Faisal -business development of small-scale businesses in saudi arabia Dissertation

Faisal -business development of small-scale businesses in saudi arabia - Dissertation Example A brief scan of the important theories and the challenges to them are as follows: Firm size: According to Schiffer and Weder, the prevailing assumption is that SMEs have more problems than large firms because of their size. The reasons favoring large firms include economies of scale and entry costs; political influence; and greater visibility. Life Cycle vs Age: Masurel & Montfort (2006) analysed the stages in the life cycle of small and medium scale enterprises, in particular in the professional services sector, and distinguishing one stage from the other. Four stages were distinguished – starting; growth; maturity; and decline. First three stages show a diversification in sales, increase in differentiation of labor force, and increase in labor productivity. In the last stage, all these measures decrease. These stages, rather than the firm’s age, are what determine its growth. ... As to innovativeness as a factor in itself, Masurel, et al (2003), Nijkamp (2000) found that the element of leadership fosters creativity in the management of SMEs are determinative of innovative behaviour. Structure: Laforet and Tann (2006) and Tidd, et al. (2001) state that there is a highly significant difference between structure and innovation. This indicates that innovation does not develop well under hierarchical structures, mainly because of high levels of bureaucracy, and flatter SME structures tend to lead to more successful innovative efforts. On the other hand, Wei Xiuli and Juan Zhao (2009) qualifies this, stating that the optimum line structure of SMEs should take into consideration the typical organizational structure of the industry, the maturity of the firm, the specific stage it is in, and other factors that impact on the firm’s performance. Strategic Alliances: Booz, Allen & Hamilton, (n.d.) showed in their studies that SMEs will benefit through the establis hment of cooperative arrangements with other organizations and businesses. Joining forces helps ease expenses by sharing expertise, assets, expenses, and risk without the need for cash, debt or trading equity. In many instances, cooperating groups resort to bartering. Research objectives It is understandable that small and medium scale industries are seldom made the topic of academic research, because of the many factors that are perceived to influence this segment of the business, the studies appear to be fragmented in that so many assumptions are made as to the type of industry and the specifications of the company (high-tech or low-tech, service or manufacture, start-up or mature, mass production or custom designed, and so forth). This study therefore