A Study on Factors Affecting the Performance of SMEs in Malaysia

Abstract

In Malaysia, despite SMEs’ have a significant contribution to the economy, they have not been given adequate attention as the various researchers have been biased towards larger and listed enterprises in Malaysia. So, this study aims to investigate the factors affecting the performance of SMEs in the manufacturing sector in Malaysia. The Contingency Theory developed by Fiedler (1964) was used to support this research. Based on the data collected from 300 SMEs in the Malaysian manufacturing sector, the results showed that there is a significant negative relationship between ineffective entrepreneurship as well as inappropriate human resource management (HRM) and the performance of SMEs. On the other hand, the results also proved that there is a significant positive relationship between the use of marketing information as well as the application of information technology and the performance of SMEs. In short, this study found out that the use of marketing information can influence the performance of SMEs at the highest.