Sustainable Approach towards Thai SMEs: The Effects of Country Philosophy of Sufficiency Economy and Government Support

Sustainable Approach towards Thai SMEs: The Effects of Country Philosophy of Sufficiency Economy and Government Support

Siriluck Thongpoon (Hatyai University, Thailand), Noor Hazlina Ahmad (Universiti Sains Malaysia, Malaysia) and Imran Mahmud (University Sains Malaysia, Malaysia & Daffodil International University, Bangladesh)
DOI: 10.4018/978-1-5225-2165-5.ch001
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This study examines issues surrounding the sustainability of SMEs in the context of Thailand. Sufficiency economy philosophy and government support are seen as important covariates that could foster sustainable performance of SMEs. A sample of 119 SME entrepreneurs in the South of Thailand participated in this study. Exploratory factor analysis and hierarchical multiple regression were conducted and the results demonstrated that some dimensions of sufficiency economy philosophy and government support are critical predictors of economic and social performance. Moreover, knowledge and morality are found to promote the principle of sufficiency economy philosophy, as such SME entrepreneurs should be cognizant of the potential effects of this philosophy. The appropriate practices can be equipped and nurtured through the values of sufficiency economy philosophy, which shed light on means to achieve firm sustainability.
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The recent rise in sustainable development has attracted the attention of scholars, policymakers, business practitioners, and the community alike. The interest in sustainability, especially within the commercial sphere, is not only the focus of developed nations but also of developing countries like Thailand. SMEs are explicitly viewed as key players in promoting sustainability of the society. The importance of SMEs in both developed and developing countries is widely scrutinized, especially due to the fact their composition is huge, they create employment to the society as well as viewed as a source of income generation to the economy of a country (Tambunan, 2008). Researcher also mentioned, SMEs act as providers to the much-needed inter-firm linkages in supporting large enterprises to ensure that they remain competitive in the market. In the context of Thailand, all in all, approximately 99% of all enterprises can be classified as SMEs. Given the significant contribution of SMEs to the economy and social-well being of the society, SMEs are deemed to be the main actor to promote the economic and social sustainability.

In fact, the World Bank referred to Thailand as the fastest growing economy during 1986-1996 (Warr, 2009). Some key facts of Thailand economy are shown in Table 1.

Table 1.
Key facts of Thailand
Population65 million
Literacy rate96%
Minimum wage300 baht per day
GDP (2014)373.3 Billion US dollar
Trade BalanceUS$ 24.6 billion
Current Account Balance (2014)US$ 14.2 billion
International ReservesUS$ 157.1 billion
Capacity Utilization60.48%
Manufacturing Production Index168.2
Consumer Price Index (May 2015)106.53
Corporate Income Tax10-20%
Withholding Tax0-15%
Value added Tax7%
Currency rate 1 US$33.55 baht

Source: Thailand Investment Review by Thailand Board of Investment (2015).

Key Terms in this Chapter

Common Method Variance: CMV is a bias or measurement error caused in self-reported data set.

Intensity of Usage of Government Support: Degree of utilization of government support.

Multicollinearity: Multicollinearity is an event in statistics where two or more constructs are strongly correlated.

Sustainable Performance: A strong financial performance by organization and its ability to contribute to social well-being.

Sufficiency Economy Philosophy: A belief on moderation, reasonableness, and self-immunity which will lead to a balanced and sustainable development of the economy and society.

SME: Enterprises which corresponds less than 250 employees and assets less than 200 million bahts (approx. 6,000,000 USD).

Entrepreneurship: Entrepreneurship is a process of identifying and initiating a business venture.

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