Growth and Development of Small and Medium Enterprises

Question: Discuss about the Growth and Development of Small and Medium Enterprises. Answer: Introduction Background Small and Medium Enterprises also known as SMEs contribute about 99.7 percent of the global business enterprises(Fayolle, 2007). Since they are very important in industrial and economic development of most countries, proper policy mechanism need to be developed to facilitate their growth. Most of the SMEs in order to remain competitive employ the use of technology to give them a competitive advantage. The use of technology improves not only on the types of products produced by SMEs, but also on the services they offer; it also reduces the cost of production by enhancing the efficiency of production material use; use of conventionally cheaper production materials and savings on energy use during production(Hakikur, 2011). Problem statement Even with the advancement in technology, most SMEs have not taken full advantage of it for their growth and development(Conference, 2004). This might be due to lack of innovativeness or lack of information about how they can integrate technological use in their operations to enhance their productivity. This limits their ability to compete effectively in the industry. For example, in Australia, about 25 percent of small enterprises and 56 percent of medium enterprises, make use of internet for e-commerce(Gale, 2005). Businesses constantly need to be innovative in order to grow and develop. AsTucker ( 2008) argued, innovation is the best way for stimulating growth in a firm. In order for businesses to develop, they have to choose an innovative approach which will give them a competitive advantage in the business industry. The purpose of this study will be to establish the influence of innovation on the growth and development of SMEs in Australia. Main Objectives The main objective is to investigate how innovation influences the growth of SMEs. Specific Objectives To determine how technological innovation practice influences the growth of SMEsTo investigate the influence of product and service innovations on the growth of SMEsTo establish how process innovation might affect the growth of SMEs. Research questions How does the technological innovations impact on the growth of SMEs in Australia? How does product innovation influence the growth of SMEs? Does process innovation influence the growth of SMEs? Justification This study is important because the use of technology and innovations has a huge impact on the growth and development of the economy(Lloyd-Reason Sear, 2007). Low level of technological use can reduce the growth of SMEs and consequently reduce economic growth, while a high level of technological use can enhance the growth and development of SMEs, and consequently enhance economic growth(Vyas, 2014). Therefore, there is a need to understand the influence of innovation and technological use by SMEs Literature Review Most countries view SMEs as viable options to enhance the growth and development of their economies; and Australia is no exception. In Australia, SMEs are very significant for economic growth and development. For example, SMEs contribute about 99.7 percent of the non-agricultural businesses in the private sector and employ about 73.8 percent of the non-agricultural workforce in the private sector(Hayes, 2009). In Australia, 52.3 percent of the gross domestic product in the industry is produced by the SMEs and about 51 percent of the total revenue from exports. The future of the Australias economy depends on these enterprises. Given their small and limited sizes, they are very flexible and with the use of technological advancement they can be very resourceful in economic growth and development(Lloyd-Reason Sear, 2007). Methodology This study will be a cross sectional descriptive survey. A sample of 9 manufacturing business in Australia will be selected. Stratified random sampling and purposive sampling techniques will be used in getting a sample of 46 respondents. The study population consisting of 9 manufacturing businesses, will be organized into three strata: involved in innovation related activities. The strata will be: RD, Manufacturing, and Sales and Marketing in the businesses. Data Collection The data will be collected using a structured questionnaire. It will first be piloted to six businesses in different localities which are not part of the targeted respondents. The validity of the instrument will be tested using expert opinion while its reliability will be tested using half-split method. The data will be analyzed using descriptive statistics with the use of Statistical Package for Social Sciences V.2. A sampling Frame will be obtained by the assistance from local government offices. Measurement of Variables Technological innovation This variable will be measured by modification and adoption of new technological information, access and skills. The use of technological networks, computers, and ICT will be rated on a scale of 1-10. Product Innovation This will be measured by introducing new products, and enhancing the functionality and characteristics of the existing products. Process Innovation This will be measure by analyzing the extent of changes in the techniques used, equipment and software. Growth of SMEs This will be measure by the increase in the number of employees, customers and profitability. Expected Research Findings The expected results from this research are that, the SMEs that employ the use of technology and innovation in their businesses, are more successful than those who do not. This will depict a situation whereby the use of technology is seen to impact positively to the growth and development of the SMEs. It is expected that this positive growth of the SMEs will impact positively to the national economy of Australia. It is also expected that some SMEs are reluctant to use technology in their operations because they feel more secure using the old outdated methods, and think that the technological advancements might be risky to their businesses. Therefore, not all SMEs are expected to employ technology and innovation in their businesses; even though they know that it might be beneficial. Some of the challenges that are expected form the research are that, some of the respondents might be unwilling to answer the questionnaires, or disclose some information that they think is top-secret in their business; some might also give misleading information. However, in spite of this challenges, it is expected that the study will be successful. References Conference, I.R.M.A.I. (2004) Innovations through Information Technology: 2004 Information Resources Management Association International Conference, New Orleans, Louisiana, USA, May 23-26, 2004. Idea Group Inc (IGI). Fayolle, A. (2007) Handbook of Research in Entrepreneurship Education: A general perspective. Edward Elgar Publishing. Gale, T. (2005) Small Business Sourcebook: General small business topicsà ¢Ã¢â€š ¬Ã‚ ¯; General small business resources (includes State and Federal sections). Thomson/Gale. Hakikur, R. (2011) SMEs and Open Innovation: Global Cases and Initiatives: Global Cases and Initiatives. IGI Global. Hayes, G. (2009) A Practical Guide to Business Valuations for SMEs. CCH Australia Limited. Lloyd-Reason, L. and Sear, L. (2007) Trading Places--SMEs in the Global Economy: A Critical Research Handbook. Edward Elgar Publishing. Tucker, R.B. (2008) Driving Growth Through Innovation: How Leading Firms Are Transforming Their Futures. Berrett-Koehler Publishers. Vyas, V. (2014) Low-Cost, Low-Tech Innovation: New Product Development in the Food Industry. Routledge.