume of sales and no tax incentives and
concessions (r=-0.286, n = 45, p = 0.050). Overall, there was a positive correlation between
gender and selected variables. The other economic factors is having p value > is 0.152, which
means there is a statistically significant correlation between two variables (i.e. increases or
decreases in one variable do significantly relate to increases or decreases in second variable).
4.3.4 Correlations between Generation of business and selected variables
Table 17 Correlations between Generation of business and selected variables
Gen
Gen
Pearson Correlation
E1
E1
Pearson Correlation
Sig. (2-tailed)
N
F2
-.329*
-.276
.379*
.317*
.071
.027
.066
.010
.034
45
45
45
45
45
45
-.271
1
.122
.162
.043
-.021
.426
.288
.781
.889
.071
45
45
45
45
-.329*
.122
1
.184
.122
-.124
.027
.426
.227
.426
.416
45
45
45
45
45
45
-.276
.162
.184
1
.162
-.195
.066
.288
.227
.288
.199
45
45
45
45
45
45
Pearson Correlation
.379*
.043
.122
.162
1
-.046
Sig. (2-tailed)
.010
.781
.426
.288
45
45
45
45
45
45
Pearson Correlation
.317*
-.021
-.124
-.195
-.046
1
Sig. (2-tailed)
.034
.889
.416
.199
.767
45
45
45
45
45
Pearson Correlation
Pearson Correlation
Sig. (2-tailed)
N
N
po2
po2
45
N
M7
M7
45
Sig. (2-tailed)
L5
L5
-.271
1
Sig. (2-tailed)
N
F2
N
.767
45
*. Correlation is significant at the 0.05 level (2-tailed).
E1: Easy Start up loan, F2: No tax incentives and concessions, L5: Health, Safety and welfare
issues, M7: Others Marketing, PO2: Adding new product lines
34
BUSUMD8
2331984
A Pearson correlation coefficient is computed to assess the relationship between generation of
business and the selected variables. Each factor in
is taken to find out the relationship with
generation of business. The following are the findings from a Pearson correlation. There is a
positive correlation between generation of business and marketing factors (r= .379, n = 45, p =
0.010), adding new product lines (r= .317, n = 45, p = 0.034). There was a negative correlation
between the generation of business and no tax incentives and concessions (r=-0.329, n = 45, p =
0.027). Overall, there was a positive correlation between generation of business and selected
variables. The factors like easy start up loan and health, safety and welfare issues is having p
value > is 0.071 and 0.66, which means there is a statistically significant correlation between two
variables (i.e. increases or decreases in one variable do significantly relate to increases or
decreases in second variable).
35
BUSUMD8
4.3.5 Correlations between level of education and selected variables
2331984
Table 18 Correlations between level of education and selected variables
Educ
Educ Pearson
Correlation
G1
1
Sig. (2-tailed)
N
G1
Pearson
Correlation
Sig. (2-tailed)
N
E6
Pearson
Correlation
Sig. (2-tailed)
N
S1
Pearson
Correlation
Sig. (2-tailed)
N
P3
Pearson
Correlation
Sig. (2-tailed)
N
F4
Pearson
Correlation
Sig. (2-tailed)
N
L1
Pearson
Correlation
Sig. (2-tailed)
N
L3
Pearson
Correlation
Sig. (2-tailed)
N
E6
S1
P3
F4
L1
L3
L4
.383** -.389** .316*
L5
-.299*
-.355* .291
-.359*
.046
.017 .050
.016
.009
.008
.035
45
45
45
45
.018
-.262
.909
.082
.115
.064
45
45
45
45
45
45
.437** -.242
-.022
45
45
45
-.299*
1
.520**
.046
45
.156
.000 .305
45
.238 -.279
45
45
-.355*
.520**
1 .131
.067
-.195
.017
.000
.390
.660
.198
.003
.110
45
45
45
45
45
45
45
45
.291
-.156
.131
1
-.052
.277
.050
.305
.390
.734
.065
.979
.771
45
45
45
45
45
45
45
-.359*
.018
.067
1
-.114
.234
.016
.909
.660 .734
.454
45
45
.383**
45
45
.052
45
45
45
-.262
-.195 .277
-.114
1
.009
.082
.198 .065
.454
45
45
45
-.389**
.238
.437**
.008
.115
45
45
45
.316*
-.279
-.242
.035
.064
45
45
45
.004
.003 .979
45
.045
.110 .771
45
45
-.004 -.045
.280
L6
-
.277
.063 .066
45
.513**
.000
45
45
-.209 .184
-.363*
.168 .227
.014
45
.529
**
.886 .000
45
45
-.221
.144
45
45
.017 .142
.264
.912 .353
.080
45
45
.008
-.248 .065
-.255
.122
.960
.101 .669
.091
45
45
45
.000 .369*
.091
1.000
.013
45
45
45
45
.113
.550 .461
45
45
45
.234
.000
.122
1.000
45
45
45
45
45
.008
.369*
-.010
1
.357*
.960
.013
.950
45
45
45
45
.245
.104
45
45
1 -.010
.115 .292
-.216
.950
.453 .051
.155
45
.090
.016 .558
45
45
45
45
.210
.166
45
36
BUSUMD8
L4
Pearson
Correlation
Sig. (2-tailed)
N
L5
Pearson
Correlation
Sig. (2-tailed)
N
L6
Pearson
Correlation
Sig. (2-tailed)
N
2331984
.280
-.209
-.022 .017
-.248
.091
.115 .357*
.063
.168
.886 .912
.101
.550
.453
.016
45
45
45
45
45
45
45
-.277
.184
.529** .142
.065
-.113
.066
.227
.000 .353
.669
45
45
45
.513**
-.363*
.000
.014
45
45
1 .203
.267
.181
.076
45
45
45
.292 -.090
.203
1
-.190
.461
.051
.558
.181
45
45
45
45
45
-.221 .264
-.255
.245
-.216
.210
.267
.144 .080
.091
.104
.155
.166
.076 .211
45
45
45
45
45
45
45
45
45
.211
45
.190
45
45
1
45
Correlation is significant at the 0.05 level (2tailed).
Correlation is significant at the 0.01 level (2tailed).
G1: Access to the Overseas/export Market, E6: Others Economic, S1: Effective management of
people and resources, P3: Duty and Charges, F4: More documentation and paper work, L1:
Skilled labour, L3: Cost of Labour, Perquisites and Retaining, L4: Stringent Laws and
Regulations, L5: Health, Safety and welfare issues, L6: Others Labour
A Pearson correlation coefficient is computed to assess the relationship between education of the
entrepreneur and the selected variables. Each factor in is taken to find out the relationship with
education of the entrepreneur. The following are the findings from a Pearson correlation. There
is a positive correlation between education of the entrepreneur and management of people and
resources (r= .291, n = 45, p = 0.050), documentation and paperwork (r= .383, n = 45, p =
0.008), cost of labour (r= .316, n = 45, p = 0.035) and other labour issues (r= .513, n = 45, p =
0.000). There was a negative correlation between the generation of business and access to the
overseas market (r=-0. 299, n = 45, p = 0.040), other economic factors (r= -.355, n = 45, p =
0.017)duty and charges (r= -.359, n = 45, p = 0.016) and skilled labour (r= -.389, n = 45, p =
0.008). Overall, there was a positive correlation between education of the entrepreneur and
selected variables. The factors like laws and regulations and health, safety and welfare issues is
having p value > is 0.063 and 0.66, which means there is a statistically significant correlation
37
BUSUMD8
2331984
between two variables (i.e. increases or decreases in one variable do significantly relate to
increases or decreases in second variable).
4.4 ANOVA
Statistical technique for deciding the level of distinction or closeness between two or more
gatherings of information. It depends on the examination of the normal estimation of a typical
segment.
4.4.1 ANOVA between age and selected variables
Table 19 ANOVA between age and selected variables
Sum of Squares
E1
E3
S1
P1
P3
P4
Between Groups
Df
Mean Square
8.852
3
2.951
Within Groups
32.926
41
.803
Total
41.778
44
4.787
3
1.596
Within Groups
34.191
41
.834
Total
38.978
44
3.856
3
1.285
Within Groups
11.122
41
.271
Total
14.978
44
6.890
3
2.297
Within Groups
38.310
41
.934
Total
45.200
44
7.465
3
2.488
Within Groups
39.113
41
.954
Total
46.578
44
7.426
3
2.475
Within Groups
31.152
41
.760
Total
38.578
44
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
F
Sig.
3.674
.020
1.914
.142
4.738
.006
2.458
.076
2.608
.064
3.258
.031
38
BUSUMD8
F4
L3
L6
M1
Between Groups
2331984
3.682
3
1.227
Within Groups
13.118
41
.320
Total
16.800
44
8.631
3
2.877
Within Groups
16.569
41
.404
Total
25.200
44
Between Groups
12.319
3
4.106
Within Groups
36.126
41
.881
Total
48.444
44
6.432
3
2.144
Within Groups
23.346
41
.569
Total
29.778
44
Between Groups
Between Groups
3.836
.016
7.119
.001
4.660
.007
3.765
.018
E1: Easy Start up loan, E3: Tax Incentives, S1: Effective management of people and resources,
P1: Availability of Raw material, P3: Duty and Charges, P4: Capacity Utilisation, F4: More
Funding/Lending Scheme , L3: Cost of Labour, Perquisites and Retaining, L6: Others Labour,
M1: Increase of competition
From the above table that the probability value (p) from the ANOVA has emerged from the data
analysis by using SPSS is lower than 0.05 (level of significance) in the factors like easy start up
loan, effective management of resources, capacity utilization, more documentation and
paperwork, cost of labour, other labour issues and increase of competition. Therefore the null
hypothesis, which was formulated (at 95% confidence level), is rejected and alternative
hypothesis may be accepted. This further shows that the probability-value from the ANOVA
table (p) is 0.142,0.076 and 0.064 > 0.05 at the significance level of 5%, (indicated as
alpha=5%). Therefore, it can be concluded that there is no significant difference among
respondents for the Factors like tax incentives, availability of raw material and duty and charges.
The test is not significant at the confidence level of 5%.
39
BUSUMD8
2331984
4.4.2 ANOVA between nature of business and selected variables
Table 20 ANOVA between nature of business and selected variables
Sum of Squares
G3
G4
G5
G6
S2
S4
T1
P5
F6
L4
Between Groups
Df
Mean Square
5.200
2
2.600
Within Groups
34.000
42
.810
Total
39.200
44
4.311
2
2.156
Within Groups
25.467
42
.606
Total
29.778
44
8.578
2
4.289
Within Groups
33.200
42
.790
Total
41.778
44
5.911
2
2.956
Within Groups
40.667
42
.968
Total
46.578
44
3.333
2
1.667
Within Groups
22.667
42
.540
Total
26.000
44
6.711
2
3.356
Within Groups
31.200
42
.743
Total
37.911
44
5.911
2
2.956
Within Groups
38.667
42
.921
Total
44.578
44
8.400
2
4.200
Within Groups
28.400
42
.676
Total
36.800
44
6.533
2
3.267
Within Groups
34.667
42
.825
Total
41.200
44
5.644
2
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
2.822
F
Sig.
3.212
.050
3.555
.037
5.426
.008
3.052
.058
3.088
.056
4.517
.017
3.210
.050
6.211
.004
3.958
.027
3.355
.045
40
BUSUMD8
po1
po5
po6
2331984
Within Groups
35.333
42
Total
40.978
44
Between Groups
10.711
2
5.356
Within Groups
32.267
42
.768
Total
42.978
44
Between Groups
12.578
2
6.289
Within Groups
37.067
42
.883
Total
49.644
44
8.578
2
4.289
Within Groups
55.067
42
1.311
Total
63.644
44
Between Groups
.841
6.971
.002
7.126
.002
3.271
.048
G3: Encourage greater R&D expenditure, G4: Support growth and Job opportunities, G5:
Chamber of commerce / Trade association Support, G6: Others Government / Political, S2:
Capability to adopt the changes, S4: Others Socio-Cultural, T1: Advances in production
technology, P5: Others Production, F6: Others Finance, L4: Stringent Laws and Regulations,
Po1: Capacity expansion, Po5: Mergers and Takeovers, Po6: Others Possibility of implementing
the following strategy in future
From the above table that the probability value (p) from the ANOVA has emerged from the data
analysis by using SPSS is lower than 0.05 (level of significance) in the factors like tax
incentives, support growth and job opportunities, association support, other socio cultural,
advances in production technology, other production challenges, financial challenges, laws and
regulations, capacity expansion, mergers and takeovers and future strategies. Therefore the null
hypothesis, which was formulated (at 95% confidence level), is rejected and alternative
hypothesis may be accepted. This further shows that the probability-value from the ANOVA
table (p) is 0.056 and 0.056 > 0.05 at the significance level of 5%, (indicated as alpha=5%).
Therefore, it can be concluded that there is no significant difference among respondents for the
Factors like government and political factors and the capability to adopt the changes. The test is
not significant at the confidence level of 5%.
41
BUSUMD8
2331984
4.4.3 ANOVA between generations and selected variables
Table 21 ANOVA between generations and selected variables
Sum of Squares
G2
G3
G5
E5
S3
P3
M2
M7
Between Groups
Df
Mean Square
7.242
3
2.414
Within Groups
29.335
41
.715
Total
36.578
44
7.286
3
2.429
Within Groups
31.914
41
.778
Total
39.200
44
Between Groups
11.085
3
3.695
Within Groups
30.693
41
.749
Total
41.778
44
9.998
3
3.333
Within Groups
35.913
41
.876
Total
45.911
44
2.521
3
.840
Within Groups
11.479
41
.280
Total
14.000
44
8.018
3
2.673
Within Groups
38.560
41
.940
Total
46.578
44
5.500
3
1.833
Within Groups
23.700
41
.578
Total
29.200
44
Between Groups
13.792
3
4.597
Within Groups
27.986
41
.683
Total
41.778
44
Between Groups
Between Groups
Between Groups
Between Groups
Between Groups
F
Sig.
3.374
.027
3.120
.036
4.936
.005
3.805
.017
3.001
.041
2.842
.049
3.172
.034
6.735
.001
G2: Favorable Rules and Regulations, G3: Encourage greater R&D expenditure, G5: Chamber of
commerce / Trade association Support, E5: Availability of low cost and skilled manpower, S3:
Customer needs are increasing, P3: Duty and Charges, M2: Managing Business tycoons
challenges, M7: Others Marketing
42
BUSUMD8
2331984
From the above table that the probability value (p) from the ANOVA has emerged from the data
analysis by using SPSS is lower than 0.05 (level of significance) in the factors like favorable
rules and regulations, encourage greater R&D expenditure, association support, availability of
manpower, customer needs increased, duty and charges, managing competition and other
marketing factors. Therefore the null hypothesis, which was formulated (at 95% confidence
level), is rejected and alternative hypothesis may be accepted.
43
BUSUMD8
2331984
4.4.4 ANOVA between influences and selected variables
Table 22 ANOVA between influences and selected variables
Sum of Squares
G4
P3
F3
F5
L1
M1
po1
po3
po5
Between Groups
Df
Mean Square
8.390
5
1.678
Within Groups
21.388
39
.548
Total
29.778
44
Between Groups
10.893
5
2.179
Within Groups
35.685
39
.915
Total
46.578
44
3.501
5
.700
Within Groups
11.077
39
.284
Total
14.578
44
8.531
5
1.706
Within Groups
23.380
39
.599
Total
31.911
44
Between Groups
11.710
5
2.342
Within Groups
36.734
39
.942
Total
48.444
44
Between Groups
12.090
5
2.418
Within Groups
17.688
39
.454
Total
29.778
44
Between Groups
11.933
5
2.387
Within Groups
31.045
39
.796
Total
42.978
44
4.418
5
.884
Within Groups
14.693
39
.377
Total
19.111
44
Between Groups
13.799
5
2.760
Within Groups
35.845
39
.919
Total
49.644
44
Between Groups
Between Groups
Between Groups
F
Sig.
3.060
.020
2.381
.056
2.465
.049
2.846
.028
2.487
.048
5.331
.001
2.998
.022
2.345
.059
3.003
.022
44
BUSUMD8
L4
2331984
Between Groups
12.644
5
2.529
Within Groups
28.334
39
.727
Total
40.978
44
3.481
.011
G4: Support growth and Job opportunities, P3: Duty and Charges, F3: High rate of Interest, F5:
Delay in disbursement, L1: Skilled labour, M1: Increase of competition, Po1: Capacity
expansion, Po3: Renovation of production process, Po5: Mergers and Takeovers, L4: Stringent
Laws and Regulations
From the above table that the probability value (p) from the ANOVA has emerged from the data
analysis by using SPSS is lower than 0.05 (level of significance) in the factors like support
growth and job opportunities, high rate of interest, delay in disbursement, skilled labour, increase
of competition, capacity expansion and mergers and takeovers and documentation and
paperwork. Therefore the null hypothesis, which was formulated (at 95% confidence level), is
rejected and alternative hypothesis may be accepted. This further shows that the probabilityvalue from the ANOVA table (p) is 0.056 and 0.059 > 0.05 at the significance level of 5%,
(indicated as alpha=5%). Therefore, it can be concluded that there is no significant difference
among respondents for the Factors like duty and charges and renovation of production process.
The test is not significant at the confidence level of 5%.
45
BUSUMD8
2331984
4.4.5 ANOVA between education and selected variables
Table 23 ANOVA between education and selected variables
Sum of Squares
E3
S1
P3
L1
L3
L4
L6
M1
Between Groups
Df
Mean Square
8.115
4
2.029
Within Groups
30.863
40
.772
Total
38.978
44
3.584
4
.896
Within Groups
11.393
40
.285
Total
14.978
44
Between Groups
10.823
4
2.706
Within Groups
35.754
40
.894
Total
46.578
44
Between Groups
14.295
4
3.574
Within Groups
34.150
40
.854
Total
48.444
44
5.932
4
1.483
Within Groups
19.268
40
.482
Total
25.200
44
Between Groups
11.560
4
2.890
Within Groups
29.418
40
.735
Total
40.978
44
Between Groups
15.949
4
3.987
Within Groups
32.496
40
.812
Total
48.444
44
8.226
4
2.057
Within Groups
21.551
40
.539
Total
29.778
44
Between Groups
Between Groups
Between Groups
F
Sig.
2.629
.048
3.146
.024
3.027
.029
4.186
.006
3.078
.027
3.929
.009
4.908
.003
3.817
.010
E3: Tax Incentives, S1: Effective management of people and resources, P3: Duty and Charges,
L1: Skilled labour, L3: Cost of Labour, Perquisites and Retaining, L4: Stringent Laws and
Regulations, L6: Others Labour, M1: Increase of competition
46
BUSUMD8
2331984
From the above table that the probability value (p) from the ANOVA has emerged from the data
analysis by using SPSS is lower than 0.05 (level of significance) in the factors like tax
incentives, effective management of people and resources, duty and charges, skilled labour, cost
of labour, laws and regulations, other labour factors and increasing the competition. Therefore
the null hypothesis, which was formulated (at 95% confidence level), is rejected and alternative
hypothesis may be accepted.
4.5 Factor Analysis on Variables influencing future expansion of SME’s
Testing of Hypothesis
H0 - Attributes are uncorrelated with influencing future expansion of SME’s
H1 - Attributes are correlated with influencing future expansion of SME’s
In order to identify the key factors which influence exporter’s (H1),
exploratory factor analysis was performed and the results are shown in Table 1
Kaiser-Mayer-Olkin (KMO) Measure of Sampling Adequacy
"The KMO measures of sampling adequacy is an index used to examine the
appropriateness of factor analysis. High values (between 0.5 and 1.0) indicated factor
analysis is appropriate. Values below 0.5 imply that factor analysis may not be
appropriate".
Table 24 - KMO and Bartlett’s test for variables influencing future expansion of
SME’s
Kaiser-Mayer-Olkin (KMO) Measure of Sampling Adequacy
0.513
Bartlett’s Test of Sphericity
Approx. Chi-square
40.659
Df.
15
Sig.
0.000
47
BUSUMD8
2331984
"For our factor analysis, the KMO measure of sampling adequacy is 0.513,
which is greater than the permissible value of 0.5. This also signifies that the scales of all
the variables of the questionnaire were properly understood by all respondents and they
have correctly answered to the scale. Additionally, the Bartlett’s Test of Sphericity has a
high chi-square value and the significance is 0.000, which is less than 0.5. Hence the null
hypothesis is rejected and H1is accepted, as the factors are correlated with each other".
"In order to identify the understanding dimensions in the influencing factors of
future expansion of SME’s, an exploratory factor analysis was employed. The
respondents were asked to rate 14 variables using a 5 point Likert scale, which ranged
from “Highly influenced” to “Highly not influenced”. The inter-item consistency
reliability of these 14 variables was tested before factor analysis was carried out. The
result of both the KMO and Bartlett’s test of Sphericity, i.e., significance value 0.000,
also indicate that it was appropriate to apply the exploratory factor analysis techniques to
this dataset".
Table 2 shows the factor analysis of the 6 variables which shows increasing
future expansion of SME’s.
48
BUSUMD8
2331984
Table 25 Factor analysis on variables influence future expansion of SME’s
S.No.
Variables
1
Market expansion
2
Adding new product lines
3
Renovation of production process
4
Change of customer culture
5
Mergers and Takeovers
6
Government support
1
Components
2
3
.643
.291
-.463
.720
.194
-.219
.800
-.167
.226
.288
.878
.870
.868
-.154
Note: Extraction method: Principal component Analysis; Rotation method: Varimax with
Kaiser Normalization; Rotation converged in five iteration
Table 26 Rotated component matrix on variables influencing future expansion of
SME’s
Factors loadings
Factor Factor
Factor 3
1
2
Factors 1 – Expansion
Market expansion
F1
Communality
0.762
.713
F2
Adding new product lines
0.713
.561
F6
Government support
0,811
.778
Factors 2 – innovation
Renovation of production
F3
process
F5
Mergers and Takeovers
0.844
.717
0.860
.766
Factors 3 – culture
F4
Change of customer culture
0.942
.905
Note: Extraction method: Principal component Analysis; Rotation method: Vari max with Kaiser
Normalization; Rotation converged in five iteration
49
BUSUMD8
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4.6 Interpretation
"Factor 1 loaded on first three variables. This factor can be labeled as
“expansion factors” as these three variables revealed the SME’s performance that is,
market expansion, adding new product lines, government support. All these elements
were considered as the predominant predictors of increasing performance of SME’s
performance in business activities".
Factor 2 correlated most highly with variables 3 and 5 i.e., renovation of
production and merger and takeover. This might be labeled as “innovation”.
Factor 3 might be labeled culture. It indicated that customer cultural changes
increase SMEs exports growth.
4.7 Conclusion
"This chapter shall discuss the findings obtained from the primary instrument used in the study
Prospects and Challenges of Small and Medium Enterprises (SMEs). The researcher provided
tables and graphs that summarize the information for SME in Oman 45 company"
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Chapter 5
Findings, Recommendations and Conclusions
5.1 Findings of study
"The larger respondent group was in the age group of 40 to 50 in the rate of 42.2, the less age of
SME in Oman below30. The maximum Owners SME in Oman area of residence from Urban in
the rate of 73.3 %. 82.2% of male owner SME in Oman and 17.8% of female. The higher
Educational qualification it graduation by 42.2% because Resort graduates to the work of smallscale projects it cannot provide jobs appropriate. The results of the questionnaire the First
generation come the top in the rate 51.1%, the less generation fourth generation in the rate 4.4%.
Came the Own Initiatives the high one in the rite 44.4%. The selection Industrial show higher
profit by 33.3% because increasing of demands. The more institutions that appeared to me less 5
years by 55.6% because it New and spread. The more Category of organization the Small it came
by 51.1% because More small businesses in Oman annual sales ranging between RO 25,000 and
RO 250,000. Most institutions of Distributed a questionnaire it Volume of Annual sales between
50001-100000 O.R by 37.8% More prevalent in Oman. The socio and cultural factor is having p
value > is 0.066, which means there is a statistically significant correlation between two
variables (i.e. increases or decreases in one variable do significantly relate to increases or
decreases in second variable). The capacity expansion is having p value > is 0.056, which means
there is a statistically significant correlation between two variables (i.e. increases or decreases in
one variable do significantly relate to increases or decreases in second variable). The other
economic factors is having p value > is 0.152, which means there is a statistically significant
correlation between two variables (i.e. increases or decreases in one variable do significantly
relate to increases or decreases in second variable). The factors like easy start up loan and health,
safety and welfare issues is having p value > is 0.071 and 0.66, which means there is a
statistically significant correlation between two variables (i.e. increases or decreases in one
variable do significantly relate to increases or decreases in second variable). The factors like
laws and regulations and health, safety and welfare issues is having p value > is 0.063 and 0.66,
which means there is a statistically significant correlation between two variables (i.e. increases or
decreases in one variable do significantly relate to increases or decreases in second variable). it
can be concluded that there is no significant difference among respondents for the Factors like
tax incentives, availability of raw material and duty and charges. The test is not significant at the
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confidence level of 5%., it can be concluded that there is no significant difference among
respondents for the Factors like government and political factors and the capability to adopt the
changes. The test is not significant at the confidence level of 5%. from the ANOVA has emerged
from the data analysis by using SPSS is lower than 0.05 (level of significance) in the factors like
favorable rules and regulations, encourage greater R&D expenditure, association support,
availability of manpower, customer needs increased, duty and charges, managing competition
and other marketing factors. the factors like tax incentives, effective management of people and
resources, duty and charges, skilled labour, cost of labour, laws and regulations, other labour
factors and increasing the competition. Therefore the null hypothesis, which was formulated (at
95% confidence level), is rejected and alternative hypothesis may be accepted".
5.2 Recommendations
"Periodical training course should be arranged for technical staff of SMEs. Moreover, training in
management of small enterprise and efficient marketing should also be provided. Training or
workshop should be organized for the development of SMEs capabilities to acquire enhanced
knowledge about how to choose, use modern technology. This training must help entrepreneur to
gather experience in every step of SMEs' development. There is no lack of entrepreneurs in
Oman but lack of experienced entrepreneurs. To attract experienced entrepreneurs training and
others brainstorming program should be organized".
"Educated people are engaging with SME not for better position of SME in Oman but for
managing the unemployment situation. To attract the educated people, the structure, policy,
facilities of SME should be well organized and updated".
"Entrepreneurs in Oman face many problems in every footstep. Here legality problems play vital
role as barriers of SME development. So, legal power should be used to develop this sector not
to destroy or not to get facilities unethically".
"More capital in SME are provided by own source of entrepreneurs in Oman. Majority percent of
small business' owners don't get any financial facilities from bank and others financial
institutions. So, many SMEs fall down and don't see the light of success. Government and others
non government financial institutions should be more enthusiasm to help the SMEs sector".
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"Majority percent of SMEs in Oman are product oriented. Others sectors like-service, technology
don't get priority as like as product. So government should make some polices to encourage
entrepreneurs to choose service sectors, technology sectors".
"All most 80% entrepreneurs are struggling in making optimal business plan in Oman. The
poorest part of the planning is done in small firms is the setting of overall goals. Most of the
entrepreneurs don't prepare business plan and don't estimate future. So they are not familiar to
business plan. It is not good sign for SME development in this country. Workshop, seminar
should be organized to encourage entrepreneurs to use business plan".
"Most of the entrepreneurs don't know the entry strategy mode like-franchising, licensing, joint
ventures etc. they should be more enthusiasm to do business in foreign market by using any
mode. By implementing above mentioned suggestion SMEs sectors can develop its self
significantly".
"The lack of a policy framework on entrepreneurship is noted and this should be addressed as a
matter of urgency. An effective entrepreneurial development strategy must comprise a long-term
policy agenda explicitly aimed at continuously strengthening young firms, with evidence of
implementation demonstrated by achieved time-bound targets. The business community needs to
have clarity on legislative changes and this needs to be communicated in a clear, effective and
timely fashion. As noted, many of the policy challenges outlined in this report overlap".
"Intergovernmental co-ordination is essential to an effective sustainable response. Ideally, this
type of co-ordination should be led by a single institution with effective mechanisms for policy
coordination, involving key ministries, agencies and relevant local administrations. Effective
implementation of any policy framework will require ownership, commitment and monitoring at
the highest levels of Government in consultation with the private sector and its representative
organizations".
"The OCCI, as the main private sector representative organization has a key role in keeping the
pressure on Government to actually apply the policies that have been agreed. This may require a
changing relationship between OCCI and its government partners".
"With appreciation for the initiative (bank guarantee) being launched by the Directorate General
for Development of Small and Medium Enterprises, Appeal to funders to cooperate in the
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success of this initiative and to create more awareness among the business owners in this
initiative"
"Allocation of government institutions and large companies proportion of its contracts for small
and medium-sized enterprises. Reconsider bringing in foreign labor in order to serve the interests
of SMEs procedures"
"Taking into account the government institutions and large companies to the need of SMEs to the
existence of continuity in the cash flows and the development of mechanisms to reduce the
length of time for payment. Review of commercial banks with the procedures relating to open
the account for small enterprises and medium-sized"
5.3 Future research
"There are more than 20,000 SMEs operating across the Sultanate, each boasting a workforce of
not more than 15 to 20 per cent of the total workforce. SME in Oman sector that contributes
nearer 60 per cent of GDP and employ 70 per cent of the available workforce. Oman’s SME
sector not only has considerable growth potential, it offers a very real opportunity for investors
and entrepreneurs. It is significant to indicate that His Majesty the Sultan has given great
importance to encouraging business initiatives and SMEs, which are the main component of the
economic diversification strategy, helping to create job opportunities for Omani youth and
enhancing the growth of the economy".
"The future study may be to know the growth and development of SME in Oman, in addition
may be to know the constrains faced by SME in Oman and creating opportunities for SMEs in
Oman".
5.4 Conclusions
"The small sized business plays an important role in the economic development of a country.
Like big enterprises small enterprises tries to contribute a lot in GDP (gross domestic product)
and in social and community development of Oman. SME provides major share of employment
in the total employment of Oman. But small business is less hierarchical, systemized, and
compartmentalized than the large company so it can't contribute more like big business in GDP.
So the recommendation should be implemented as soon as possible to overcome all problems
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and to develop SME sector like such a way that it can contribute in economic development of
Oman".
"Small and Medium Scale Enterprises constitute essential ingredients in the lubrication and
development of any economy. In Oman, the story makes no remarkable difference as Small and
Medium Scale Enterprises dominate the economy. Government over the years has formulated a
number of policies aimed at developing Small and Medium Scale Enterprises. SMEs throughout
the world have been considered as the silent drives of a nation's economy. Their enterprise is
laudable and their ability to generate pools of growth and employment, invaluable. This is true
for most developed, as well as developing economies".
"In the emerging economic order SMEs are the leading edge when it comes to innovation and
entering new global markets. The SME story in the Sultanate is not different. SMEs form the
backbone of Oman's economy. The studies show that SMEs' contributions towards GDP and
employment creation in Oman is far below when compared to other developed and developing
countries. Many failures in SME sectors reported in the past few years were due to the absence
of efficient management systems especially the effective market entry strategies in the
enterprises. A study of the marketing strategies of SMEs of Oman particularly the market entry
strategies will give light to the real issues of this sector and thereby strengthen the very base of
the SMEs in Oman".
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