Access to Finance: Exploring Barriers to Entrepreneurship Development in SMEs

Access to Finance: Exploring Barriers to Entrepreneurship Development in SMEs

Shazida Jan Mohd Khan (Universiti Utara Malaysia, Malaysia) and Abdul Rahim Anuar (Universiti Utara Malaysia, Malaysia)
DOI: 10.4018/978-1-5225-2835-7.ch006


Over the years, Malaysian government has attributes to a number of supports programs to the small and medium enterprises (SMEs) sector. These includes the involvement of several government agencies, at both the federal and state levels, providing variety of programs to SMEs sector in achieving sustainable levels of growth and development. A well-developed financial infrastructure that is able to meet the diverse financing needs of SMEs is essential to support the competitiveness and continuous growth of SMEs.
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Entrepreneurship plays a crucial role in triggering economy development which can be relates to the introduction of new product or new method of production, opening of a new market or finding of the new inputs supply or even opening a new organization. There are three attributes that consistently associated to entrepreneur behavior (Brockhaus, 1982): the need of achievement, the internal locus of control and a risk-taking propensity. Entrepreneurship is also believed to have culturally embedded phenomenon (Morris & Schindehutte, 2005).

The term SMEs is an acronym for “small and medium scale enterprises”. They are firms or businesses arising as a result of entrepreneurial activities of individuals. Several definitions and meanings of SMEs exist due to their global diversity and characteristics (Darren & Conrad 2009). SMEs also can be defined according to industry to industry, county to country, size to size and number of employee to number of employee as to reflect industry, country, size and employment differences accurately. The following discussion will further define SMEs according to Malaysia context based on employment, number of employees, size, industry, country, asset value etc. Even though SME and entrepreneurship is used interchangeably both concepts may differ considerably (Osai & Lucky, 2012).

Table 1.
Differences Between Entrepreneurship and SME
DefinitionProcess where an individual discovers,Firms or business ventures evaluates, and exploits opportunities manage by individuals independently owners
SizeLarge, Medium or SmallSmall and Medium only
Number of People Involvedsmall to large Smallsmall to large Small
PurposeTo discover, innovate and establishTo produce, buy and sell
Degree of RiskVariesLower
SectorsPrivate, government and not-for-profitPrivate sector only
Key AttributesHigh need for: achievement; internal locus of Control; creativity and innovation; growthOrganizational skills to manage efficiently, little innovation, moderate growth, moderate need for Achievement
Smooth FocusHighVaries

Source: Adapted from Osai & Lucky, 2012, p. 350

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