Leader Member Exchange, Nepotism, and Employee Loyalty as the Determinants of Organizational Sustainability in Small and Medium Enterprises in India

1. Introduction

Micro, small, and medium enterprises (MSMEs) have been experiencing dramatic changes in response to the challenges of globalization (Patnaik et al., 2016). After decades of ‘controlled’ industrialization, safeguarding infant industries, and adopting an import-substitution strategy, the small business sector was forced to confront the globalization imperatives in 1991 as a result of economic changes (Kaur, 2017; Hussein et al., 2019) MSMEs have been undergoing significant changes all around the world in response to the many demands of globalization (Ghatak, 2010). The new policy framework substantiates this fundamental shift in focus by placing a greater emphasis on external orientation, domestic business, competitiveness, leadership, employee commitment, and networking within and beyond (Singh and Wasdani, 2016). MSMEs are the engine of India's economic growth, accounting for roughly 30% of the country's gross domestic product (Boateng et al., 2019). These small businesses also play an important role in expanding job possibilities, as they employ about 110 million people across the country. Furthermore, they operate in rural India for more than half of their operations in India (Zanjurne, 2018). To boost and facilitate this industry, the Indian government has implemented several policy changes and programmes. According to the amended criterion, as established by Section 7 of the MSME Development Act applicable w.e.f 1^st June 2020, SMEs are defined as businesses with a turnover of less than INR 50 crore(US$ 0.6 million)and an investment of less than INR 10 crore(US$ 1.4 million)under the MSME Development Act. According to MSME Development Act, SMEs are under the domain of the manufacturing service sector based on their investment.

Source: https://www.ibef.org/industry/msme.aspx