The Impact of Government Support For Small and Medium Enterprises

Question: Discuss about the Impact of Government Support For Small and Medium Enterprises. Answer: Introduction Small and medium enterprises (SMEs) are among the biggest contributors of global economy making it among the most successful particularly in developing countries (Schaper Blackburn, 2012). As such, the sector has been beneficial to the economy by creation of jobs and provision of social and political stability (Henschel, 2008). For instance, SMEs is now a sector that cannot be ignored in the UK despite the country being one of the developed countries (Mullerat, 2010). Small and medium enterprises have received accolades for promoting economic growth as they contribute in economic growth of a country (Henschel, 2008). Additionally, the sector contributes to reduction of unemployment increase in GDP hence creating many job opportunities. This is the major reason that governments around the world offer support to SMEs. Granted, SMEs contribute immensely to developing the economy and achieves different objectives of the government such as raising standard of living of the SME operators as well as its employees and the community at large (Ibid). It has become imperative for the state to give required assistance if form of tax cuts for instance so as to aid in contributing to economic growth (Mullerat, 2010). The government also assists my providing financial support through offering grants using various government agencies themselves Mumford et al. (2010) notes that among the main challenges faced by SMEs is inadequate financial resources to sustain themselves for a long time. Additionally, some SMEs do not have qualified work force to run their businesses profitably therefore prompting the government to intercede by provision of capital (Henschel, 2008). The governments may also give assistance by training staff of effective business management and offer protection from cheap imports by imposing heavy taxes on such imports (Mullerat, 2010). As a result, of the current high rate of globalization, SMEs are constantly faced with major challenges because of vigorous competition from other countries such as China (Mullerat, 2010). Therefore, it has become standard practice for state agencies to give the required assistance through offering a conducive environment to grow (Mullerat, 2010). This problem has necessitated the need for the current study to investigate the impact that government support has on the small and medium enterprises. Aim of the Study The aim of this study will be to investigate the impact of government support on small and medium enterprises by addressing the challenges that face the enterprises. Research Questions The questions that the researcher will seek to answer will be; How does the government influence or support the challenges faced by SMEs? What is the impact if any of government support in the growth of SMEs? What are the challenges and barriers that SMEs encounter and what is the government doing to address them? Research Hypotheses The researcher shall formulate the following research hypotheses based on the research questions; H0 : There is no association between government support and challenges faced by SMEs H0 : There is no association between government support and growth of SMEs H0 : Government support has no effect on the challenges faced by SMEs. Related Literature According to Collings (2010), previous research has identified the main impediments contributing to the success of SMEs to include state of the economy, cash flow and availability of capital. This therefore offers the government an opportunity to instill strict measures to enhance better business environment for SMEs to operate so that they can also contribute towards economic growth (Ibid). Mullerat (2010) asserts that it is prudent to note that access towards finance is vital for the SMEs since it allows them to not only expand but to also thrive and create opportunities for jobs thus significantly contributing to the recovery of the economy (Schaper Blackburn, 2012). Research Design and Methodology This study will employ the case study method because the study is based on one organization. This kind of study design enables an analysis of both quantitative and qualitative data to be carried out by explaining the present conditions. Sampling Design and Procedures Stratified random sampling method will be used for the study. This sampling method will be used because data needs to be collected from various departments and not just one department of the case study firm. This will be done in order to get different opinions from participants of all the departments. Simple random sampling will then be used to select participants from each department. The researcher will utilize a seventy-five percent criteria selection for the whole population. . This formula below will be employed to determine the sample size per strata; a/bc=z where; a is the number of employees in a department b is the total target population c is the sample size z is the number of respondents obtained from each department Data Collection Tools and Methods The researcher will utilize questionnaires that will have both closed and open-ended questions. Krishnaswamy, Appa and Mathirajan (2006), opine that a questionnaire is beneficial to the researcher as it lets him gather large amount of data given a short duration of time. In addition, analyzing data from a questionnaire may be used to make a comparison with previous research and may be used quantify change. The questionnaire will have two sections; demographic information that will provide information necessary to understand the respondents. The other section will included questions meant to study the research objectives in an effort to answer the research questions of the study.. Validity of Research Instruments To ensure data quality, the data collection tools will be pre-tested to ensure reliability. Ten percent of the sample size from a different firm will be used in order to identify necessary changes and thereafter make revisions. Data Analysis and Presentation Data collected will be edited, coded, cleaned, categorized, and tabulated as appropriate. Data will be analyzed and presented using Statistical package for Social Sciences (SPSS version 20). Information generated will be presented in tables, charts, and graphs. To test the hypotheses, a five-point likert scale will be utilized. Descriptive statistics will be used to test for normality of the data collected. Levels of dispersion and measures of central tendency like mean, median and standard deviation will be computed to see if it concurs with the research objectives. Inferential statistics will be used to draw implications from the data for instance; the objectives will be achieved by calculating the Pearson product moment correlation coefficient of the variables. This will establish whether the findings indicate a strong or weak, positive or negative correlation. Any value that is greater than 0.75, regardless of the sign, will indicate a strong correlation while any value that is less than 0.75 will indicate a weak correlation. Hypothesis testing will also be done to test for the significance of the relationship between the various independent variables and the dependent variable in line with the hypotheses at 5% level of significance. The significance level also known as the alpha level denoted by () is the prospect of making the wrong decision when the null hypothesis is true.The alpha level of .05 is used to balance between making a type I error and a type II error. A type I error is supporting the alternative hypothesis when the null hypothesis is true whereas a type II error is not supporting the alternative hypothesis when the alternative hypothesis is in fact true. Variables Dependent Variable Impact of government support on SMEs Independent Variables Government influence or support Effect of government policies towards SMEs Challenges and barriers affecting SMEs Expected Outcome The current study will provide informed knowledge in the following areas; provide information on SMEs situation to other interested parties particularly large firms; provide a reference material by other researchers on SMEs impact in the Australian economy and: provide relevant information on the challenges faced by SMEs in Australia by making recommendations on ways of improving the sector. In addition, other researchers will benefit from the outcome of the current study by making comparison with other studies and identify gaps to be filled in the study. References and Bibliography Collings, S 2011, Interpretation and Application of International Standards on Auditing, New York, John Wiley Sons. Henschel, T 2008, Risk Management Practices of SMEs...New York, Erich Co. Mullerat, R 2010, International Corporate Social Responsibility: The Role of Corporations in the Economic Order of the 21st Century, New York, Kluwer Law International. Mumford, A, et al 2010, Gower Handbook of Leadership and Management Development, New York, Gower Publishing Ltd. Schaper, M Blackburn, R. 2012, Government, SMEs and Entrepreneurship Development: Policy, Practice and Challenges, New York, Gower Publishing.