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3 J. Mgmt. & Sustainability 166 (2013)
Factors Affect the Success of SME in Bangladesh: Evidence from Khulna City

handle is hein.journals/jms3 and id is 515 raw text is: Journal of Management and Sustainability; Vol. 3, No. 3; 2013 ISSN 1925-4725 E-ISSN 1925-4733 Published by Canadian Center of Science and Education Factors Affect the Success of SME in Bangladesh: Evidence from Khulna City Md Reaz Uddin1 & Tarun Kanti Bose1 1Business Administration Discipline, Khulna University, Bangladesh Correspondence: Tarun Kanti Bose, Business Administration Discipline, Khulna University, Bangladesh. E-mail: tarun84ku ttyahoo.com Received: March 3, 2013 Accepted: April 2, 2013 Online Published: July 3, 2013 doi: 10.5539/jms.v3n3p166 URL: http://dx.doi.org/10.5539/jms.v3n3p166 Abstract Small and Medium Enterprises (SMEs) occupy dominant positions in economy. SMEs bear special significance for counties where density of population is very high because it offers huge employment opportunities and income generations at low cost. Considering the importance this study has strived to identify those factors contribute the success of SMEs using causal model. Data were collected from SMEs owners of the Khulna city, divisional city of Bangladesh. A total 195 respondents were finally interviewed for the study. Several factors were selected typically affect the success of SMEs from pervious literature. Important factors were identified first using rotated components matrix later regression statistics was applied to find out which are statistically significant. Business plan, channel of distribution, management skills and government support are identified statistically significant in determining success of SMEs in Khulna City. Keywords: factors, SME success, Khulna City, Bangladesh 1. Introduction Small and Medium Enterprises (SME) occupy a dominant position in any economy of world. SME activities cover all areas of business including manufacturing, mining, wholesaling, retailing, service and the like. This sector is an integral part of an economy and considered as an active engine of economic growth. Small and medium enterprises, including the tiny and 'micro' enterprises comprise virtually all (about 99.85%) of all business enterprises outside agriculture in Bangladesh (Rahman, 2009). Small and Medium Enterprises play an important role in economy through generation of employment, contributing to the growth of GDP, embarking on innovation and stimulating other economic activities (Gamage, 2003). SMEs including micro enterprises account for some 81.2%, while only 0.15% of all business enterprises employ a full 18.8% of the employment of all business enterprises outside agriculture (Rahman, 2009). In Bangladesh approximately 6 million micro, small and medium enterprises (MSMEs), which included enterprises with up to 100 workers employing a total of 31 million people, equivalent to 40 per cent of the population of the country of age 15 years and above. SMEs consisted of primarily wholesale and retail trade and repairs (40 per cent), production and sale of agricultural goods (22 percent), services (15 percent), and manufacturing only (14 per cent). Contribution to GDP varies sector to sector. Manufacturing contributed the highest proportion (38 per cent), followed by Agriculture (24 per cent) and, closely following, wholesale and Retail Trade and Repairs (23 per cent) (Mintoo, 2006). 2. Literature Review The success of SME depends on number of various factors which are multidimensional. Some factors are internal and some are external. Both affect the success but there is considerable variation in these factors identified by previous studies. Chittithaworn et al (2011) explored the business success factors of SME in Thailand based on a survey. They examined eight factors which are SMEs characteristic, management and know-how, products and services, Customer and Market, the way of doing business and cooperation, resources and finance, strategy, and external environment. They found some variables significantly affecting business success in Thailand which are SMEs characteristic, customer and market, the way of doing business and cooperation, resources and finance and external environment. Maher Al-Mahrouq (2010) in his case study on small and medium enterprise on Jordan identified some influential and positive factors affect business success.

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