SME Development through Digital Transformation
Small and medium enterprises (or usually known as SMEs) often play an important role in the growth of developing economies. Some of their significant contributions include:
Addressing poverty by generating new jobs and by improving income levels of individuals
Instilling entrepreneurial skills among the masses
Diffusing economic activities in the rural areas, and hence, provide extensive sources of growth
Serving as suppliers of support services for larger corporations
Performing as incubators for converting domestic enterprises into large businesses
Creating employment for a large division of a country's unemployed workforce and contribute significantly to national GDP
It is an acknowledged fact that a dynamic, strong and efficient SME sector is a pivotal element "in establishing international competitive advantage", and ensures sustainable economic growth. However, SMEs in developing economies also face various limitations and problems that threaten their sustainability; e.g. limited access to financial resources, limited access to market/industry information, lack of managerial skills and competent workforce, lesser networking capabilities, lesser economies of scale etc.
Another key challenge for most SMEs is being able to engross innovative pursuits and to upgrade their technological capacities in order to meet more dynamic market requirements for improved quality products at lower prices, to keep up with increasingly tough competition and to adapt to changes in consumer’s tastes and preferences. And again, they have to overcome various obstacles to succeed in this endeavor; including high innovation/technology costs, high levels of risks related to innovation activities, lack or limitation of financial resources, low customer interest in product innovation, lack of information on technology and market, absence of skilled labors and compliance with stringent regulations and technical standards.
There is, therefore, a greater need to establish such a business environment that will inspire SMEs to not only develop their own organizational capacities to innovate and upgrade, but also to leverage the resources of other organizations such as financial institutions, government agencies, universities and academic bodies, policymakers and other private firms.
In this regard, Malaysia can be a role model, as it has set up effective mechanisms to synchronize various efforts to assist SMEs and has clearly linked SMEs’ development efforts to overall social-economic goals. The Philippines can definitely learn from the experience of Malaysia and provide a level playing field for SMEs to grow.
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