Factors Affecting Success and Survival of Small and Medium Enterprises in the Middle East
Abstract
:1. Introduction
2. Literature Review and Background
2.1. Policy Interventions by the Omani Government to Support SMEs
2.2. Challenges Facing SMEs in Oman
2.3. External Factors
2.3.1. Processes and Procedures
2.3.2. Education System
2.3.3. Culture
2.4. Internal Factors
3. Research Methods and Procedures
4. Analysis and Findings
4.1. Four-Dimensional Analysis
4.1.1. Education System
4.1.2. Culture
4.1.3. Managerial Skills
4.1.4. Business Establishment Procedures
5. Discussion and Implications
5.1. Implications for Practice and Recommendations
- ▪
- Introducing a basic entrepreneurship mindset at early stages in basic education curricula and making it mandatory for public and private schools.
- ▪
- Colleges and universities could introduce entrepreneurship (breadth) courses to all students from different disciplines and specialties.
- ▪
- Colleges and universities could open in-campus entrepreneurship centers to assist students who follow this path after graduation.
- ▪
- Colleges and universities could arrange social events hosting successful local entrepreneurs who could share their experiences and connect with students and possibly mentor them.
- ▪
- The education system could be redesigned to help, in the long run, reduce uncertainty avoidance among Omani new generations and encourage rational risk-taking.
- ▪
- Steps could be taken to gradually transform society to be more supportive towards entrepreneurs, especially the unsuccessful ones.
- ▪
- The government could develop a strategy to change the mindset of citizens away from public sector jobs and more towards private businesses while focusing on and shedding more light on successful local entrepreneurship stories.
- ▪
- Individuals who pursue an entrepreneurial future should seek appropriate training to advance their necessary managerial skills before taking that path.
- ▪
- Governmental support programs should be publicized more to reach the maximum number of beneficiaries around the country. Different innovative marketing techniques could be used to accomplish this outcome.
- ▪
- The government could decentralize certain functions and establish a center in every governorate to manage the procedures required by different regulatory agencies.
- ▪
- Conditions, guarantees, and interest rates on loans from governmental and private agencies could be rationalized to encourage entrepreneurship. These decisions could also be decentralized at the governorate level.
5.2. Conclusions, Limitations, and Future Research
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
- Madani, A.E. SME policy: Comparative analysis of SME definitions. Int. J. Acad. Res. Bus. Soc. Sci. 2018, 8, 103–114. [Google Scholar] [CrossRef]
- Sataic, I. Attitudes About the Economic Impact of the COVID-19 Lockdown in the Republic of Croatia on Micro, Small and Medium Enterprises. Eur. J. Econ. 2021, 1, 22–33. [Google Scholar] [CrossRef]
- Elhassan, O.M. Obstacles and Problems Facing the Financing of Small and Medium Enterprises in KSA. J. Financ. Account. 2019, 7, 168–183. [Google Scholar]
- Bhuiyan, M.F.; Ivlevs, A. Micro-entrepreneurship and subjective well-being: Evidence from rural Bangladesh. J. Bus. Ventur. 2019, 34, 625–645. [Google Scholar] [CrossRef]
- Ratanova, I.; Voroncuka, I. The Aspects of Entrepreneurship and Innovation Development of SMEs. In Proceedings of the 11th Annual International Conference on Industrial Engineering and Operations Management, Singapore, 7–11 March 2021. [Google Scholar]
- OECD. OECD SME and Entrepreneurship Outlook 2019; OECD: Paris, France, 2019. [Google Scholar] [CrossRef]
- Gherghina, Ș.C.; Botezatu, M.A.; Hosszu, A.; Simionescu, L.N. Small and medium-sized enterprises (SMEs): The engine of economic growth through investments and innovation. Sustainability 2020, 12, 347. [Google Scholar] [CrossRef]
- Vermeulen, B.; Kesselhut, J.; Pyka, A.; Saviotti, P.P. The impact of automation on employment: Just the usual structural change? Sustainability 2018, 10, 1661. [Google Scholar] [CrossRef]
- Haddad, M.I.; Williams, I.A.; Hammoud, M.S.; Dwyer, R.J. Strategies for implementing innovation in small and medium-sized enterprises. World J. Entrep. Manag. Sustain. Dev. 2019, 16, 12–29. [Google Scholar] [CrossRef]
- Alqassabi, M.A. Insights on Sustainability of Small and Medium Enterprises in Oman: A Conceptual Framework. Int. J. Econ. Financ. Issues 2020, 10, 209–218. [Google Scholar] [CrossRef]
- The World Bank. Unemployment, Youth Total (% of Total Labor Force Ages 15–24) (Modeled ILO Estimate)—Oman. 2020. Available online: https://data.worldbank.org/indicator/SL.UEM.1524.ZS?contextual=region&end=2019&locations=OM&start=1991&view=chart. (accessed on 21 September 2021).
- Rahman, S.A.; Khan, G.M.; AlAbri, S.; Taghizadeh, S.K. The role of intellectual capital on entrepreneurial opportunity recognition among SMEs in the Sultanate of Oman. J. Intellect. Cap. 2021, 23, 1–24. [Google Scholar] [CrossRef]
- SustainableOman. Tanfeedh-Oman’s Initiative towards Economic Diversification. 2021. Available online: https://sustainableoman.com/tanfeedh-omans-initiative-towards-economic-diversification/ (accessed on 15 September 2021).
- Al Balushi, Y.; Locke, S.; Boulanouar, Z. Determinants of the decision to adopt Islamic finance: Evidence from Oman. ISRA Int. J. Islamic Financ. 2019, 11, 6–26. [Google Scholar] [CrossRef] [Green Version]
- Civelek, M.; Ključnikov, A.; Fialova, V.; Folvarčná, A.; Stoch, M. How innovativeness of family-owned SMEs differ depending on their characteristics? Equilib. Q. J. Econ. Econ. Policy 2021, 16, 413–428. [Google Scholar] [CrossRef]
- Ramachandran, N.; Yahmadi, H.M.A.A. Challenges Faced by SMEs in Oman. Shanlax Int. J. Arts Sci. Humanit. 2019, 7, 15–25. [Google Scholar] [CrossRef]
- Al Maimani, J.; Johari, F. Enhancing Active Participation of SMEs and Islamic Banks towards Economic Diversification in Oman. Procedia Econ. Financ. 2015, 31, 677–688. [Google Scholar] [CrossRef]
- Bilal, Z.O.; Al Mqbali, N.S. Challenges and constrains faced by small and medium enterprises (SMEs) in Al Batinah governorate of Oman. World J. Entrep. Manag. Sustain. Dev. 2015, 11, 120–130. [Google Scholar] [CrossRef]
- Joshi, S.; Sharma, M. Impact of sustainable supply chain management on performance of SMEs amidst COVID-19 pandemic: An Indian perspective. Int. J. Logist. Econ. Glob. 2022, 9, 248–276. [Google Scholar] [CrossRef]
- OECD. Enterprises by Business Size. 2021. Available online: https://data.oecd.org/entrepreneur/enterprises-by-business-size.htm (accessed on 7 September 2021).
- National Centre for Statistics and Information. Small and Medium Enterprises. 2019. Available online: https://data.gov.om/eopqlmg/small-and-medium-enterprise?lang=en (accessed on 22 June 2021).
- Zutshi, A.; Mendy, J.; Sharma, G.D.; Thomas, A.; Sarker, T. From challenges to creativity: Enhancing SMEs’ resilience in the context of COVID-19. Sustainability 2021, 13, 6542. [Google Scholar] [CrossRef]
- Al-Tit, A.; Omri, A.; Euchi, J. Critical success factors of small and medium-sized enterprises in Saudi Arabia: Insights from sustainability perspective. Adm. Sci. 2019, 9, 32. [Google Scholar] [CrossRef]
- Christina, B.; Neelufer, A.; Al Amri, S. Challenges and barriers encountered by the SMEs owners in Muscat Blossom Christina. Int. J. Small Bus. Entrep. Res. 2014, 2, 1–13. [Google Scholar]
- Al Buraiki, A.; Khan, F.R. Finance and Technology: Key Challenges Faced by Small and Medium Enterprises (SMEs) in Oman. Int. J. Manag. Innov. Entrep. Res. 2018, 4, 1–12. [Google Scholar] [CrossRef]
- Sanyal, S.; Hisam, M.W.; Baawain, A.M.S. Challenges facing internationalization of SMEs in emerging economies: A study on OECD model. J. Asian Financ. Econ. Bus. 2020, 7, 281–289. [Google Scholar] [CrossRef]
- Ministry of Education Portal Oman. Education System in Oman. Available online: https://home.moe.gov.om/module.php?m=pages-showpage&CatID=14&ID=16 (accessed on 15 July 2021).
- Yarahmadi, F.; Magd, H.A.E. Entrepreneurship Infrastructure and Education in Oman. Procedia Soc. Behav. Sci. 2016, 219, 792–797. [Google Scholar] [CrossRef] [Green Version]
- Al-Mataani, R.N. Examining the Entrepreneurial Context of Oman: Multi-Layered Perspective Using the Institutional Lens. Ph.D. Thesis, University of Southampton, Southampton, UK, 2017. [Google Scholar]
- Bindah, E.V.; Magd, H.A.E. Teaching entrepreneurship in Oman: Successful approaches. Procedia Soc. Behav. Sci. 2016, 219, 140–144. [Google Scholar] [CrossRef]
- Belwal, R.; Al Balushi, H.; Belwal, S. Students’ perception of entrepreneurship and enterprise education in Oman. Educ. Train. 2015, 57, 924–947. [Google Scholar] [CrossRef]
- Taderera, F.; Al-Nabhani, S.; Karedza, G. Exploring entrepreneurship and SMEs in Oman: Opportunities, Challenges, Realities and Pitfalls. Int. J. Bus. Manag. Stud. 2014, 3, 379–390. [Google Scholar]
- Hofstede Insights. Hofstede’s Cultural Dimensions in Some GCC Countries. 2020. Available online: https://www.hofstede-insights.com/product/compare-countries/ (accessed on 5 April 2020).
- Al Badi, K. Implementation of marketing concept and organizational culture in SMEs in Al Buraimi—Oman. Benchmarking Int. J. 2019, 26, 2401–2414. [Google Scholar] [CrossRef]
- Al Bulushi, B.H.S.; Bagum, S. Growth Strategies of SME in Oman—Issues and Challenges. Int. J. Small Bus. Entrep. Res. 2017, 5, 21–61. [Google Scholar]
- Al-Shanfari, D.A. Entrepreneurship in Oman: A Snapshot of the Main Challenges. In Proceedings of the United Nations Conference on Trade and Development: Multi-Year Expert Meeting on Enterprise Development Policies and Capacity-Building in Science, Technology and Innovation (STI), Geneva, Switzerland, 16–18 January 2012. [Google Scholar]
- Kabir, I.; Abdullahi, Y.A.; Naqshbandi, M.M. Measuring entrepreneurial orientation and institutional theory for informal enterprises: Scale validation. Qual. Quant. 2022, 1–25. [Google Scholar] [CrossRef]
- Naqshbandi, M.M. Managerial ties and open innovation: Examining the role of absorptive capacity. Manag. Decis. 2016, 54, 2256–2276. [Google Scholar] [CrossRef]
- Naqshbandi, M.M.; Kaur, S. Do managerial ties support or stifle open innovation? Ind. Manag. Data Syst. 2014, 114, 652–675. [Google Scholar] [CrossRef]
- Naqshbandi, M.M.; Kamel, Y. Intervening role of realized absorptive capacity in organizational culture–open innovation relationship: Evidence from an emerging market. J. Gen. Manag. 2017, 42, 5–20. [Google Scholar] [CrossRef]
Classification | No. of Employees | Annual Sales (OMR) |
---|---|---|
Micro | 1–5 | Less than 100,000 (~USD 260,000) |
Small | 6–25 | 100,000–500,000 (~USD 260,000–1,300,000) |
Medium | 26–99 | 500,000-less than 3,000,000 (~USD 1,300,000–7,800,000) |
Variable | Category | Frequency | Percentage |
---|---|---|---|
Gender | Male | 265 | 77.03% |
Female | 79 | 22.97% | |
Age | 25 or less | 15 | 4.36% |
26–35 | 176 | 51.16% | |
36–45 | 127 | 36.92% | |
46 or above | 26 | 7.56% | |
Educational Background | Secondary or below | 68 | 19.76% |
Diploma | 96 | 27.91% | |
Bachelor | 126 | 36.63% | |
Master or above | 54 | 15.70% | |
Employment | Public sector only | 161 | 46.80% |
Private sector only | 93 | 27.04% | |
Entrepreneurs | 62 | 18.02% | |
Unemployed | 28 | 8.14% | |
Job Preference | Public sector | 309 | 89.83% |
Private sector | 11 | 3.20% | |
Entrepreneurs | 24 | 6.97% |
Dimension | Mean | Rank |
---|---|---|
Education system | 4.29 | 1 |
Culture | 4.28 | 2 |
Managerial skills | 4.25 | 3 |
Business establishment procedures | 4.08 | 4 |
Determinants of SME Survival and Success | Respondent Support for Reforms |
---|---|
Interventions in the education system | |
| 86.63% |
| 93.90% |
| 90.99% |
| 91.86% |
Reforms in the cultural dimension | |
| 91.86% |
| 90.40% |
| 92.74% |
Interventions related to managerial skills | |
| 96.51% |
| 93.90% |
| 74.42% |
Interventions in business establishment procedures | |
| 92.74% |
| 35.76% |
| 86.91% |
| 88.08% |
| 79.95% |
| 85.48% |
| 91.86% |
| 75.87% |
| 76.16% |
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. |
© 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).
Share and Cite
Ismail Albalushi, K.; Naqshbandi, M.M. Factors Affecting Success and Survival of Small and Medium Enterprises in the Middle East. Knowledge 2022, 2, 525-538. https://doi.org/10.3390/knowledge2030031
Ismail Albalushi K, Naqshbandi MM. Factors Affecting Success and Survival of Small and Medium Enterprises in the Middle East. Knowledge. 2022; 2(3):525-538. https://doi.org/10.3390/knowledge2030031
Chicago/Turabian StyleIsmail Albalushi, Khalid, and M. Muzamil Naqshbandi. 2022. "Factors Affecting Success and Survival of Small and Medium Enterprises in the Middle East" Knowledge 2, no. 3: 525-538. https://doi.org/10.3390/knowledge2030031