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Defining SMEs and Identifying their features

Governmental commission findings and research strategies have different attacks about the definition and the features of little and average concerns. Sing public presentation of SMEs Westhead & A ; Storey have mentioned “ the little house is non a scaled down ‘ version of a big house. In short, theories associating to SMEs must see the motives, restraints and uncertainnesss confronting smaller houses and acknowledge that these differ from those confronting big houses ” .

There are so many standards either qualitative or quantitative to make up one’s mind what organize an endeavor is. In instance of quantitative steps ; staffing degree, turnover and plus can be mentioned while others carry qualitative attack.

Not merely there is a big figure of chances sing the characteristics of SMEs but besides governmental point of views conduct a legion of SMEs ‘ definitions depending on the county being considered. For illustration the study which has been issued by Wiltshire Committee in Australia has shown this flexible definition of any SMEs ( Meredith, 1994 ) “ Small concern is one in which one or two individuals are required to do all of the critical determinations ( such as finance, accounting, forces, stock list, production, service, selling and merchandising determinations ) without the assistance of internal ( employed ) specializers and with proprietors merely holding specific cognition in one or two functional countries of direction. ”

United provinces pay more attending to the place of organisation within the overall market place. Harmonizing to United States Small Business Administration ( SBA ) SMEs have the undermentioned definition “ An SME shall be deemed to be one which is independently owned and operated and which is non dominant in its field of operation. ”

On the other manus the quantitative attitude has been emerged in United Kingdom, specifying an SME as: “ Having fewer than 50 employees and is non a subordinate of any other company. ”

Small and medium endeavors have their ain features and using large-scaled companies ‘ characteristics to SMEs is non suited.

The surveies which have done by Reynolds et al. , ( 1994 ) , Murphy ( 1996 ) , Bunker & A ; MacGregor ( 2000 ) show differences in direction manner between big concern and SMEs. These surveies have illustrated SMEs tend to hold a little direction squad instead than a group of people ( frequently prefer to hold one or two persons ) , they are purely monitored by proprietor of the house and they have small control over their environment and duties and the want they could be independent.

“ Differences between SMEs and larger houses are magnified even more when they move toward IT ( Bunker and MacGregor 2000 ) ” .

“ Khan and khan ( 1992 ) mentioned that SMEs prefer non to run complicated applications on their computing machines ” .

Harmonizing to a general point of position of literature, a sum-up of characteristics of SMEs has been reported by MacGregor and Vrazalic ( 2004 ) which is illustrated in Table. SMEs ‘ features can be categorized either internal or external. Internal features embrace direction, determination devising and planning procedures, and acquisition of resources on the other manus external features are associated to the market ( products/services and clients ) and external environment.

Idaho

Features of SMEs

Reported by

INT1

SMEs have little and centralised direction with a short scope position.

Reynolds et al.. ( 1994 )

Bunker & A ; MacGregor ( 2002 )

Welsh & A ; white ( 1981 )

INT2

SMEs have hapless direction accomplishments.

Blili & A ; Raymond ( 1993 )

INT3

SMEs have informal and unequal planning and record maintaining procedures.

Reynolds et al. , ( 1994 )

Tetteh & A ; Burn ( 2001 )

Miller & A ; Besser ( 2000 )

Rotch ( 1981 )

INT4

SMEs exhibit a strong desire for independency and avoid concern ventures which impinge on their independency.

Dennis ( 2000 )

Reynolds et al. , ( 1994 )

INT5

The SMEs proprietor ( s ) has/have a strong influence in the determination devising procedure

Reynolds et al. , ( 1994 )

Murphy ( 1996 ) Munker & A ; MacGregor ( 2000 )

INT6

SMEs proprietors frequently withhold information from co-workers.

Dennis ( 2000 )

INT7

The determination doing procedure in SMEs is intuitive, instead than bases on elaborate planning and thorough survey.

Reynolds et al.. ( 1994 )

Bunker & A ; MacGregor

( 2000 )

INT8

Invasion of household values and concerns in determination devising procedures.

Dennis ( 2000 )

Bunker & A ; MacGregor ( 2000 )

Idaho

Features of SMEs

Reported by

INT9

SMEs are more captive on bettering daily processs SMEs face troubles obtaining finance and other resources, and as a consequence have fewer resources.

MacGregor et al. , ( 1998 )

Cragg & A ; King ( 1993 )

Welsh & A ; White ( 1981 )

Gaskill & A ; Gibbs ( 1994 )

Reynolds et Al. ( 1994 )

Blili & A ; Raymond ( 1993 )

INT 10

SMEs are more loath to pass on information engineering and hence have limited usage of engineering.

Walczuch et Al. ( 2000 )

Dennis ( 2000 )

MacGregor & A ; Bunker ( 1996 )

Poon & A ; Swatman ( 1997 )

Abell & A ; Limm ( 1996 )

INT11

SMEs have a deficiency of proficient cognition and specialist staff and supply small IT preparation for staff.

Martin & A ; Matlay ( 2001 )

Cragg & A ; King ( 1993 )

Bunker & A ; MacGregor ( 2000 )

Reynolds et al. , ( 1994 )

Blili & A ; Raymond ( 1993 )

Table 1: Internal features of SMEs – categorized by MacGregor and Vrazalic ( 2004 )

Idaho

Features of SMEs

Reported by

EXT 1

SMEs have a narrow product/service scope.

Bunker & A ; MacGregor ( 2000 )

Reynolds et Al. ( 1994 )

EXT2

SMEs have a limited portion of the market ( frequently confined toward a niche market ) and hence to a great extent rely on few client.

Hadjimonolis ( 1999 )

Lawrence ( 1997 )

Quayle ( 2002 )

Reynolds et Al. ( 1994 )

EXT3

SMEs are merchandise oriented, while big concerns are more client oriented.

Reynolds et Al. ( 1994 )

Bunker & A ; MacGregor ( 2000 )

MacGregor et Al ( 1998 )

EXT4

SMEs are non interested in big portions of the market.

Reynolds et Al. ( 1994 )

MacGregor et Al. ( 1998 )

EXT5

SMEs are unable to vie with their larger opposite numbers.

Lawrence ( 1997 )

EXT6

SMEs have lower control over their external environment than larger concerns and hence face more uncertainness.

Westhead & A ; Storey ( 1996 )

Hill & A ; Stewart ( 2000 )

EXT7

SMEs face more hazards than big concerns because the failure rates of SMEs are higher.

Brigham & A ; Smith ( 1967 )

Delone ( 1988 )

Cochran ( 1981 )

Table 2: External features of SMEs – categorized by MacGregor and Vrazalic ( 2004 )

Obviously, the most important SMEs ‘ characteristic which clarifies boundary line between little concerns and their larger opposite number is “ uncertainness ” the feature which has been come up by Westhead & A ; Storey ( 1996 ) and Hill & A ; Stewart ( 2000 ) . It takes root in missing control over external environment and this characteristic shows differences between big endeavors and their little opposite numbers.

Electronic Commerce

As the term electronic commercialism is still an emerging construct, the definition varies between different contexts. Generally electronic commercialism refers to the replacing of physical economic procedures with electronic 1s and the creative activity of new theoretical accounts for coaction among merchandising spouses. Harmonizing to Tuunainen ( 1999 ) “ E-commerce consists of dealing oriented internet base maps ( e.g. online catalogs, buying and payment ) .For on-line retail merchandising, the term e-tailing is sometimes used. ”

There are a legion surveies sing E-commerce so there are so many definitions for E-commerce.Turban et Al. ( 2002 ) have expressed this definition as “ an emerging construct that describes the procedure of purchasing, selling or interchanging services and information via computing machine webs. ”

Cummingss and LeMaire ( 2005 ) described the significance of E-commerce as “ an online system that allows clients to execute minutess over Internet. ” This procedure consists of whole concern stairss from telling to bringing.

Raymond ( 2001 ) specified E-commerce as “ maps of information exchange and commercial dealing support that operate on telecommunications webs associating concern spouses ( typically clients and providers ) . ”

Another definition which has been mentioned by MacGregor and Vrazalic ( 2004 ) is one of which presented by Damanpour ( 2001 ) as “ any ‘net ‘ concern activity that transforms internal and external relationships to make value and exploit market chances driven by new regulations of the affiliated economic system. ”

Zwass ( 1996 ) identified another definition for E-commerce as “ sharing of concern information, keeping concern relationships and carry oning concern minutess by agencies of telecommunications webs ” .

An e-commerce and development study by the United Nations Conference on Trade and Development ( UNCTAD ) anticipated entire value of universe e-commerce in 2002 at about US $ 2.3 trillion, and it came to US $ 12.8 trillion by 2006 ( E-commerce and Development Report, 2002 ) so in the words of Kofi Annan, the former Secretary-General of the United Nations: “ E-commerce is one of the most seeable illustrations of the manner in which information and communicating engineerings ( ICT ) can lend to economic growing. It helps states better trade efficiency and facilitates the integrating of developing states into the planetary economic system. It allows concerns go more competitory. And it provides occupations, thereby making wealth ” ( E-commerce and Development Report, 2002 ) .

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