Defining SMEs and Identifying their features

Defining SMEs and Identifying their featuresGovernmental committee findings and research schemes establish different approaches about the comment and the characteristics of sm exclusively and mediocre businesses. Regarding performance of SMEs Westhead tale have mentioned the small firm is non a scaled down version of a large firm. In short, theories relating to SMEs must visit the motivations, constraints and uncertainties facing smaller firms and recognize that these differ from those facing large firms. on that point atomic number 18 so many criteria either qualitative or quantitative to set what form an enterprise is. In case of quantitative measures staffing level, turnover and asset can be mentioned while others carry qualitative approach.Not only in that respect is a large number of prospects regarding the features of SMEs but also governmental viewpoints conduct a numerous of SMEs definitions depending on the county being considered. For example the report which has been issued by Wiltshire committee in Australia has shown this flexible definition of any SMEs (Meredith, 1994) Small business is one in which one or two persons are required to make all of the critical decisions (such as finance, accounting, personnel, inventory, production, servicing, marketing and selling decisions) without the aid of internal (employed) specialists and with owners only having specific knowledge in one or two functional areas of prudence. coupled states pay more attention to the position of organization within the overall marketplace. According to United States Small Business Administration (SBA) SMEs have the following definition An SME shall be deemed to be one which is independently owned and operated and which is non dominant in its field of operation.On the other hand the quantitative attitude has been emerged in United Kingdom, defining an SME as Having fewer than 50 employees and is not a subsidiary of any other company.Small and medium enterprises have their own characteristics and applying large-scaled companies features to SMEs is not suitable.The studies which have done by Reynolds et al., (1994), Murphy (1996), Bunker MacGregor (2000) show differences in management style between large business and SMEs. These studies have illustrated SMEs tend to have a small management team rather than a group of people (often prefer to have one or two individuals), they are rigorously monitored by owner of the firm and they have little control over their environment and responsibilities and the wish they could be independent.Differences between SMEs and larger firms are magnified even up more when they move toward IT (Bunker and MacGregor 2000).Khan and khan (1992) mentioned that SMEs prefer not to run complicated applications on their computers.According to a general point of view of literature, a summary of features of SMEs has been reported by MacGregor and Vrazalic (2004) which is illustrated in Table. SMEs characteristics can be cat egorize either internal or external. Internal features embrace management, decision making and prep routinees, and acquisition of resources on the other hand external characteristics are associated to the market (products/services and customers) and external environment.IDCharacteristics of SMEsReported byINT1SMEs have small and centralized management with a short range perspective.Reynolds et al.. (1994)Bunker MacGregor(2002)Welsh white (1981)INT2SMEs have poor management skills.Blili Raymond (1993)INT3SMEs have informal and inadequate planning and record property processes.Reynolds et al., (1994)Tetteh Burn (2001)Miller Besser (2000)Rotch (1981)INT4SMEs exhibit a strong desire for independence and avoid business ventures which impinge on their independence.Dennis (2000)Reynolds et al., (1994)INT5The SMEs owner(s) has/have a strong influence in the decision making processReynolds et al., (1994)Murphy (1996) Munker MacGregor (2000)INT6SMEs owners often withhold discipline f rom colleagues.Dennis (2000)INT7The decision making process in SMEs is intuitive, rather than bases on exposit planning and exhaustive study.Reynolds et al.. (1994)Bunker MacGregor(2000)INT8Intrusion of family values and concerns in decision making processes.Dennis (2000)Bunker MacGregor (2000)IDCharacteristics of SMEsReported byINT9SMEs are more intent on improving day-to-day procedures SMEs face difficulties obtaining finance and other resources, and as a result have fewer resources.MacGregor et al., (1998)Cragg King (1993)Welsh White (1981)Gaskill Gibbs (1994)Reynolds et al. (1994)Blili Raymond (1993)INT 10SMEs are more reluctant to spend on information technology and hence have limited use of technology.Walczuch et al. (2000)Dennis (2000)MacGregor Bunker (1996)Poon Swatman (1997)Abell Limm (1996)INT11SMEs have a lack of good knowledge and specialist staff and provide little IT training for staff.Martin Matlay (2001)Cragg King (1993)Bunker MacGregor (2000)Reynolds et al., (1994)Blili Raymond (1993)Table 1 Internal characteristics of SMEs categorized by MacGregor and Vrazalic (2004)IDCharacteristics of SMEsReported byEXT 1SMEs have a narrow product/service range.Bunker MacGregor (2000)Reynolds et al. (1994)EXT2SMEs have a limited share of the market (often confined toward a ceding back market) and therefore heavily rely on few customer.Hadjimonolis (1999)Lawrence (1997)Quayle (2002)Reynolds et al. (1994)EXT3SMEs are product oriented, while large businesses are more customer oriented.Reynolds et al. (1994)Bunker MacGregor (2000)MacGregor et al(1998)EXT4SMEs are not interested in large shares of the market.Reynolds et al. (1994)MacGregor et al. (1998)EXT5SMEs are unable to compete with their larger counterparts.Lawrence (1997)EXT6SMEs have lower control over their external environment than larger businesses and therefore face more uncertainty.Westhead Storey (1996)Hill Stewart(2000)EXT7SMEs face more risks than large businesses because th e failure rates of SMEs are higher.Brigham Smith (1967)Delone (1988)Cochran (1981)Table 2 External characteristics of SMEs categorized by MacGregor and Vrazalic (2004)Obviously, the most significant SMEs feature which clarifies border between small businesses and their larger counterpart is uncertainty the characteristic which has been come up by Westhead Storey (1996) and Hill Stewart (2000). It takes root in lacking control over external environment and this feature shows differences between large enterprises and their small counterparts.Electronic CommerceAs the term electronic commerce is still an emerging concept, the definition varies between different contexts. Generally electronic commerce refers to the replacement of physical economic processes with electronic ones and the creation of new models for collaboration among trading partners. According to Tuunainen (1999) E-commerce consists of transaction oriented internet base functions (e.g. on-line catalogs, purchasing an d payment).For online retail selling, the term e-tailing is sometimes used.There are a numerous studies regarding E-commerce so there are so many definitions for E-commerce.Turban et al. (2002) have expressed this definition as an emerging concept that describes the process of buying, selling or exchanging services and information via computer networks.Cummings and LeMaire (2005) described the meaning of E-commerce as an online system that allows customers to perform transactions over Internet. This process consists of hale business steps from ordering to delivery.Raymond (2001) specified E-commerce as functions of information exchange and commercial transaction support that operate on telecommunications networks linking business partners (typically customers and suppliers).Another definition which has been mentioned by MacGregor and Vrazalic (2004) is one of which presented by Damanpour (2001) as any net business activity that transforms internal and external relationships to crea te value and exploit market opportunities drive by new rules of the connected economy.Zwass (1996) identified another definition for E-commerce as sharing of business information, maintaining business relationships and conducting business transactions by means of telecommunications networks.An e-commerce and festering report by the United Nations Conference on Trade and festering (UNCTAD) anticipated total value of world e-commerce in 2002 at about US$2.3 trillion, and it came to US$12.8 trillion by 2006 (E-commerce and Development Report, 2002) so in the words of Kofi Annan, the former Secretary-General of the United Nations E-commerce is one of the most visible examples of the way in which information and communication technologies (ICT) can contribute to economic growth. It helps countries improve trade efficiency and facilitates the integration of developing countries into the global economy. It allows businesses become more competitive. And it provides jobs, thereby creating wealth (E-commerce and Development Report, 2002).