Scholarly article on topic 'A Breakout Strategy Model of Malay (Malaysian Indigenous) Micro-entrepreneurs'

A Breakout Strategy Model of Malay (Malaysian Indigenous) Micro-entrepreneurs Academic research paper on "Economics and business"

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Abstract of research paper on Economics and business, author of scientific article — Abu Bakar Sedek Abdul Jamak, Razol Mahari Mohd Ali, Zulkipli Ghazali

Abstract The paper seeks to explore why most Malay micro-entrepreneurs still lag behind in entrepreneurship as compared to other races, determine what needs to be rectified and outline the skills sets that the micro-entrepreneurs need to become successful and break- out into larger enterprise. This paper proposes a breakout model approach that can serve as a basis to identify critical success factors in developing tools to assist micro business owners. This is the results of an extensive review of literature concerning lack of success among micro entrepreneurs and how this can be preceded the conceptualization of a Breakout model. Lastly, once in the business, the micro-enterprises need to overcome certain negative influences (disablers) and how certain positive influences (enablers) may help them succeed to stay competitive and sustainable.

Academic research paper on topic "A Breakout Strategy Model of Malay (Malaysian Indigenous) Micro-entrepreneurs"

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Social and Behavioral Sciences

ELSEVIER Procedia - Social and Behavioral Sciences 109 (2014) 572 - 583 _

2nd World Conference On Business, Economics And Management - WCBEM 2013

A Breakout Strategy Model of Malay (Malaysian Indigenous)


Abu Bakar Sedek Abdul Jamaka*, Razol Mahari Mohd Alib, Zulkipli Ghazalic

aDepartment of Management & Humanities, Universiti Teknologi PETRONAS,Bandar Sri Iskandar, 31750 Perak, Malaysia

bCentre for Languages & Malaysian Studies,Universiti Tun Abdul Razak,50100 Kuala Lumpur, Malaysia c Department of Management & Humanities, Universiti Teknologi PETRONAS,Bandar Sri Iskandar, 31750 Perak, Malaysia


The paper seeks to explore why most Malay micro-entrepreneurs still lag behind in entrepreneurship as compared to other races, determine what needs to be rectified and outline the skills sets that the micro-entrepreneurs need to become successful and breakout into larger enterprise. This paper proposes a breakout model approach that can serve as a basis to identify critical success factors in developing tools to assist micro business owners. This is the results of an extensive review of literature concerning lack of success among micro entrepreneurs and how this can be preceded the conceptualization of a Breakout model. Lastly, once in the business, the micro-enterprises need to overcome certain negative influences (disablers) and how certain positive influences (enablers) may help them succeed to stay competitive and sustainable.

© 2014 The Authors. Published by Elsevier Ltd.

Selection and peer review under responsibility of Organizing Committee of BEM 2013. Keywords: Micro-entrepreneurs, Malays, entrepreneurship, Break-out strategy;

1. Introduction

This paper is about the issues and challenges faced by the Government of Malaysia in developing and transforming the Malay ethnic community to improve their standard of living and reduce the income gap among micro-enterprises (MEs) of three major ethnic groups that are Malay, Chinese and Indians.

Despite the Government's concerted effort and initiatives, Malay entrepreneurship is still far behind. Even though the Government has been successful in helping more Malays to become entrepreneurs, the numbers are still small compared to the Chinese entrepreneurs and their sustainability and competitiveness are well below that of other races. Furthermore, the objective of achieving a thirty per cent (30%) Malay corporate equity share within the economy has yet to materialize (MTR 9MP, 2008). So why is it that the Malays are still far away from the 30 per cent objective? Why cannot the Malays develop entrepreneurially to be at least at par with the Chinese entrepreneurs or at least reduce the gap? Are the Malays not interested in pursuing business enterprises? Is it true that the Malays are incompetent or lazy, as some accused them to be (Wheeler, 1929; Mahathir, 1970).

* Corresponding Author: Abu Bakar Sedek Abdul Jamak. Tel.: +605-3687764 E-mail address:

1877-0428 © 2014 The Authors. Published by Elsevier Ltd.

Selection and peer review under responsibility of Organizing Committee of BEM 2013. doi:10.1016/j.sbspro.2013.12.509

Micro-enterprises (MEs) are the backbone for most countries in the world including Malaysia (The Star, 27 March 2009) as evidence by Table 1, nearly 80 per cent of total establishment of companies in Malaysia are micro-enterprises. Micro and small enterprises have been recognized as a major source of employment and income in many of the Third World countries (Mead & Liedholm, 1998). The Inter-American Development Bank (1997) reported that MEs make a major contribution to aggregate employment, production and national income in Latin America and the Caribbean. MEs provide income and employment for a significant number of workers in rural and urban areas through the production of basic goods and services such as the making traditional foods, tailors, barbers and hawkers for the need of rapidly growing populations. Micro-enterprises are also an important vehicle to escape poverty through market-driven, productive activities for low-income people especially among Malays.

Table 1: Total establishment of companies in Malaysia: 552,849

Size No. of companies Percentage

Large 4,542 0.8%

Medium 12,694 2.3%

Small 100,561 18.2%

Micro 435,052 78.7%

Sources: Census of Establishments & Enterprises 2005, Department of Statistics, Malaysia

Data shows that the Malays' household income in 2009 was RM2, 531 (about US$844) - which was still lower than the national median of RM2, 830 (about US$944). Statistically, the Malays represent 64.9 per cent of the total household but make up about 74.7 per cent of the total household with income below RM2, 000 (US$667). Additionally, Malay equity stood at 21.9 per cent as of 2009.

The government has allocated RM1 billion (US$0.34 billion) this year (2012) to improve participation and equity of Malay entrepreneurs in the economy. Malaysia's Rural and Regional Development Minister Datuk Seri Mohd Shafie Apdal said of the 800,000 small and medium companies nationwide, only 200,000 are owned by the Malays (The Edge, Saturday 28 January 2012). He further stated that "of the 200,000, about 88% are micro companies making less than RM250, 000 (US$84,334) per year". The minister concluded that this figures show that there is a significant gap between Malay entrepreneurs and other races and that more efforts must be done to narrow the gap.

This paper is motivated by Malaysia's aspiration to become a High Income Nation by 2020. In order to help achieve this vision, MME's must progress by leaps and bounds. Therefore this paper is to present the factors that have contributed to the weak position of Malays in the overall economic sector and to probe further what can be done to improve the situation and to ensure MMEs will not be left behind in the march towards achieving Vision 2020.

This study presents the results of a review of the literature concerning a lack of success among micro entrepreneurs and how this can be averted with the conceptualization of micro-enterprise success model as shown in figure 1.

2. Problem Statements

Even though the Government put more effort and initiatives, Malay entrepreneurship are still small in number as compared to the Chinese entrepreneurs. And in terms of the sustainability and competitiveness of the MMEs are well below those of other races. Furthermore, the objective of achieving a thirty (30) per cent Malay corporate equity share within the economy has yet to materialize (MTR 9MP, 2008).

One of the challenges for any micro business is growth. According to Mead (1994; 1999), most enterprises that start small subsequently stay small and Mead estimated over a time span of at least five years fewer than 20% of those with four or less workers grew at all in Dominican Republic, Botswana, Malawi, Swaziland, Kenya and Zimbabwe. A previous study by Liedholm and Mead (1987:67) in Bangladesh, Sierra Leone, Jamaica, Honduras, Thailand and Egypt found that in the segment of MEs, only 1% graduated to the next size category of more than 10 workers. The result is the same for Botswana, Kenya, Malawi, Swaziland and Zimbabwe: just 1% of the MEs that started with 1 to 4 workers employed 10 or more workers in the long run (Mead, 1994). Similarly from other studies in 2007, there were approximately 637,100 new businesses opened while 560,300 closed and another 28,322 declared bankruptcy. Survival rates for new businesses are staggering with reported numbers showing two-thirds of new firms survive for two years while 44% survive for up to 4 years and only 31% survive for up to 7 years (U.S. Small Business Administration Office of Advocacy as cited in SCORE, 2008). As has been shown, many studies have documented the high failure rate of entrepreneurship.

3. Objectives

This paper attempts to fill in more gaps in the existing literature, specifically in Malaysia, by focusing on the main aspects that will be looked into both internally and externally. Specifically, this research has the following objectives:

• To identify the factors influencing the success of MMEs.

• To investigate the key factors that rejuvenated MMEs into successful businesses (graduated into SME).

• To identify key factors contributing to the failures of MMEs.

• To develop a model of a "Break Out Strategy" for MMEs.

4. The Micro-Enterprises (MEs)

Small medium enterprises (SMEs) consist of three different categories of enterprises. The definition of each category is based on its size, turnover and activities (National SME Development Council of Malaysia). Microenterprise is defined by yearly sales turnover of less than RM250, 000 or fewer than five full-time employees. Like in any developing countries, MEs have developed as a means to eradicate poverty and particularly in generating income to supplement household income.

MEs play a vital role in developing the Malaysian economy. A sizeable 99.2% or 548,267 of Malaysian business establishments are made up of micro, small, medium enterprises (MSMEs), of which 80% are micro enterprises (Table 1). The World Bank claims that one third and three quarters of total employment in most developing countries comes from informal MEs sector (Webster & Fidler, 1996).

5. A Malay Micro-Entrepreneur's Success Model

This section will present a comprehensive look at the elements a successful MME should possess from its inception through its operation. This section also discusses the success, disablers and enablers of an MME.

5.1 Drivers for starting up a micro business

This subsection highlights the elements that a successful MME should have before the enterprise is established. These elements will drive the entrepreneur to see his or her business venture goes all the way to the pinnacle of success.

5.11 Set out clear objectives

Setting clear objectives involved achievement motives, independent motives and economics necessity, which influenced the business profitability (Brockhaus and Horwitz, 1986). Entrepreneurs whose objectives are to be

established and to expand their enterprises will be motivated to perform better thus resulting in higher profit and profit margin in their business (Storey, 1994). Entrepreneurs could overcome the structural barriers when they have strong objectives to achieve high profitability (Lerner et al., 1997). Other studies found that personal objectives also act as motivation to the entrepreneur to work harder in their business. The entrepreneurs believe that they will earn more money after they attain the goal and success is measured of these objectives by the level of achievement (Kuratko et al., 1997). A number of studies have found that the objectives (motivations and goals) are important factors to determine the success or failure of a business venture (Borooah and Hart, 1999; Brockhaus, 1980).

5.12 Human capital

Human capital has a direct and positive relationship with business profitability. Human capitals involved education level, previous experience in doing business and business skills. Earlier research by Cooper (1981) has shown that previous experience and education have an influence on the business profitability. Some other researchers have also shown that the educations for entrepreneurs were related to the company's return (Box,White, and Barr 1993; Brush and Hisrich 1991).

Charney and Libecap (2000) also found that entrepreneurship education produces self-sufficient enterprising individuals. Furthermore, they found that entrepreneurship education increases the formation of new ventures, the likelihood of self-employment, the likelihood of developing new products, and the likelihood of self-employed graduates owning a high-technology business. Also, the study revealed that entrepreneurship education of employee increases the sales growth rates of emerging firms and graduates' assets.

5.13 Entrepreneurial readiness

Entrepreneurial readiness in this study refers to self-efficacy. The term self-efficacy, derived from Bandura's (1977) social learning theory, refers to a person's belief in his or her capability to perform a given task. An individual's perception of self-efficacy has a strong influence on how he or she will act and how the available knowledge and skills will be utilized. Consequently, people behave according to beliefs about their capabilities rather than on real facts based on their competence and capabilities. In their study among Norwegian and Indonesian students, Kristiansen and Indarti (2004) found a significant correlation between self-efficacy and entrepreneurial intention. Kristiansen, Furuholt, and Wahid (2003) also found that entrepreneurial readiness was linked significantly to business success.

5.14 Escape from poverty and survival instinct

Microenterprises contribute significantly to economic growth, social stability and equity. The sector is one of the most important vehicles through which low-income people can escape poverty. With limited skills and education to compete for formal sector jobs, these men and women find economic opportunities in microenterprises as business owners and employees. Finally, it has been noted that, "MEs constitute the most dynamic segment of many transition and developing economies. They are more innovative, faster growing, and possibly more profitable as compared to larger-sized enterprises." Hence, the role of entrepreneurship in reducing poverty in less developed countries (LDCs) is promising. The IFC (2004) notes that well-managed MEs have convincingly demonstrated that they can become profitable and sustainable institutions while making major contributions to poverty reduction by increasing economic opportunities and employment. This is core to sustainable micro-entrepreneurship.

5.2 Factors Necessary to Run a Successful Micro Business

Once the entrepreneur has what it takes the next step in setting up a business, they must possess the following skills and knowledge to ensure that the enterprise will be well managed.

5.22 Technical skills

Entrepreneurs, especially the novices, often lack the formal skills needed to access loans and grow their businesses. They also lack formal training to prepare the business records needed to secure bank loans, a challenge that points to one of the major obstacles MEs face: access to networks and technical skills.

Similarly, Sinha (1996) who analysed the educational background of the entrepreneur revealed that 72% of the successful entrepreneurs who had a minimum of technical qualification, whereas most (67%) of the unsuccessful entrepreneurs did not have any technical background. She summed up that entrepreneurs with business and technical educational background are in a better position to appreciate and analyse hard reality and deal with it intuitively, which seems to play a critical role in entrepreneurial effectiveness.

5.23 Sales and Marketing skills

Marketing as a culture is defined as an analysis of consumer needs and wants and assessment of competitiveness of micro and small enterprises. Studies have consistently shown that firms which are marketing oriented, or competent practitioners of marketing, perform better in terms of return-on-investment (ROI) and market share (McDonald, 1987). Most micro owners started their business either revolving around their expertise or their passion. They have no intention of becoming the sales and marketing expert that is required of them to effectively market their businesses! But yet, the fact remains that "80% of success in small business depends on owners themselves being able to effectively market their products and services" (McDonald, 1987). In a recent survey by, micro SME (Micro, Small and Medium Enterprises) owners were asked, "What were the three biggest challenges facing your business in the last 12 months?" The response revealed that 43.9% of 1,700 micro SME owners said that their biggest challenge in their businesses is "finding new customers". It is vital to attract new customers and keep existing clients on a consistent basis or else they will be out of business sooner than they expected.

Poor marketing has always been recognized as a problem faced by micro and small businesses (Salleh, 1990). No matter how small the operation of the business is, promotion is an important tool to be competitive in the market (Ngaosi, L. & Navarro G., 2007). Harvard Business School professor Theodore Levitt once said: "The purpose of every business is to create and keep a customer." Ebitu (2005) opines that "marketing is crucial to the survival and growth of any organization which is used to settle bills, acquire assets, carry out expansion, pay dividends and taxies and embark on community projects as part of its social responsibility. He further notes, "the marketing function interrelates with all other functional areas of business such as business such as accounting, finance, production, engineering and human resources. The marketing function is central and strategic to a firms' success" (Ebitu, 2005).

5.24 Financing

Access to capital is obviously one of the typical obstacles to the start-up of new businesses, not least in developing economies with weak credit and venture capital institutions. Several empirical studies have concluded that the lack of access to capital and credit schemes and the constraints of financial systems are regarded by potential entrepreneurs as main hindrances to business innovation and success in developing economies (Meier & Pilgrim, 1994; Steel, 1994).

Most of micro entrepreneurs just relied on their own sources of funding such as personal savings and borrowings from family and friends (Petersen & Rajan, 1994; Berger & Udell, 1995). A chronic problem facing many MEs is the lack of funds to establish them on a sound and stable financial footing. Initially, a business's capital may be limited to what its owners can raise from savings, mortgaging the family home or borrowing from relatives and friends. Furthermore, the availability of financial capital not only will influence business profitability but also will affect the business success and failure. Scherrer (2003) found that 80 percent of business failures are because of inferior management on the internal control especially on the financial capital management. On the relationship side, studies by Gatewood (2004) and Bozbura (2004) found that there is a positive relationship between financial capitals and profitability.

5.25 Financial literacy

Financial literacy is defined as "the ability to make informed judgments and to take effective decisions regarding the use and management of money (Schagen, S & Lines, A. 1996). For example, it relates to understanding how to access options for minimizing bank fees, negotiate loan facilities, manage repayments and other finance decisions.

Research into Australian Indigenous money management behaviour has found limited access and exposure to financial institutions and comparatively low levels of home ownership (National Indigenous Money Management Agenda 2007). A low financial literacy level is a disadvantage which carries across into their lives. Hunter (1999) points out that competency in numeracy and literacy must be the platform for improvements in Indigenous self-employment.

5.26 Management practices

In the study of business incubators, Patti Wilber and Leonard Dixon caution that the lack of managerial expertise may rank high in the reasons for small business failure: "While the ranking of causes may vary from industry to industry, the contributing factors remain the same (economic causes, finances causes and experience causes). According to Sanjay Ahire (2001), lack of professional managerial expertise accounts for about 90 per cent of small business failure and other factors include insufficient clout with suppliers, limited capital and displaced priorities (Wlber, P & Dixon L. 2003). There is a set of literature that point to business management capacity as key in enterprise growth. Some of the crucial management areas to master include (Promising Business Growth Practices: Business Management Training and Technical Assistance, pages 37-34): 1) Planning 2) Human resources 3) communications 4) Information technology and 5) Finances.

5.3 Disablers (-): Factors that exert a Negative influence on Success

5.31 High competition

Product differentiation is a source of competitive advantage in some businesses while others focus on niche markets (Hogarth-Scott et al., 1996). It would appear from this study that marketing strategy did contribute positively to small business success and the ability to think how to outcompete rivals strategically.

In the market place, competitions among micro entrepreneurs are so great that some of them are fighting for the same customers and attacking each other in terms of price, quality, spaces, and bombardment of promotional materials and chasing after the customers with all sorts of value added gadgets (Abdul Jamak A.B.S. et. al. 2012). These micro competitions use all means of attacking abilities in order to gain a greater market share and of course "to survive". They however lack the ability to implement marketing strategies, differentiate their offerings against rivals, the funds needed in promotions, be innovative and react effectively to the competitiveness of their rivals (Abdul Jamak A.B.S. et. al. (2012).

Based on the findings and conclusion by Abdul Jamak A.B.S. et al. (2012), the failed MEs should have prepared to handle competition by employing various marketing strategies. Survival is an important element in micro enterprise environment. Rivals will pursue on whatever means of attacking their counterparts in order to sustain in the market place. Rivals use all kinds of unfair strategies such as black magic, which is very commonly found in the competitions among Malay MEs. Under "others" (20.7%), some failed MEs stated that they were hit by spiritual disturbances (black magic), that they could not carry out their business and finally just gave up. This is evidently occurred whereby the business places are located in town areas and the intensity of competition among the micro traders is very high because of the pressure to survive (Abdul Jamak A.B.S. et al., 2012).

5.32 Lack of business networks

Networking means having connection between entrepreneurs and government officers in charge of business assistance besides establishing networks with financial institutions and other business associations (Kader et al., 2009). Being able to build a good network of relationships has become most important asset for every entrepreneur

in order to grow their businesses, to gain visibility and to achieve competitiveness. Based on a unique survey of surviving Canadian micro-businesses conducted by Statistics Canada, this analysis has added to our understanding of how micro-businesses grow. The study supports the idea that micro-business owners learn mostly from informal networks by demonstrating that entrepreneurs who receive advice from informal sources, such as suppliers and customers, have exhibited superior growth performance. Coy et al. (2007) point out that Pakistani small business owners strongly believed that business success lay within their internal control and business connections was the only factor rated representing an external factor for business success.

5.33 Lack of management skills

Managerial competencies relate to the set of knowledge, skills, behaviours and attitudes that contribute to personal effectiveness and survival and growth of new MEs (Hellriegel, Jackson, Slocum, Staude, Amos, Klopper, Louw and Oosthuizen 2008, cited by Olawale et al 2010). Attahir (1995) suggests that management skills refer to the ability to develop and effect good business plans, to obtain and employ resources effectively, to balance obligations with business demand and to accurately keep records.

A lack of planning appears to be a feature of small businesses (Bosworth and Jacobs, 1989; Hogarth-Scott et al., 1996; Stone and Brush, 1996). Moreover, the smaller a firm, the less likely it is to plan and the detail involved is reduced (Atkins and Lowe, 1997). This is supported by this study, which found that very few micro-businesses produced written plans. However, the view that micro firms in particular do not plan at all may be a misnomer as there may still be clear mental frameworks of future plans regardless of whether they are formally written down (Kuratko et al., 1999; Wyer, 1997). However it is argued two most commonly stated variables that seem to make the difference are management experience and capital.

5.4 Enablers (+): Factors that Enable Success in Business

5.41 Business Advisory (Performance coaching)

Working with a person inside the business to get things done and improve performance - using a directive (show and tell) approach. Performance Coaches improve competencies in key business functions. Ideally it will take the perspective that coaching "transfers" knowledge, know-how and experience to the businesses rather than doing it for them (terminology from The European Mentoring and Coaching Council).

5.42 Business Advisory (Mentoring)

Again working with a person inside the business to get things done and improve performance - but using a non-directive approach. Business Mentors need to believe in the people that they are supporting and helping, and take actions to help them be the very best they can at what they do in the context of the business. To accomplish this they might: help people develop their entrepreneurial potential and capabilities, help re-draw and re-shape the "bigger picture", add value to the would-be entrepreneur's original idea, help people grow in confidence as their business develops, stimulate thinking and provide reality checks, offer a sympathetic and listening ear when people need to talk something through and prepare entrepreneurs for their organisational leadership role. In a study of 17 successful SMEs in Australia (Gwynne, 1999), mentoring from experienced business people was found to be helpful in the transition stages of the growing firm where the mentors had relevant experiences of similar transitions. The 2003 GEM (Global Entrepreneurship Monitor) Report for the UK made a comment that a significant number of start-ups that failed could very likely have been saved with effective mentoring.

5.43 Supportive environment

The success of entrepreneurs is influenced by support from others, which can be in the form of formal and informal support. Formal support comes in the form of financial, technology, and strategic partnerships or industrial contacts (Carrier et al, 2004). Informal support may come from personal and community-based networks (Lavent et al., 2003). Family plays an important role in a entrepreneur's life. Many micro-entrepreneurs manage their enterprises with support from family and friends, both start up and expansion.

As stated by Clifton Barton (Microenterprise Business Development Services, September 1997), friends and relatives are the primary source of business support for most MEs. They are the first source the micro-entrepreneur turns to for information, advice, loans and human resources. They are the primary source of business contacts and the chief arbitrators of business disputes. Moreover, as personal social networks comprising friends and relatives are the principal channels through which production know-how is acquired and transferred. When such networks are deficient in business skills and information, smaller enterprises are forced to struggle on their own to acquire needed support and resources. However, as members of these local networks gain experience in their business dealings, they increase the chances for other members of these personal networks to succeed. The resources and performance of such networks or groups constitute one important key to survival for most MEs.

5.44 Government support

The importance of government assistance to MEs success is reported in a number of studies. Sarder, et al. (1997) conducted a study of 161 micro and small enterprise in Bangladesh and found that firms receiving support services such as marketing, management education and training, technical, extension and consultancy, information and common facilities from the public or private agencies experienced a significant increase in sales, employment and productivity. Yusuf (1995) found in his study that government support is one of the critical success factors for small business in South Pacific. Governments in developing countries play a role in promoting and supporting companies by providing incentives and infrastructure. Yusuf (1995) additionally found that government assistance was more critical for the success of small indigenous entrepreneurs than the non-indigenous ones. Once again government support is viewed as crucial for MEs success (Attahir 1995; Croulet 1988; Croulet and Sio 1986) with government's perceived role being the promotion and support of enterprises by provision of facilities, incentives and cultivation of small business opportunities (Attahir 1995).

6. Micro-Entrepreneurial Success Factors

Micro-entrepreneurial success has been defined in different ways. The easiest definition is through tangible elements such as revenue or a firm's growth, personal wealth creation, profitability, sustainability, turnover (Perren, 1999, 2000; Amit et al., 2000) Watson et al. (1998) and Dafna (2008) associate micro-entrepreneurial success by relating the success with continued trading, and entrepreneurial failure is linked to unrewarding or ceased trading. In other studies, entrepreneurial success is defined based on the understanding of definition given by several researchers (such as Vesper, 1990; Watson et al., 1998; Dafna, 2008), who support the notion that successful business is a venture that has been operating for at least three years. However, Vesper (1990) reveals that about 10% of businesses survive after three years of operation. Indeed, the performance of rural micro enterprise is often highly correlated with several entrepreneurial characteristics, managerial processes, and effective support system. These three dimensions are deemed necessary to collectively determine enterprise success (Kanungo, 1998, p. 314).

6.1 Business Growth (Break out Strategy)

Most authors define growth as "increases in business revenue or sales." As researchers get more applied, they use other bench marks of growth: jobs created, number of businesses, owner's personal income, cash taken out, new starts, business survival, survival with revenue, intent to grow business and ability to pay the bills (Morrison et al., 2003).

Based on the evidence from high-growth micro businesses, for the purpose of this literature review, business growth for MEs can be defined as the following (Headd, 2001; Montgomery, 2000; Taylor 2004):

• Moving from (Break out) part-time to full-time operation;

• Generating revenues of a sufficient size (average of US100, 000/year) to generate a meaningful income for the owner (greater than US25,000/year) that is more than minimum wage and contributes to economic self-sufficiency for the household; and

• Creating employment opportunities for others (2.7 jobs in addition to the owner).

Hafsah Hashim, CEO of SME Corp Malaysia (NST Business Times, Monday July 16, 2012) said that the Malaysian prime minister (PM) is very serious about the need to raise the productivity of the MEs to the next level. According to Hafsah Hashim, the Malaysian PM wants to see the graduation of more "mom and pop" businesses operating from homes to operating on a bigger scale with proper facilities in place, complete with a structured marketing and packaging strategy. His concern on this led to the idea on a new "break out" strategy - providing assistance to MEs and owner-operator businesses, from even registering their business, through to providing access to financing, right up to provision of business advisory services on management, automation, marketing and branding. This handholding approach is necessary to help MEs to graduate from micro to small and medium to

6.2 Recommendations and Lessons Learned

A company's success is achieved through entrepreneurs who can communicate a clear purpose, allocate resources effectively and efficiently, and take responsibility for fostering and nurturing people to reach common goals (Tichy, 2002). A survey shows that the solutions for successful enterprise lie within the business structures. Disciplined finance management, differentiating products and services to satisfy customer needs, having the business located within the reach of the customers and good networking can make a difference between success and failure in micro-enterprise development.

The ability to compete is embedded in an individual's education which is related to knowledge, problem-solving skills, self-confidence and behaviour that allow entrepreneurs to identify market opportunities and gather resources required to set up the new business (Martinez, Mora & Vila, 2007, cited by Kunene, 2008). Programmes working with micro-entrepreneurs should adopt a comprehensive approach, focusing on business training, sales and marketing, access to finance, and access to markets as part of a suite of programs to promote entrepreneurship.

Governments and related organizations should work together with the private sector to create and sponsor financial products targeted at micro entrepreneurs in states where risk capital is lacking, with a focus on micro-enterprises. Examples include cash-flow loans, loan guarantees, and loans based on customer contracts.

Furthermore, a mentoring program encompasses strategic coaching by successful entrepreneurs would be beneficial in order to share real business experience and offer mutual benefits (such as sharing of the market-niche, marketing strategies and networking) among the micro entrepreneurs. From the studies, it was concluded that business skills were inclined towards the tacit-practical type of knowledge (skills) which rarely transferred formally from one skill to another. Therefore, this paper justifies the needs for an experiential learning approach for business and entrepreneurship education rather than the classroom-based approach.

Figure 1: A Break Out Strategy model for Malay (Indigenous) Micro-Entrepreneurs (MMEs)

Drivers to start a micro business


necessary to run a micro business

MMEs Disablers (-)

MMEs Enablers (+)

Set out clear objectives

Human capital

Entrepreneuri al Readiness

Escape from poverty and Survival

Management practices

Financing & Financial

literacy V_1_y

Becoming SME

Delegation/ Stagnant


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