SME Export Performance in Indonesia After the Crisis

Abstract

Firms in export-oriented sectors with more exporters and more foreign investment, or firms with more access/use of credit, tend to export a higher share of their output, whether they are small or large. The latter points out that the benefits of size-neutral policies that improve the overall business and foreign investment climate and secure access to formal credit for all enterprises produce benefits for the entire economy. Small firms with higher use of machinery and higher use of domestic inputs displayed a higher likelihood to increase the share of their output exported. SMEs show rising productivity with access and use of appropriate production inputs. Decades of protective size-specific policies, such as the reservation scheme for SMEs still in place in Indonesia’s manufacturing may have distorted, more than supported, adoption of appropriate technologies among SMEs. These policies may need to be revisited and refocused on more size-neutral policies such as improved access to collateral or reduced cost of business registration and licensing. Copyright Springer 2006O240-development planning and policy: trade policy, O530-economywide country studies: Indonesia, O470-measurement of economic growth: aggregate productivity, O330-technological change: choices and consequences,

Determinants of small and medium enterprises performance in the Malaysian auto-parts industry

“…An inspection of the Mahalanobis distance values also indicates that there are no multivariate outliers among the independent variables for all the models since their values are not greater than or equal to the critical chi-square value of 18.47 at an alpha level of 0.001. Based on Table 4, the age variable is consistent with the expectation that the performance of the SMEs tends to improve with increased longevity as against the normal case in small firm studies (Wynarczyk and Watson, 2005;Wengel and Rodriguez, 2006). This finding is not surprising since, unlike other small business industries, the auto-parts making industry requires high skills, knowledge, and expertise in meeting tight specifications and quality set by the buyer(s) or auto-maker(s).…”

“…Wengel and Rodriguez's (2006) study on the export performance of Indonesian SMEs, among others, included firm size and age as well as foreign share in the capital structure of the firm as their explanatory variables. Sarder et al (1997) in their study on the performance of SMEs in Bangladesh used age of firm, management experience, initial investment, market competition, industry sector, and time elapsed after receiving financial support as moderating-independent variables.…”

“…With respect to age, some studies found a negative relationship between this variable and firm performance (Wynarczyk and Watson, 2005;Wengel and Rodriguez, 2006) because young firms are relatively easier than the older ones to achieve a proportionate increase in scale (Storey et al, 1987). It is also argued that young firms tend to grow rapidly because they have innovative ideas and dynamic management (Wijewardena and Tibbits, 1999).…”

“…Pertinent to Frgn (foreign equity participation), it is expected that this factor has a positive relationship with the performance of SMEs, concomitant with the arguments or empirical findings of Douma et al (2003) and Wengel and Rodriguez (2006). Based on a threshold used by OECD (1999), this paper considers that a particular SME has foreign equity participation when nonMalaysian residents have at least 10% ordinary shares or voting power in the firm.…”

Employment and SMEs during crises

“…As a result, SMEs may be more able to sustain their employment levels and thus counteract the negative effects of the crisis, helping to stabilize the economy. Indeed, there is robust empirical evidence showing that SMEs, and specifically export-oriented SMEs, are better able to adjust to crises (e.g., Sato 2000;Berry et al 2001;and Wengel and Rodriguez 2006 There are also several reasons to expect smaller firms to be more vulnerable to the negative effects of an economic crisis. On the one hand, SMEs may suffer disproportionately from economic downturns due to their limited financial resources and dependence on banks' lending, paying for such high interest rates (e.g.…”