The Role of Business Grant Assistance, Micro Saving and Financial Knowledge towards Bumiputera SME Business
Performance in Sabah
Mat Salleh Ayub1*, Mohd Affandi Harun2, Mazalan Mifli1, Azmi Majid1
1 Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu, Malaysia
2 Unit Peneraju Agenda Bumiputera (TERAJU), Kota Kinabalu, Sabah, Malaysia
*Corresponding Author: [email protected]
Accepted: 15 December 2020 | Published: 28 December 2020
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Abstract: The purpose of this study is to examine the influence of business grant, micro saving, and financial knowledge towards Bumiputera SME business performance in Sabah. This paper analyses the Bumiputera SME performance by examining three determinants, namely business grant assistance, micro saving and financial knowledge. Total number of 187 questionnaires distributed and 96 were returned. The respondents were selected from TERAJU (Sabah) SMEs directory database and respondents were those who have been assisted and supported by TERAJU programs. The data collected and analyzed using Statistical Package for the Social Science (SPSS 26) and SmartPLS 3.0. The study confirms that there are significant positive relationships between micro saving towards Bumiputera SME performance in Sabah.
However, the study also found that there are no significant relationships between financing knowledge and business grant assistance towards Bumiputera SME business performance in Sabah. The finding of this study has useful implication to help strengthen the provision of government business support to Bumiputera SME in Sabah. It will provide new framework for future study on SMEs business performance looking at the SMEs business support ecosystem in Sabah.
Keywords: Business grant, Micro saving, Financial knowledge, Business performance and Small and Medium Enterprise (SME)
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1. Introduction
In July 2019, Malaysian government introduced Shared National Entrepreneur Policies 2030 (NEP2030) blueprint in line with the Government's shared prosperity concept, to increase the number of qualified, viable and resilient entrepreneurs as well as to improve the capacities of local entrepreneurs, especially for Bumiputera SME. The recognition of SME as the backbone to the economy, especially in stimulate growth of employment and income has existed in many works of literature including in Malaysia. SME participation in the national economy has played a vital role in contributing to national GDP, job growth, and in promoting fair income distribution over the years. Based on the SME Corporation Malaysia's Economic Census 2016, the SME in Malaysia comprises of 98.5% or 907,065 of the establishment and these SMEs contributed 36.6% to the GDP, 65.3% of employment and 18.6% of total export (SME Corp.
Malaysia Census, 2016). The census also reported that the service sector recorded the highest participation of SMEs by 90%, followed by manufacturing sectors by 6%, and others 4%. In term of sizes, micro-sized SME represented the highest number of participations by 76.5% and then followed by 2.3% of medium-sized and small-sized at 21.2%. According to the location,
most of the SMEs operate in Selangor (19.8%) followed by WP Kuala Lumpur at 14.7% and Johor at 10.8%.
Government recognition can be clearly seen through initiatives to promote growth and increase SME productivity in this country, including the provision of SMEs in the national budget, through policymaking and policy realignment. The Efforts include providing suitable business environment, updating technology by enhancing communication and moving goods and people, providing secure access to information and access to various business support aids. The SME Masterplan was formulated to drive the SME contributions from 32% to 41% in Malaysian GDP, employment rate at 59% to 62%, and export to 25% by 2020 irrespective of gender, sector, ethnic and geographical region background. Malaysia Productivity Blueprint (MPB) 2017 was also launched with a specific focus to ensure the close collaboration within industry led by the private sectors that are driven by the SMEs.
SMEs in Sabah has contributed significantly to the state economy estimated about RM85.4 billion to the state GDP in 2019 (Department of Statistics, Malaysia), mainly from services 46.1%, mining and quarrying 26.4%, agriculture 16.1%, manufacturing 7.6% and construction 3.6%. SMEs contributed almost half of the Sabah revenue annually. Continuous and consistence contribution of SMEs to the state revenue is highly critical to ensure that SMEs become major the catalyst for the economic growth in future. The government has taken various steps and programs to promote SMEs growth in Sabah. Sylvia Nabila et al., (2020) highlighted that there are five main barriers to business growth namely; financial issues, human resources problems, marketing strategies, facilities, appliances and layout and problems with suppliers. The state government will continuously support SMEs growth through various business programs and supports as a backbone of the state economy revenue.
2. Literature Review
2.1 Business Performance
Business performance or success is an important indicator of any business venture. The concept of business performance has two strategic results that are frequently referred to the literature which are either success or failure (Eniola & Entebang, 2015). Business performance is a central marvel in business management. According to Eniola & Entebang (2015), performance is generally employed as a measure of a business health over a definite period. Performance could be a business ability to achieve or surpass its pre-set targets or goals set up by shareholders for a certain period. However, performance appears to be conceptualized, rationalized and measured in diverse directions, hence making cross comparison difficult to be made. This puts measurement of performance as one of the key issues for entrepreneurs. The ability to establish business performance is a better approach to explore whether a business enterprise is progressing or not, using indicators of financial and non-financial measurement.
A key standard to performance in business environment is the objective setting which means instituting what an individual or business enterprise desires to accomplish over a specified period. The objectives must be precise, quantifiable, attainable, accurate and timely planned.
Within this context, two aspect emerged commonly used in explaining the success of entrepreneurial activities which are financial and non-financial. Financial aspect of business success refers to objectives and tangible measure such as business growth, wealth establishment, profitability and sustainability. On the other hand, non-financial measure include element such as job satisfaction, flexibility, autonomy and other subjective measures (Sarapaivanich Kotey,2006).
2.2 Business Grant Assistance
Previous studies results show on average strong positive effects of business grants on capital stock, bank loans, intermediate inputs and value added, but no empirical evidence for a positive effect on productivity measures, sales, employment, average wage and inventories Srhoj et al.
(2020). However, the significant findings rely on the positive effects of firms of smaller size.
The positive effect on small firm growth is in line with the studies of Munch and Schaur (2018) and Bertoni et al. (2019) that stronger positive effects are found for firms bellow 20 employees.
More favourable effects of business grants on smaller firms’ capital, bank loans, employment, value added, sales and labour productivity are theoretically justified as the specific grant amount is designed more appropriately for loosening the capital constraints of smaller firms in comparison to larger firms.
Business grants assistance provide smaller grant amounts and can benefit therefore a larger number of smaller beneficiaries; support acquisition of machinery, tools and equipment and firm’s learning activities; and are targeted towards loosening capital constraints of smaller firms (Srhoj et al. 2019). The findings suggest that overall SME business grant has a positive impact on firm performance, employment creation, and labor productivity. Daisy et al., (2011) highlighted that the government bureaucracy and red tape are the major stumbling block for some of the government programs achieved it objectives. Government delivery system need to be revamped and improved to ensure the SMEs would able to growth smoothly.
Recent studies analysing the impact of business grants show mixed findings (McKenzie 2017;
Srhoj et al.2019). McKenzie (2017) finds positive effects of winning the business plan competition on capital stock, employment, sales and profits. Srhoj et al. (2019) show positive effects of business grants on firms’ sales and employment, survival probability and access to bank loans, but only for 1-year-old firms and no effects are found for 2- up to 5-year-old firms.
Business grants do not have significant effects on small firms when the grant amount over last year’s profits is small (Srhoj et al., 2019c). Both studies demonstrate the suitability of business grants but for young firms. The question remains whether these grants are just suitable for young firms to achieve positive effects on firm performance or whether in the context of grant success start-up is more likely just a proxy for small firm size and its corresponding characteristics.
H1: There is a positive relationship between business grant assistance and Bumiputera SME Performance in Sabah
2.3 Micro Saving
In general, saving refer to the amount of money kept by people in financial institution (Ashta et al., 2014). In relation to micro savings, it represents a small fraction of an income of the poor that is kept by financial institutions which are mostly the micro institution (MFIs). From the microfinance point of view, saving refers to the money which is kept in a micro finance institution, mostly by poor, with the aim of meeting family need and build up capital for initiating or expanding an income generating venture (Olu, O. J. O. 2009). It is argued that micro accessible can help inculcate savings habit in poor households and serve as a free interest rate sources of funding for daily life and managing business expenditure (Ononugbo &
Nwosu,2006).
Most small and medium-sized enterprises require financial resources to run and finance daily production. These resources are either debt expenses that are borne by interest, own investments, family investments, or equity that needs a return on profits. Small enterprises tend to have more self-financing, less liquidity, seldom stock issue, lower leverage, rely on bank
financing, and use more commercial loans and owner loans. According to Renfrew (1982), small businesses rely mainly on equity, retained profits, and bank financing.
According to (Harding, 2002), SMEs typically do not achieve growth potential and therefore do not have the anticipated volume of employment and income. An explanation for the lack of growth contribution of SMEs is that there is a difference between SMEs' and access to external sources of financing by large companies (Beck & Demirguc, Kunt, 2006). To financial capital a SME cannot always turn to a bank compare to big company. Another alternative according to Van Auken H.E (2001), is funding from government programs. Van Auken H.E (2001) assumes that it is because government funding is overlooked by the enterprises in his study. It is also not rare for SMEs to be less aware of what funding is available them and for financiers not to have enough knowledge or information for them to provide adequate financial support.
Research about this defines it as information gaps. This suggests a capital gap, referring to the number of SMEs without access to external financing according to (Harding, 2002).
Scholars who argued against microcredit for poverty alleviation assert that poverty is multidimensional and only reduces income poverty but no other forms poverty (Buckley,1997).
In this respect, it is argued that microcredit reaches mainly the wealthy poor’-those who fall above the poverty line rather than the core poor (Lonborg & Rasmussen, 2014). Thus, savings as little as it can be a source of consolation to the poor (Nkpyen & Eteng, 2012).
The effect of saving on entrepreneurs’ productivity in Nigeria is found to be positive (Olu, O.
J. O. 2009). To guard against risk of default, some amount of saving may require by MFIs before credit is granted to an entrepreneur. This is because not only customer funds offer a clear cushion for suitable reimbursement of credits, they can be expanded to another and reasonable economical basis of capitals for the MFIs loans rate are higher than those for deposits. In this light, savings is viewed in term of voluntary (individual) and mandatory group savings. However, micro savings have not received the attention it deserves from microfinance sector because much emphasis has been given to other microfinance products. In this sense, it is argued that micro saving is as important as microcredit in overcoming the issue of poverty (Shuaibu, Kuperan & Suhaimi, 2017). In relation to Bumiputera entrepreneurs, it is believed that micro savings also have significant influence on the success of their entrepreneurial activities.
H2: There is a positive relationship between micro saving and Bumiputera SME Performance in Sabah
2.4 Financial Knowledge
Financial knowledge is the ability to understand on how money flows in the company, how it is made, spent and invested in improving financial position. In recent years, researchers in financial literacy have increased their efforts and have also documented the connection between financial literacy and business performance. Lusardi and Mitchell (2014) proposes that, financial literacy is required to make a measurement of financial capability to remain knowledgeable about financial issues. Those financially literate persons were more likely to participate in financial market since they have knowledge on financial matters. Lusardi, (2013) revealed that, there is a relation between financial literacy and low-cost borrowers. Most high cost borrowers have very low rates of financial literacy and lack of knowledge of fundamental financial concepts compare to those have. By becoming high cost borrower, this will affect of their business performance. Similarly, Abubakar (2015) established that persons invested in financial awareness have a higher degree of financial literacy. Kamal and Kaur (2014) indicated that, entrepreneur with best financial knowledge maintain comprehensive financial
data and having competitive than their equivalents when it comes to accessing external funding.
Likewise, Lusardi, (2014) highlighted that entrepreneurial business owner that has financial knowledge and can put this knowledge into practice, may show an improved financial wellbeing. According to Lusardi (2014), Financial literacy is also an important factor when individual investing stock market. For example, the literature suggests that individuals with greater financial knowledge are most likely to engage in a wide range of financial spectrum.
H3: There is a positive relationship between financial knowledge and Bumiputera SME performance.
3. Methodology
3.1 Participants and Procedure
The targeted respondents of this study were the owner-manager of SME in Sabah with at least three years in operation. Respondents are recipient of TERAJU grant assistance. 187 questionnaires were distributed through online survey platform, which were distributed directly to the respondents and 96 were returned. However, 20 responses were unusable and discarded, therefore leaving only 76 usable questionnaires for data analysis.
3.2. Profile of the Respondents
From the 76 respondents received in this sample, a wide range of demographical characteristics was examined. Demographic information that has been collected from respondents are gender, age, and education background. Whilst since this survey is focusing on SME business performance, the business information collected includes business location, year of starting business, business sector, business ownership status, type of business, and followed by the correspondent’s experience. This was again due to random distribution of the questionnaire, which might not indicate the whole population.
Table 1.0 below shows the demographic characteristics and the SME characteristics that participated in this study. The analysis on the respondents’ demographic shows that the majority respondent was male which were 44 (57.9%) whilst female respondents were only 32 (42.1%). The age of the respondents is between 26-35 years old is 30.3%, followed by 36-46 years 28.9%, 46-55 years is 16 21.1%, and over 55 years old is 19.7%. For educational background, majority of the respondent have bachelor’s degree, which are 20 (31%), followed by Diploma by 26%. The remaining balance of the respondent possesses STPM and SPM (18%), master’s degree (4%) and PMR (1%). Most of the respondent’s business location is Kota Kinabalu, which is 19 out of the total 76, followed by Tawau 10 businesses, Kudat 8 businesses, Sandakan 6, 5 businesses recorded for Papar, Tuaran and Keningau, 3 in Penampang and Semporna, 2 in Tambunan, Ranau and Sipitang and lastly 1 business in Kinabatangan, Putatan, Kota Belud, Kundasang, Kota Marudu and Beuafort. Approximately 55% of the respondent are in manufacturing sectors and the remaining 20 (26%) in services, 6 (8%) in Construction, 5 (7%) in retails, 5 (4.0%) in wholesaling, 2 (3%) in engineering, and 1 (1%) respondent involves in wholesaler. Most of the company set up is a registered company or Sdn Bhd settings that make up to 68 or 90% respondents, followed by a sole proprietorship at 10% (8). Approximately 65.3% (81) businesses hired a range between 5-9 full-time employees. 50% or 50 SMEs employed more than 5 employees, 14 (18%) employed between 3-5 employees, 12 (16%) have 3 employees.
Most of the respondents have a private working experience prior to the current business, which are 68 or 89% of whole respondents worked with public sector while 5 or 6% of the respondent have worked for the private sector.
Table 1.0: Profile of Respondents
3.3 Research Measures
Focus of this research is to examine the relationship between the constructs of business performance determinants (business grant assistance, micro saving, and financial knowledge) towards the business performance (See Figure 1). Respondents answer 15 items of the business performance determinants and also 6 items of the demographic section. The measurement of business performance determinants was adapted which included the exogenous variables such as business grant assistance 4 items (Bernard et al., 2016), micro saving 4 items (Bernard et al., 2016) and financial knowledge 3 items (Usama and Yusuff, 2018). The business performance is the endogenous variable was measured with 4 items (Bernard et al., 2016). For the data entry, researchers are using SPSS 26.0 and statistically analysed using Partial Least Squares (PLS) technique through the SmartPLS program version 3.2.8 software.
Demographic Variables Categories Frequency Percentage
Gender Female 32 42.1
Male 44 57.9
Age 26-35 years old 23 30.3
36-45 years old 22 28.9
46-55 years old 16 21.1
Over 55 years old 15 19.7
Education PMR 1 1.3
SPM 14 18.4
STPM 14 18.4
DIPLOMA 20 26.3
BACHELOR DEGREE 24 31.6
MASTER 3 3.9
Location Tawau 10 13.2
Kota Kinabalu 19 25.0
Papar 5 6.6
Penampang 3 3.9
Sandakan 6 7.9
Kinabatangan 1 1.3
Tuaran 5 6.6
Kudat 8 10.5
Semporna 3 3.9
Ranau 2 2.6
Putatan 1 1.3
Keningau 5 6.6
Sipitang 2 2.6
Kota Belud 1 1.3
Kundasang 1 1.3
Kota Marudu 1 1.3
Tambunan 2 2.6
Beaufort 1 1.3
Year of Business 3- 5 YEARS 39 51.3
> 5 YEARS 37 48.7
Business Type Retails 5 6.6
Wholesale 1 1.3
Manufacturing 38 50
Construction 6 7.9
Figure 1. A model of the hypothesized relationships
The initial run of the indicator reliability on 15 latent variables which includes business grant assistance, micro saving and financial knowledge and Bumiputera SME Performance study constructs with the value ranging from -0.304 to 0.916. One study construct, “approval process is reasonable” (BGA3, “Business Grant Assistance” construct) was removed due to having - 0.304 loading value, which is less than 0.5. After this item being removed and run the PLS Algorithm, the final run of indicator reliability on 14 latent variables produced the value ranging from 0.778 to 0.920.
Based on Table 2, the results of the measurement model showed that all the estimated indices were above the threshold (Bagozzi and Yi, 1988) of 0.7 for Composite Reliability (CR) and 0.5 for Average Variance Extracted(AVE). More specifically, the results indicate that the AVE for each of the constructs was in the ranged of 0.588 to 0.667 and the composite reliability for all of the constructs were ranged between 0.772 to 0.923.
Table 2.0: Result of the measurement model
Construct Items loading CR AVE Cronbach's
Alpha
Business Grant BGA1 0.918 0.933 0.822 0.895
Assistance BGA2 0.900
BGA4 0.903
Micro Saving MS1 0.778 0.902 0.699 8.856
MS2 0.792
MS3 0.855
MS4 0.912
Financial OFK1 0.920 0.904 0.759 0.855
Knowledge OFK2 0.841
OFK3 0.851
Business BP1 0.859 0.928 0.763 0.896
Performance BP2 0.873
BP3 0.916
BP4 0.845
*Average Variance Extracted (AVE) = (summation of squared factor loadings)/(summation of squared factor loadings) (summation of error variances) *Composite reliability (CR) = (square of the summation of the factor loadings)/[(square of the summation of the factor loadings) + (square of the summation of the error variances)]
Table 3.0 Discriminant validity of constructs
No Construct Business Grant
Assistance
Business Performance
Micro Saving
Financial Knowledge 1 Business Grant Assistance 0.907
2 Business Performance -0.101 0.874
3 Micro Saving 0.163 0.436 0.836
4 Financial Knowledge -0.121 0.153 0.052 0.871
Note: Diagonals represent the square root of the AVE while the off diagonals represent the correlations
Table 3 indicates that all of the constructs in this study have met the criterion as suggested by Gefen and Straub (2005). To be exact, all of the studied constructs have showed acceptable discriminant validity. Table 3 represents the square root of AVE and the correlations between constructs. The results showed that the square root of AVE is larger (in bold) than the correlation with other constructs.
Table 4.0: Discriminant Validity: Cross Loading
Business Grant
Assistance Business Performance Micro Saving
Financial Knowledge
BGA1 0.918 -0.083 0.160 -0.138
BGA2 0.900 -0.111 0.141 -0.062
BGA4 0.903 -0.072 0.143 -0.150
BP1 -0.148 0.859 0.367 0.071
BP2 0.024 0.873 0.471 0.054
BP3 -0.142 0.916 0.351 0.201
BP4 -0.097 0.845 0.324 0.218
MS1 0.128 0.355 0.778 0.025
MS2 0.121 0.284 0.792 0.105
MS3 0.178 0.412 0.855 0.062
MS4 0.110 0.386 0.912 -0.004
OFK1 -0.147 0.176 0.045 0.920
OFK2 -0.103 0.066 0.001 0.841
OFK3 -0.045 0.111 0.074 0.851
Note: Bold values are loadings for items which are above the recommended value of 0.5
In Table 4 depicts the loadings and cross-loadings for all variables construct were included.
All the items were found having higher loading on their corresponding construct (bold items) than the cross loadings on the other constructs in the model. As suggested by Hair et al. (2013) the loadings should be higher than the cross loadings by at least 0.1 to indicate enough discriminant validity. In total, the measurement model demonstrated adequate convergent validity and discriminant validity. Hence, it can conclude that discriminant validity is achieved (Chin et al., 2010).
3.4 Structural Model Estimation
The structural model of this study is estimated by using bootstrapping procedures with 500 sub-samples to generate the path coefficient and t-value result as recommended by Chin (1998).
Figure 1.0 shown the measurement Model with CR, Loading and Path Coefficient, and the result for the bootstrapping was shown in Figure 2.0.
Figure 1.0: Measurement Model with CR, Loading and Path Coefficient
Figure 2.0: Bootstrapping Result
Table 5.0: PLS path model results Hypoth
esis Relationship
std Beta
std error
t- valu
e p- valu
e
LC CI
UL
CI Decision
H1
Business Grant Assistance ->
Business Performance
-
0.162 0.082 1.97
4 0.05
9 - 0.25
5 0.05
3
Not supported H2
Micro Saving -> Business
Performance 0.457 0.100
4.54 6
0.00 0
0.29 3
0.60
4 Supported
H3
Financial Knowledge -> Business
Performance 0.109 0.145
0.75 2
0.45 3
- 0.24
3 0.25
7
Not Supported Path Coefficient 0.01,0.05 (Hair et al. 2017)
Significant at t-value >1.65*(p <0.05)
Figure 2, shows the SME Business Performance model and the bootstrap results of the study.
For 1-tail test, t-value greater or equal to 2.33 with P<0.01 suggested a confidence level of 99%, while t-value greater or equal to 1.645 with P<0.05 suggested a confidence level of 95%. Table 5.0 shows that hypothesis H1 on business grant is not supported due to std. Beta - 0.169 although t-value of 1.974. Hypothesis H3 on relationship between owner financial knowledge to business performance is also not supported (t=0.75). The relationship micro saving and SME business performance has a t-value of 4.546, thus H2 is supported. The t- value of the entire exogenous constructs in Table 5.0 shows that, the micro saving is the most important influence factor on SME business performance. The measure of hypothesis testing is divided into 3 hypotheses. Overall, the level of significant of hypothesis is measured from the t-value that obtained from Table 5.0 and Table 6.0 show the summary of the hypothesis in this research.
Table 6.0: Summary of Hypothesis
Hypothesis Relationship Decision
H1 There is a positive relationship between Business Grant Assistance and Bumiputera SME Business Performance in Sabah
Not Supported
H2 There is a positive relationship between Micro Saving and Bumiputera SME Business Performance in Sabah
Supported H3 There is a positive relationship between Financial Knowledge
and Bumiputera SME Business Performance in Sabah
Not supported
4. Discussion and Conclusion
Research findings are mixed in this study. The result revealed that the relationship of business grant assistance and Bumiputera SME business performance in Sabah is not significant. The study does not support positive relationship between the business grant assistance and Bumiputera SME business performance in Sabah. This study in line with the finding by McKenzie 2017, Srhoj et al. 2019. Daisy et al., (2011) highlighted the problem of government support programs mainly lied in delivery system of business support to meet the need beneficiaries itself. Majority respondent felt that the length duration of time from application to approval process had caused in delay of their project or business development implementation according on milestone. Therefore, they felt the approval process is unreasonable and time consuming. Thus, this has contributed to first lowest factor loading for in this study which is -0.099 “approval process is reasonable” (BGA3, “Business Grant Assistance” construct). On this note, this study suggests the government to relook and improve the implementing mechanism of its business support to ensure the objective of policies and initiatives formulated are meet. The business grant assistances may not significant due to the
size of the SMEs which employed less than 5 employees and the efficiency of government agencies delivery system in various entrepreneurship development programs.
The result revealed that the relationship of micro saving and Bumiputera SME Performance in Sabah is significant with t-value 3.939 (p‹0.05). This study supported that there is relationship between Micro Saving and performance. It is argued that micro accessible can help inculcate savings habit in poor households and serve as a free interest rate sources of funding for daily life and managing business expenditure (Ononugbo & Nwosu,2006).
In addition, the study revealed that the relationship between financial knowledge and Bumiputera SMEs Business Performance in Sabah is not supported. The result of this study contradicts with the study Lusardi, (2014), Bumiputera SMEs felt that deep financial knowledge is not necessary for business success as they can outsource their accounting function or employed the services of accountant. Only basic knowledges are applied by SMEs to maintain bookkeeping such as filing of invoice, receipt, payment voucher and managing bank account.
Based on the research results, the micro saving was identified to be key determinant in SMEs business performance in Sabah. The finding of this study highlighted that micro saving is equally important in driving the growth of SMEs. In addition, this study helps Bumiputera SMEs entrepreneurs and managers to further understand the needs of micro saving for business success. Although finding on business grant assistance, and financial knowledge insignificant in this study, SMEs owners should not completely reject the important of business grant assistance, and financial knowledge as these two items have been proved in previous and other studies have significant contribution toward SME performance. Furthermore, these assistances and supported provide avenue or opportunity for SMEs to leverage on external source of funding for growth. This study provides an overview of the issues and challenges faced by the SMEs in Sabah as mention in Sylvia Nabila et al., (2020).
In conclusion, matters of business performance among bumiputera entrepreneurs’ issues can be solved by joint efforts of policy makers who encourage bumiputera entrepreneurs to engage in SME, as medium for the government agencies especially TERAJU to uplift bumiputera entrepreneurs. This study shows that micro saving has significant effects towards Bumiputera SME performance. However, the business grant assistance, micro financing does not show significant relationship towards Bumiputera SME performance and the financial knowledge does not have significant relationship with SME businesses performance. This is due to the size of the entrepreneurs, still at the early stage of the business life cycle, and less than 5 years operation. This government should review its implementation mechanism to ensure the objectives of entrepreneurship policies and initiatives are meet and achieved.
For policymakers, this study suggests that the Sabah government must formulate a new research agenda and innovative policies for SMEs. Policymakers need to be aware of economic uncertainties by applying special fiscal and support measures to enable SMEs to build up their competitiveness and growth that contribute to the wealth creation of the state economy. Despite the mixed findings, practitioners must embrace entrepreneurial mindset in utilising government assistance and programs to enhance business performance.
As this study conducted during the covid-19 pandemic and the implementation of movement control order by the government, the results of this study limited to the respective respondents.
A longitudinal study might provide better insights into emerging issues and realities facing
SMEs and gain better understanding the development, survival and growth of SMEs. Similarly, this study’s contradictory or insignificant findings may offer fertile ground for future research.
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