Research Background
Despite the fact that Saudi Arabia has a favorable climate for business ventures, the share of the small and medium businesses (SME) in the Saudi economy has not been particularly large (Zamberi Ahmad 218). SMEs play a pivotal role in any state’s economy as they provide a variety of workplaces for local communities and add value by pioneering innovative spheres of activity (Wonglimpiyarat 295). Due to their flexibility and adaptability to change, SMEs act as a supporting chain in the network of domestic and international trade, which reinforces the resilience of the economy. Thus, their development is the key to national prosperity.
There is a variety of factors influencing SME growth and quantity many of which stem from the business environment created under the influence of state and other business. As such, Doh and Kim note that the level of governmental support for SMEs has a major influence on the sustainability of small and medium business ventures (1557). On the other hand, Wonglimpiyarat argues that the experience of developing countries such as China demonstrates the insufficiency of governmental support as a measure to sustain the growth and development of SMEs (295). In addition to that, the state’s interference in the economy and trade could also be an important factor (Jenna and Baharudin 69-70).
A recent study on 177 Saudi Arabia SMEs demonstrated that among the challenges facing small businesses is the presence of bureaucracy, lack of credit opportunities, and business environment constraints (Zamberi 217). Despite the fact that the problems of SMEs are well-researched on the global and local levels, Riyadh’s business climate and SME factors have been largely understudied. Zamberi notes that their study needs additional research follow-up data to strengthen the evidence they received (230-231). Therefore, apart from practical relevance, the study of factors affecting Riyadh’s SME’s success has vast theoretical underpinnings.
Research Statement
Aim
The research undertakes to explore the perceptions of local Riyadh SME owners and executives to capture the perceived factors that hinder their development. The previous research did a broad overview of small business challenges in Saudi Arabia, yet, the percentage of Riyadh SMEs in the sample was relatively small, which substantiates further, more focused study.
Objectives
- Uncover major factors that affect SME success in Riyadh
- Determine the relative weight of each factor in the eyes of entrepreneurs
- Establish a preliminary action plan on how the situation could be improved
Research Question
In light of present and past research in the sphere, there following questions have been formulated:
- What are the major factors affecting SME success in Riyadh?
- Which factors are the most influential for small and medium business owners?
- What actions could be performed to ameliorate the situation?
Study Data
The study data will include primary and secondary sources of information. Secondary sources will be used to substantiate the research, ensure its groundedness in theory and cohesiveness with prior studies. In addition, the findings of scholars worldwide will be used to craft an appropriate methodological basis for the study. Primary data will be used for exploring the topic of SMEs in Riyadh. It will be collected from business owners and executives and analyzed qualitatively to achieve the study aims and answer research questions.
Research Hypothesis
Based on the research results obtained by Zamberi, the first hypothesis will be as follows:
- H1:The major barrier towards SME success in Riyadh is a challenging procedure of receiving financial support
- Sub-hypothesis 1: there is a bureaucratic mechanism that diverts business owners from attempting to receive financial support
The second hypothesis is based on the premise that the credit options in Saudi Arabia for small and medium businesses are limited (Zamberi 295).
- H2: There is insufficient flexibility of credit policy established in Saudi banks, which discourages the establishment of new small and medium enterprises.
- Sub-H2: Owners and executives believe that credit should be given to SMEs at lower rates
- Sub-H2: Owners and executives believe that credit options should be extended to a longer period.
Research Methodology
Quantitative research will be selected as the main study design. Since the research aims are to explore the factors that hinder SME success in Riyadh, assess and rank their importance, the quantitative methodology will assist in deep and thorough analysis. The quantitative study also allows for capturing individual perceptions to create a more detailed profile of a problem.
Data Collection
Under such a design questionnaire will be chosen as the main data collection method. A carefully designed questionnaire with a Likert scale will allow for narrowing down the factors that have the most influence on SME success. To establish the face validity of the designed tool, a consultation with a research assistant and a professor will be held. This measure will help assess the questionnaire on the subject of its accuracy in gathering the required data (Bryman and Bell 170). The reliability will be guaranteed by ensuring the tool will be administered at least two times thus testing its stability. To account for internal reliability, Cronbach’s alpha will be calculated as it captures the consistency of measurements on separate indicators.
The sample will consist of 100 top managers or owners of SMEs in Riyadh. The size of the sample appears to be realistic due to the limited resources of the research authors. It also seems sufficient to allow for comparison and evaluation of the most influential factor affecting SME success. The participants will be approached by email with an invitation to take part in an anonymous survey. No personal details will be gathered to control for objectivity and ethical standards of research. Non-probability sampling technique will be employed as the study requires participants to occupy a specific position within an organization. The timeframe for the study will be three months, two of which will be allocated to data collection as a gathering of participants may be challenging due to the tight schedule of the latter. As for the place, the questionnaire will be delivered online, so no physical presence will be required.
Data Analysis
Analyzing data gathered from a large number of participants may benefit from the utilization of computer-assisted tools such as SPSS statistics by IBM. It provides a wide array of measurements and data evaluation mechanisms, as well as user, interfaces for navigation. Descriptive statistics such as mean, median, and standard deviation will be used to capture the frequency of certain answers. Due to the hypothesis-driven approach and the existence of knowledge of the SME factors in Saudi Arabia, a deductive approach will be chosen for information interpretation.
Possible Limitations
Due to the peculiarities of the chosen data collection tool, some factors of SME success may elude capturing. To control for that issue, open-ended items will be added to a survey so that participants may write in factors they did not find among the choices given. This will benefit the breadth of research. Generalizability can also be undermined by the peculiarity of the sample location. Yet, the study results will be representative of a particular region of Saudi Arabia, which allows for adding theoretical value to the field.
Works Cited
Bryman, Alan, and Emma Bell. Business Research Methods. 4th ed., Oxford University Press, 2015.
Doh, Soogwan, and Byungkyu Kim. “Government Support for SME Innovations in the Regional Industries: The Case of Government Financial Support Program in South Korea.” Research Policy, vol. 43, no. 9, Nov. 2014, pp. 1557–69.
Jebna, Abdul Karim Kanaan, and Ahmad Suhaimi Baharudin. “Factors Affecting Small and Medium Enterprises Success: An Exploratory Study.” Jurnal Teknologi, vol. 64, no. 3, Oct. 2013, pp. 69–72.
Wonglimpiyarat, Jarunee. “Challenges of SMEs Innovation and Entrepreneurial Financing.” World Journal of Entrepreneurship, Management and Sustainable Development, vol. 11, no. 4, Sept. 2015, pp. 295–311.
Zamberi Ahmad, Syed. “Micro, Small and Medium‐sized Enterprises Development in the Kingdom of Saudi Arabia: Problems and Constraints.” World Journal of Entrepreneurship, Management and Sustainable Development, vol. 8, no. 4, Apr. 2012, pp. 217–32.