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Microcredit position in micro and small enterprise performance: the Malaysian case

Author

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  • Rosman Mahmood
  • M. Mohd Rosli

Abstract

Purpose - This paper aims to evaluate the microcredit position in the performance of micro and small enterprises (MSEs). In the case of Malaysian MSEs, the paper also aims to examine other relevant factors, especially entrepreneur‐specific factors, which may be equally important for improving firm performance. Design/methodology/approach - Primary data were collected from 756 MSE samples in Kelantan, the state where a large majority of the microcredit recipients under AIM and TEKUN run their business. Descriptive and multiple regression analyses were used to analyze the data. Findings - Microcredit is positively and significantly related to the performance of MSEs across all the microcredit programs under investigation. Other entrepreneur‐specific factors, especially entrepreneurial values and management practices are equally significant for enhancing firm performance. Practical implications - This study reminds policy makers, support institutions and small entrepreneurs that the microcredit program alone is not enough for improving the performance of MSEs. Besides microcredit, entrepreneur‐specific factors are equally important for firm performance. Thus, readjustment to the existing microcredit programs, especially on entrepreneurial and managerial developments, should be made so that entrepreneurial values and management competencies of the entrepreneurs could be enhanced from time to time for superior performance of MSEs. Originality/value - This paper proves that microcredit is important for firm performance. It also reminds theorists and practitioners that entrepreneur‐specific factors should not be neglected in their theoretical or practical consideration of micro and small firm performance.

Suggested Citation

  • Rosman Mahmood & M. Mohd Rosli, 2013. "Microcredit position in micro and small enterprise performance: the Malaysian case," Management Research Review, Emerald Group Publishing Limited, vol. 36(5), pages 436-453, April.
    • Handle: RePEc:eme:mrrpps:v:36:y:2013:i:5:p:436-453
    DOI: 10.1108/01409171311327226
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    Citations

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    Cited by:

    1. Yang Fuming & WeiLun Huang & Liu Xiaojing, 2022. "Micro- and small-sized enterprises’ willingness to borrow via internet financial services during coronavirus disease 2019," International Entrepreneurship and Management Journal, Springer, vol. 18(1), pages 191-216, March.
    2. Abiot Animaw Semegn & Narendra Kumar Bishnoi, 2021. "Analysis of Effect of Microfinance on the Performance of MSEs in Amhara National Regional State, Ethiopia," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 30(1), pages 153-178, March.
    3. Usman & A. S. & Tasmin & R., 2016. "The Relevance of Islamic Micro-finance in achieving the Sustainable Development Goals," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 6(2), pages 1115-1115.
    4. Wan Nurulasiah binti Wan Mustapa & Abdullah Al Mamun & Mohamed Dahlan Ibrahim, 2018. "Economic Impact of Development Initiatives on Low-Income Households in Kelantan, Malaysia," Social Sciences, MDPI, vol. 7(7), pages 1-17, July.
    5. Abdullah Al Mamun & Mohd Asrul Hery Bin Ibrahim & Rajennd A/L Muniady & Mohammad Bin Ismail & Noorshella Binti Che Nawi & Noorul Azwin Binti Md Nasir, 2019. "Observations of Participation in Development Initiatives on Enterprise Income and Asset in Peninsular Malaysia," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 5(2), pages 198-213, July.
    6. Rafiatul Adlin Hj Mohd Ruslan & Christopher Gan & Baiding Hu & Nguyen Thi Thieu Quang, 2020. "Impact of Microcredit on SMEs Performance in Malaysia," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(1), pages 109-130, June.
    7. Usman, A. S. & Tasmin, R. & Ulum, Z. K. A. B, 2019. "The Role of Entrepreneurial Empowerment in the Relationship between Islamic Microfinance and Well-being of Clients: A View from a Service Provider," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 26, pages 73-93.
    8. Salvador Cruz Rambaud & Joaquín López Pascual & Emilio M. Santandreu, 2023. "A socioeconomic approach to the profile of microcredit holders from the Hispanic minority in the USA," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-25, December.

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