Determinants of small and medium enterprises performance in the Malaysian auto-parts industry

Abstract

This paper examines factors determining the performance of SMEs in theMalaysian auto-parts industry. Using a multiple regression analysis, itis evident that firm age and foreign equity are significantly related tothe performance of the firms. This consolidates earlier expectations andstudies that age and foreign equity ownership do matter to SMEsperformance. These findings provide an important signal for SMEs forentering joint ventures with foreigners in order to achieve betterperformance and more importantly to compete in the growing open marketmechanisms. Only through joint ventures, foreigners would be eager totransfer a package of required assets, including technological,marketing and managerial skills to the local partners. Further researchshould be conducted to determine the role played by foreigners, who areresponsible for improving SMEs performance in the auto-parts industry.Future studies should also incorporate intangible performance measures,such as customer satisfaction, competitive position and quality ofproduct.