Academic journal article Asian Social Science

The Public Business Support Services: Does It Really Works?

Academic journal article Asian Social Science

The Public Business Support Services: Does It Really Works?

Article excerpt

Abstract

The establishment of business entity, especially among Malays ethnic, experienced a rapid development since Malaysia has gained independence from British colonial in 1957. In 1970 the government has launched a New Economic Policy (1970-1990) which aimed to increase Malays ownership in economic activities without sidelining other races. However, at the end of the period, the targeted figure of 30% Bumiputera (indigenous) ownership is far from achieved. The government was alerted and has conducted a substantial program to overcome the problems. Thus, this study aimed to investigate the factors that hinder SMEs from using the services, hoping that the awareness is no more a key issue. This study is also to assess non-users perception of firms' performance in the absence of the government support services. The study used cross sectional data from database of national SME supervisory body. The respondents are Malays SMEs all over Malaysia.

Keywords: Malay, public business support services, SME and firm performance

1. Introduction

The establishment of business entity, especially among Malays experience rapid development since Malaysia has gained independence from British colonial in 1957. The government focuses on Malay entrepreneurs as one of the tools to stabilize the distribution of wealth among ethnic. The greatest impact on inequitable distribution of wealth witnessed a tragic incident in 1969 where the country has to pay a very high price when ethnic riot occurs. As a turning point, the government had come out with 20 years economic plan (1970-1990) which was called The New Economic Policy (NEP). It's objective was to eradicate poverty and redistribution of wealth among ethnics (Malaysia, 1971). So, to achieve the objective the government had encouraged Malays to venture into entrepreneurship activities. The government recognized and believed that entrepreneurship is one of the effective tools to achieve the objectives outlined in the New Economic Policy.

With the mission to sustain prosperity via fair economic distribution the government encouraged Malays to involve in the entrepreneurship activities. During NEP period a number of agencies were established to provide business support for the Malays. It is important to note that, the NEP has targeted by the end of NEP period 30% of national wealth goes to Malay (Malaysia, 1971). Since the beginning of NEP, the government had spent billions of Ringgit in providing supports for Malays and natives people covering various services. The supports begin from the business startup, up until business expansion and internationalization. However, at the end of the period, the targeted figure is far achieved. It is believed that the unsatisfactory achievement has to do with the role of business support services. Previous study shows that a significant number of Malays SMEs do not utilized the services. So, this study aimed to investigate the factors that hinder SMEs from using the services and to assess SMEs' perception on their performance in the absence of the government business support services.

2. Literature Review

This section presents the concept of the effectiveness of business support services by discussing how it was measured. Further discussion is based on the findings from previous studies on the impact of the external business support services on SMEs firms' performance.

2.1 The Effectiveness of the Business Support Services

In the study of business support, the effectiveness of the services is measured at two different stages. First, the measurement is made on the frequency of usage of the services as the Resource-based Theory suggested that more frequent usage has positive impact on the firms' performance. Second, the effectiveness is measured based on the direct impact on firms' performance.

2.2 Frequency of Usage

The measurement is based on the how frequent SMEs seek for advice from the agency. In the study conducted by Berry, Sweeting and Goto (2006) in UK, the study used scale from always being used to never being use in measuring the effectiveness of the services provided by a range of services suppliers. …

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