Sustainable development is the demand of the hr for our state, SMEs are considered to be playing a important function in advancing the sustainability. This paper makes an effort to suggest a conceptual model of a sustainable public presentation of SMEs in India. The aim is to analyze the extent to which entrepreneurial competences, which are assumed to be formed by equal economic system of the state, could excite and heighten sustainable public presentation. Role of the authorities is besides considered as an of import external factor for making a sustainable concern atmosphere in the state.
Keywords: SMEs, sustainability, entrepreneurial competences, equal economic system, authorities support
The little and average endeavors ( SMEs ) are lending a batch to the economic growing of a state. In developing states, as some writers argue[ 1 ], the part of SMEs towards employment coevals is high because they tend to utilize more labour intensive production processes than big endeavors, hiking employment and taking to more just income distribution. In states like India where there is a batch of difference in income degrees and industrialisation is non unvarying, SMEs play a important function in employment coevals. They besides provide support chances through simple activities in agribusiness based economic systems, raising entrepreneurship and back up the edifice up of systemic productive capacities and the creative activity of resilient economic systems, through linkages with the big organisations.
The issues of sustainable development have attracted the attending of many bookmans, policymakers, concern practicians every bit good as the community likewise. This recent development in the involvement on sustainability, particularly within the commercial landscape, is non merely the focal point of the developed state, but besides the developing states like India. SMEs are claimed to be crisis daze absorbers ( Wiboonchutikula, 2002 ) that would move as buffer for a countryaa‚¬a„?s economic system at times when big organisations resort to drastic step of puting off workers during the unsmooth period of economic downswing. As such, advancing sustainable public presentation among SMEs is seen polar.
However, the part of the economic public presentation of SMEs is inconsistent and still less than Large Enterprises ( MSME, 2011 ) . The grounds may be because of SMEs are holding limited resources if compared to Large Enterprises. SMEs are known to confront assorted troubles and restraints, taking many to shut their concerns each twelvemonth ; peculiarly, within the early old ages of operation ( Taylor, 1999 ; Jeffoate, Chappell, and Feindt, 2002 ) . In India, despite assorted support mechanism made available to SMEs by the authorities, many still fail. It has been claimed that the failures were due to the deficiency of cognition, ability, experience, deficient capital, selling, information, and engineering among the enterprisers. These jobs have created major faltering blocks for SMEs to accomplish sustainable public presentation.
Surveies look intoing the success factors of SMEs suggest that SMEs owners/managers are the nucleus competency of the house ( Gibb, 2005 ) . Their actions and inactivities would act upon steadfast public presentation well. On the other manus, authorities support particularly in the development states, besides play an of import function in finding regulations and policies which could impact SMEs public presentation. Government support is perceived as an of import factor in foretelling steadfast public presentation ( Yusuf, 1995 ; Mohd Shariff, Peou, and Ali, 2010 ) .
A reappraisal of SMEs literature in the context of India suggests that empirical research look intoing the function of SMEs and factors taking to sustainable public presentation is instead light ( MSME, 2011 ) . This paper endeavours to stress on the function of entrepreneurial competences, which peculiarly derived from sufficiency economic system doctrine, every bit good as the chairing consequence of authorities support in developing sustainable public presentation of Indian SMEs. It is envisaged that the consequences of this survey will be good to many parties, including policy shapers, enterprisers, authorities and bureaus, venture capitalists, and academic bookmans.
Small and Medium Enterprises in India
The little and average endeavors ( SMEs ) sector contributes significantly to the fabrication end product, employment and exports of the state. It is estimated that in footings of value, the sector histories for about 45 per cent of the fabrication end product and 40 per cent of the entire exports of the state. The sector is estimated to use about 59 million individuals in over 26 million units throughout the state. Further, this sector has systematically registered a higher growing rate than the remainder of the industrial sector. There are over 6000 merchandises runing from traditional to hi-tech points, which are being manufactured by the SMEs in India. It is good known that the SME sector provides the maximal chances for both self-employment and occupations after agribusiness sector. Acknowledging the part and potency of the sector, the definitions and coverage of the Small Scale Industry ( SSI ) sector were broadened significantly under the Micro, Small and Medium Enterprises Development ( MSMED ) Act, 2006 which recognized the construct of aa‚¬A“enterpriseaa‚¬A? to include both fabrication and services sector besides, specifying the medium enterprises.
Performance of SMEs
The term SME is of comparatively recent beginning in the Indian context. SMEs were referred to as little graduated table industry or SSI. The SSI was officially created in the 1950s. Since 1954, the Government of India has consciously nurtured, promoted and developed SSIs through specific policies as a portion of the overall industrial development scheme[ 2 ]. The part of SMEs to the economic development of India is important. Their part in the entire corporate sector is as follows: 45 % of the entire volume of production, 85 % of employment, 40 % of the exports and 92 % in footings of endeavors. The SMEs contribute 8 % of India ‘s GDP. As per the Fourth All India Census of Small Scale Industries conducted in 2007, the SMEs have increased from about 80,000 units in the 1940s to about 26 million units. In the athleticss goods and garments sector their part to exports is every bit high as 90 % to 100 % .
They constitute 90 % of the industrial units in the state and besides lend to approximately 40 % of India ‘s exports[ 3 ]. In recent old ages, beyond the economic growing, there is a greater urgency for ‘inclusive growing ‘ in which SMEs are expected to play a critical function. The geographical and socio-cultural diverseness of India with 28 provinces and 16 national linguistic communications, coupled with important disparities in income, and co-existence of poorness and high richness make the SME sector more critical for India. Out of the 26 million units, 64 % are located in rural India ( Fourth All India Census of SSI, 2007 ) . Registration of SMEs has non been compulsory in the Indian context. The sector employs about 25 million individuals. About 10 % of this sector consists of women-owned endeavors. About 47 % of the entire SMEs were located in five provinces, with the staying 53 % being contributed to by 23 provinces. The function of SMEs in the context of balanced regional development and just distribution of income becomes relevant. The sector besides contributes to about 7 % of the GDP.
Though there were a assortment of endeavors runing in India, no individual definition of micro and little endeavors was available until the passage of the Micro, Small and Medium Enterprises Development Act ( MSMED ) in 2006
Definition of SMEs
SMEs are defined in different ways in different parts of the universe. Some define them in footings of assets, while others use employment, stockholder financess or gross revenues as standards. Some others use a combination of gross and employment as a intercrossed standard. The MSMED Act of 2006 defines them as:
Enterprises engaged in the production/manufacturing of goods for any industry ; and
Enterprises engaged in rendering/providing services.
Enterprises in the fabrication sector are defined in footings of investing in works and machinery ( excepting land and edifices ) and farther classified into:
Micro enterprises – investing up to Rs. 2.5 million i.e. up to Rs. 2.5 million ( about USD $ 60,000 ) ;
Small endeavors – investing between Rs. 2.5 million and Rs. 50 million ; and
Medium endeavor – investing between Rs. 50 million and Rs. 100 million.
Service Enterprises: defined in footings of their investing in equipment and farther classified into:
Micro Enterprises – Investing up to Rs. 1 million
Small Enterprises – Investing above Rs. 1 million & A ; up to Rs. 20 million
Medium Enterprises – Investing above Rs. 20 million but below Rs. 50 million. ( Development Commissioner MSME, 2009 )
2. Materials and Methods
2.1 The Sustainable Performance
Sustainable development has late been discussed as an influential construct for concern and policy. However, it has been sparse within the entrepreneurship literature ( Hall, Daneke, and Lenox, 2010 ) . There appears to be no individual set of sustainable public presentation measuring particularly within the SMEs literature. Previous survey suggests that the specific indexs for different concern sectors have to be defined individually, on a individual footing in order to reflect the particular concern features ( Azapagic, and Perdan, 2000 ) .
Although many surveies have reached to a consensus on using the satisfaction in the accomplishment of societal, environmental, and economic ends as public presentation measuring, it is hard to use environmental facet particularly in the beginning phase of concern development ( Schick, Marxen, and Freimann, 2002 ) due to the assorted restraints posed by the internal and external factors on the entrepreneurial ventures. Having noted that, Kantabutra ( 2007 ) has highlighted that concern will be sustainable when it meets the conditions of presenting strong fiscal public presentation, holding ability to digest economic and societal troubles over clip, and being able to keep a leading place. Therefore, the sustainable public presentation in this survey is defined as the extent to which the enterpriser owner/manager can prolong the economic and societal public presentation in the long tally.
Besides it has been highlighted that for public presentation measuring, multiple dimensions of public presentation is the most appropriate attack to mensurate steadfast public presentation ( Murphy, Trailer, and Hill, 1996 ) . In order to capture steadfast public presentation, fiscal steps, on the one manus, represent the economic public presentation which consists of hard currency flow, profitableness, liquidness, solvency, and market portion. On the other manus, non-financial steps represent societal public presentation which consists of employee satisfaction, client satisfaction, owner/ complacency, relation with providers, and relation with community. In add-on, to mensurate the little house public presentation, the subjective measuring is appropriate ( Ahmad, 2007 ) .
2.2 The Entrepreneurial Competencies and Firm Performance
Competency consists of the underlying features such as generic and specific cognition, motivations, traits, self-images, societal functions, and accomplishments which consequences in venture birth, endurance, and/or growing ( Bird, 1995 ) . The competence attack allows research workers to analyze the complex, multi-level, multi-disciplinary research. There are some empirical surveies have shown that entrepreneurial competences are non merely increase competitory advantages ; they are predicted to act upon steadfast public presentation ( Man, Lau, and Chan, 2002 ; Ahmad, 2007 ; Ahmad et al. , 2010 ) . Importantly, it is noteworthy that the entrepreneurial competences can be discernible and mensurable. These competences are learnable, even in maturity. The list of entrepreneurial competences is hence developed based on the old literatures ( Man, Lau, and Chan, 2002 ; Ahmad, 2007 ; Ahmad et al. , 2010 ) . It consists of chance, relationship, conceptual, forming, strategic, committedness, acquisition, and personal competences.
2.3 The Moderating Effects of Government Support on Firm Performance
North ( 1990 ) defines establishments as the regulations of the game in a society and organisations are the participants. He suggests that institutional models interact with organisations by signaling which picks are acceptable and bearable. So, establishments help to cut down uncertainness for organisations. Since the institutional theory provides meaningful attack, it has late been employed into the entrepreneurship research. Mohd Shariff, Peou, and Ali ( 2010 ) point out that authoritiess can better chances available to entrepreneurs every bit good as strengthen the cognitive environment by offering assorted supports, therefore, increasing the ability of enterprisers to carry on concerns.
Following that statement, authorities is seen as a critical factor of concern success ( Hall, Daneke, and Lenox, 2010 ) . Government provides assorted agencies to back up concern activities. Even though authorities support is carried out by legion bureaus through assorted plans, it is still limited comparing to the high demand on the portion of SMEs. This survey seeks to analyze the perceptual experience of SMEs enterprisers in footings of the utility of the authorities support made available to them. Government support in this survey is expected to better the magnitude of the relationship between entrepreneurial competences and sustainable public presentation.
3. Consequences and Discussion
Based on old literature and the call to airt the focal point on the part and ability of enterpriser owners/managers in bring forthing successful concern public presentation, a theoretical model is advanced to contend the nexus entrepreneurial competences, their ancestor, the chairing consequence of authorities support, and sustainable public presentation of SMEs. Specifically, the propositions are put away as follows ;
Proposition 1: Higher degree of entrepreneurial competences will be associated with greater sustainable public presentation among SMEs in India
Proposition 2: The utility of authorities support will significantly chair the relationship between entrepreneurial competences and sustainable public presentation of SMEs in India.
Figure 1: Conceptual Model
Sustainable public presentation
– Economic facets
– Sociable facets
Sufficiency Economy Philosophy
Based on the model, the findings are expected to help to relevant parties. First, SMEs owners/managers can be enlightened of the critical competence countries that are needed to prolong concern public presentation in the long tally. Second, authorities and its bureaus including the policy shapers can supply the appropriate policy to advance the good concern environment in peculiar for the SMEs. Third, the bankers and venture capitalists can incorporate entrepreneurial competences in the assessment tool. This may assist them in sing and bring forthing loan/fund to the competent enterpriser. Last but non least, the bookmans may farther dig into the sufficiency economic system doctrine, particularly as of import values that would finally find steadfast public presentation. This alternate attack may either straight or indirectly helps in advancing concern sustainability in the state.
The thesis of this paper is that SMEs enterprisers are the cardinal participants in guaranting the sustainable public presentation of SMEs in India. Their embedded abilities will be reflected through competences. These competences that were constructing from the value of sufficiency economic system doctrine would finally take to sustainable public presentation. Entrepreneurs, therefore, have to fit themselves with the relevant competences over clip. Government necessarily is besides an of import institutional participant to back up the SMEs in accomplishing sustainable public presentation.