Usage of Public Financial Support Services, Entrepreneurial Orientation and SMEs Performance

Abstract

SME has received much recognition as continue to be the backbone in the development and economic growth of a nation. Being the main players in economic activities, there were numbers of financial support made available by the government for SMEs. However, previous studies showed that the government business support services were not attractive to SMEs and perceived gave less impact on performance. Mixed results from empirical studies concerning the effectiveness of the services raise questions about the role of government business support services and SMEs characteristic on firms’ performance. To address this issue, based on the Resource Based View Theory this study empirically investigated the relationship between one of the support services dimensions, financial support services and firm performance. In addition, this study intended to investigate how the entrepreneurial orientation moderates the relationship between the utilisation of the financial support services and the firm’s performance. This study use Structural Equation Modelling to evaluate the impact of the financial support services on SME’s performance. The sample for this study involved the SMEs in Malaysia. The result indicates that financial support services significantly associated with the firms’ performance and entrepreneurial orientation failed to influence significantly the relationship between the usage of the services and the performance. The findings of this study could bring useful benefits for the government business support services providers to enhance further the quality of services and will provide an understanding of how effectively the characteristics of SMEs related to entrepreneurial orientation would help increase the effectiveness of the support services. To conclude, a number of suggestions were also made for service providers to assist in addressing the issue of effectiveness of the support services together with proposed future study.