SMEs in Malaysia: Research Report

Research Report

Table of Contents
Chapter-1 Introduction to the study.................................................................................................2
Introduction......................................................................................................................................2
Background of the research.............................................................................................................2
Review of past work & identification of gaps.................................................................................3
Research problem............................................................................................................................3
Research question............................................................................................................................4
Research objective...........................................................................................................................4
Justification of research...................................................................................................................4
Scope of the study............................................................................................................................5
Limitations.......................................................................................................................................5
Methodology....................................................................................................................................6
Conclusion.......................................................................................................................................6
Chapter-2 Literature Review...........................................................................................................6
Introduction......................................................................................................................................6
Domain Research.............................................................................................................................7
Technical Research..........................................................................................................................8
SMEs in Malaysia............................................................................................................................9
Financial performance of SMEs in Malaysia.............................................................................10
Conclusion.....................................................................................................................................11
Chapter-3 Research Methodology.................................................................................................12
Introduction....................................................................................................................................12
Research Approach........................................................................................................................12
Research Variables........................................................................................................................12
Hypothesis.....................................................................................................................................13
Research design.............................................................................................................................13
Primary Research.......................................................................................................................14
Data analysis methods...................................................................................................................14
Sampling........................................................................................................................................14
Research instrument.......................................................................................................................14

Ethical consideration.....................................................................................................................15
Conclusion.....................................................................................................................................15
Chapter-4 Presentation and Data Analysis....................................................................................15
Introduction....................................................................................................................................15
Survey Findings.............................................................................................................................16
Pilot testing................................................................................................................................16
Response rate.............................................................................................................................16
Analysis from statistical packages.................................................................................................16
Response format.........................................................................................................................16
Reliability test results.................................................................................................................17
Conclusion.....................................................................................................................................17
Chapter-5 Findings........................................................................................................................17
Reliability tests...........................................................................................................................19
Analysis of Qualitative results.......................................................................................................19
Regression analysis....................................................................................................................19
Chapter-6 Conclusion and Recommendations...............................................................................20
References......................................................................................................................................21
Appendix........................................................................................................................................24
Questionnaire: EC and it affects financial performance of Malaysian SME’s..............................24

Chapter-1 Introduction to the study
Introduction
The research study topic is an adoption of e-commerce and its effect on the financial
performance of the Malaysian SME's. The research is conducted on the ninety-eight SME's of
Malaysia in order to determine the impact of e-commerce adoption on the financial performance
of the company.
Background of the research
The Small and Medium Enterprises are expanding rapidly which is contributing towards the
economic development of the country as well as the worldwide economy through the growth of
the businesses and the development of practical knowledge. In the year 2011, the Small and
Medium Enterprises has contributed approximately thirty-five percent in the overall GDP of the
economy, and the accounting of all the registered establishments shows that approximately sixty
percent of the workforce is employed in the Small and Medium Enterprises.
The importance of the Small and Medium Enterprises in Malaysia manifests in numbers, and it is
estimated that the Small and Medium Enterprises employed approximately sixty-five percent of
the workforce. The Small and Medium Enterprises contributes approximately 50% towards the
GDO of the country in the year 2013 which is half of the whole country’s level of income
generation.

The adoption of electronic commerce is important for the Small and Medium Enterprises in
Malaysia because it provides various advantages to the country such as the increase in the
profitability of the companies, minimization of costs, standardization and streamlined of
operations, increases the market reachability and enables to enter into the new market. The
research study shows that the adoption of EC enables to develop the healthy relationship with the
customers as well as the suppliers which lead to improving the sales volume of the company and
overall performance within the particular period of time. The performance of Small and Medium
Enterprises has also improved with the adoption of EC through improving the operations of the
company which enables to relocate the resources, but it can sometimes be limited to enhance the
operations of the company in order to maximize the growth.
Review of past work & identification of gaps
The previous research shows that adoption of e-commerce and its benefits but the relationship
between the financial performance of Small and Medium Enterprises and adoption of e-
commerce are not analyzed in the previous study. So this research work contributes towards the
awareness of the business regarding the adoption of e-commerce in order to achieve the mission
and vision of the company.
Research problem
There are four measures which are used to determine the impact of e-commerce adoption on the
performance of Small and Medium Enterprises. According to the previous research studies, there
are various factors which influence the use of e-commerce in Small and Medium Enterprises.
Furthermore, other research studies are conducted in order to determine the impact of e-

commerce adoption on the financial performance of the company. It is also studied that the e-
commerce influence the operations of the company by adding additional facilities such as e-
marketing, customer service, new business opportunities and others.
Research question
1. How the financial performance of SME's is influenced by the adoption of E-commerce?
2. How many levels of awareness is required by SME's in Malaysia for the business
growth?
3. What is the current level of e-commerce adoption by SME's in Malaysia?
4. How the adoption of e-commerce is supported by the top management in order to
improve the financial performance of the company?
Research objective
1. The primary objective is to find the impact of e-commerce on the financial performance
of SME's in Malaysia.
2. Another objective is to find the empirical evidence in context to the awareness of e-
commerce on the overall performance of the company.
3. The objective is to determine the support of top management for the adoption of e-
commerce and to recommend the findings in order to enhance the financial performance
of the company.