Understanding the Barriers Limiting SMEs’ Capacity to Participate in Formal Training: A Perspective from an Emerging Market

Authors

  • Obi Berko O. Damoah
  • Augustina Adei Ashie
  • Kekesi Kodjo Elias

Abstract

Whilst SMEs are known to contribute significantly to the socio-economic development of most economies of the world, they are also known to face many challenges which limit their full effectiveness. The present study seeks to explore the factors that limit SMEs’ capacity to participate in formal training programmes from the Ghanaian perspective. The study seeks to identify the extent to which the barriers to training compare and contrast with existing studies, although the extant literature argues that some barriers are more specific to some regions. The study is based on a purposive sample of 85 owner-managed SMEs drawn from the capital of Ghana, Accra. Using the principal component analysis, coupled the mean rankings of the respondents’ average score as the main analytical tools, the results show that among the eight main barriers that were found, lack of accessibility to training, lack of funds to fund training programme and a negative perception of owner-managers regarding the usefulness of training were the three most important barriers accounting for why SMEs from Ghana find it difficult to participate in formal training and therefore remain inefficient and ineffective compared to their counterparts’ large firms. 

Author Biographies

Obi Berko O. Damoah

University of Ghana Business School

Augustina Adei Ashie

University of Education, Winneba, Ghana

Kekesi Kodjo Elias

University of Ghana

References

Abor, J. and Biekepe, N. (2006). Small Business Financing Initiatives in Ghana. Problems and Perspective in Management, 4(3), 69-77

Abor, J., Quartey, P. (2010). Issues in SME development in Ghana and South Africa. International Research Journal of Finance and Economics, 39(6), 215-228.

Adom, P. K., Amakye, K., Doh, E., and Anku, R. (2014). SMEs Record Keeping in Ghana: Has

VAT Made It Better? International Journal of Economics and Financial Issues, 4(1), 152.

AMOAFO, S. O. (2012). Problems of SMEs in Ghana. Daily Graphic, 14th July, p.15.

Argote, L., and Ingram, P. (2000). Knowledge Transfer: A Basis for Competitive Advantage in Firms. Organisational Behaviour and Human Decision Processes, 82(1), 150 – 169,

Armeanu, D., Istudor, N., and Lache, L. (2015). The Role of SMEs in Assessing the Contribution of Entrepreneurship to GDP in the Romanian Business Environment. Amfiteatru Economic, 17(38), 195.

Armstrong, M. (2006). Armstrong’s Handbook of Performance Management: An Evidencebased Guide to Delivering High Performance (3rd edition). Kohan Page, London, Philadelphia, New Delhi.

Aryeetey, E. (2001). Priority Research Issues Relating to Regulation and Competition in Ghana.

Centre on Regulation and Competition Working Paper Series, University of Manchester, Manchester

Asare, A., O. (2014). Challenges Affecting SMEs Growth in Ghana. International Journal of Sustainable Development, 7(6), 24-28

Beyene, A. (2002). Enhancing the Competitiveness and Productivity of Small and Medium Scale Enterprises (SMEs) in Africa: An Analysis of Differential Roles of National Governments through Improved Support Services. Africa Development. 27(3), 130-156.

Bhatnagar, J. (2007). Talent Management Strategy of Employee Engagement in Indian ITES Employees: Key to Retention. Employee relations, 29(6), 640-663.

Bilal, Z. O., and Al Mqbali, N. S. (2015). Challenges and Constrains Faced by Small and Medium Enterprises (SMEs) in Al Batinah Governorate of Oman. World Journal of Entrepreneurship, Management and Sustainable Development, 11(2), 120-130.

Bourletidis, K. (2013). The Strategic Management of Market Information to SMEs during Economic Crisis. Procedia-Social and Behavioural Sciences, 73, 598–606.

Bowen, M., Morara, M and Mureithi, S. (2009). Management of Business Challenges Among

Small and Micro Enterprises in Nairobi-Kenya. KCA Journal of Business Management, 2(1), 16-30

Brush, C. G., Ceru, D. J., and Blackburn, R. (2009). Pathways to Entrepreneurial Growth: The Influence of Management, Marketing, and Money. Business Horizons, 52(5), 481-491.

Burcin, A. (2015). An Analysis of the Impact of SMEs on the Labour Market. International Journal of Economics Practices and Theories, 5(3), 160-165

Byrom, J., Parker, C., and Harris, J. (2002). Towards a Healthy High Street: Identifying Skills Needs in Small Independent Retailers. Education+ Training, 44(8/9), 413-420.

CEDEFOP (European Centre for the Development of Vocational Training) (2010). Jobs in Europe to become more knowledge and skills-intensive. Cedefop Briefing Note, February 2010, Cedefop, Thessaloniki (Pylea).

Chowdhury, M. S. A., Azam, M. K. G., and Islam, S. (2015). Problems and Prospects of SME financing in Bangladesh. Asian Business Review, 2(2), 51-58.

Dalziel, P. (2011). Leveraging Training and Skills Development in SMEs: A Regional Skills Ecosystem Case Study. Lincoln University: Agribusiness and Economics Research Unit.

Dasanayaka, S. W. S. B. (2011). Global Challenges for SMEs in Sri Lanka and Pakistan in Comparative Perspective. Business Review, 6(1), 61-80.

Dasanayaka, S., Kankanamge, R., andSardana, G. (2011). Identification of Barriers for Development of the Sri Lankan Small and Medium Scale Furniture and Wooden Products Manufacturing Enterprises. Euro Asia Journal of Management, 21(40), 69–101.

Feldens, M., Maccari, E., andGarcez, M. (2012). Barriers for Production Innovation in Small and Medium Technology-based Firms in Brazil. Brazilian Business Review, 9(3), 1–12.

Fjose, S., Grünfeld, L. A., and Green, C. (2010). SMEs and Growth in Sub-Saharan Africa: Identifying SME Roles and Obstacles to SME growth. MENON Business Economics, MENON Publication, (14).

Gree, A., and Thurnik, C. (2003). Firm Selection and Industry Evolution: The Post Country Performance of New Firm. Journal of Evolutionary Economics, 4(4), 243-264.

Green, A. and L. E. Martinez-Solano (2011). Leveraging Training Skills Development in SMEs:

An Analysis of the West Midlands, England, UK. OECD Local Economic and Employment Development (LEED) Working Papers, 2011/15, OECD

Publishing.http://dx.doi.org/10.1787/5kg0vststzr5-en

Grimsholm, E. and Poblete, L. (2010). Internal and External Factors Hampering SME Growth:

A qualitative case study of SMEs in Thailand. Master in Business Administration, Gotland University

Guijarro, A., Garcia, M., and Auken, H. (2009). Barriers to Innovation among Spanish Manufacturing SMEs. Journal of Small Business Management, 47(4), 465–488.

Gunerergin, M., Penbek, S., and Zaptcioglu, D. (2012). Exploring the Problems and Advantages of Turkish SMEs for Sustainability. Procedia - Social and Behavioral Sciences, 58, 244– 251.

Hashim, F. (2015). SMEs’ Impediments and Developments in the Internationalization Process: Malaysian Experiences. World Journal of Entrepreneurship, Management and Sustainable Development, 11(2), 100-119.

Hatega, G. (2007). SME Development in Uganda: A Paper Presented on SMEs in Uganda at the Public Lecture by Private Sector Foundation.

Henrekson, M., and Johansson, D. (2010). Gazelles as Job Creators: A Survey and Interpretation of the Evidence. Small Business Economics, 35(2), 227-244.

Hessels, J., and Parker, S. (2013). Constraints, Internationalization and Growth: A Cross-Country Analysis of European SMEs. Journal of World Business, 48(1), 137–148.

Hogarth T., Bosworth D.L., Gambin L., Wilson R.A. and Stanfield C. (2009). Review of Employer Collective Measures: Empirical Review, Evidence Report 7, UK Commissionfor Employment and Skills, Wath-upon-Dearne and London

Hyz, A. B. (2011). Small and Medium Enterprises (SMEs) in Greece - Barriers in Access to Banking Services. An Empirical Investigation. International Journal of Business and Social Science, 2(2), 161–165.

Irjayanti, M., and Azis, A. (2012). Barrier Factors and Potential Solutions for Indonesian SMEs. Procedia Economics and Finance, 4, 3–12.

Janita, I., and Chong, W. (2013). Barriers of B2B e-Business Adoption in Indonesian SMEs: A Literature Analysis. Procedia Computer Science, 17, 571–578.

Ji, H. (2011). The Reasons and Solutions for Chinese SMEs' Financing Dilemma. Journal of Special Zone Economy in China, 2, 219-221.

Johnson, S. (2002). Lifelong Learning and SMEs: Issues for Research and Policy. Journal of Small Business and Enterprise Development. 9(3), 285-95.

Johnston, K. and Loader, K. (2003). Encouraging SME Participation in Training: Identifying practical approaches. Journal of European Industrial Training, 27(6), 273 – 280.

Kamalian, A., Rashki, M., and Arbabi, M. (2011). Barriers to Innovation among Iranian SMEs. Asian Journal of Business Management, 3(2), 79–90.

Kayanula, D., and Quartey, P., (2000). The Policy Environment for Promoting Small,Medium Enterprises in Ghana and Malawi. Finance and Economic Research Programme Working Paper Series 15. Institute of Development Policy Management (IDPM), University of Manchester.

Keough, W. and Stewart, V. (2001). Identifying the Skill Requirements of the Workforce in SMEs: Findings from a European Social Fund Project. Journal of Small Business and Enterprise Development, 8(2), 140-149.

Kerr, A. and McDougall, M. (1999). The Small Business of Developing People. Woodcock Publications.

Kongolo, M. (2010). Job Creation versus Job Shedding and the Role of SMEs in Economic Development. African Journal of Business Management, 4(11), 2288.

Kuratko, D. F. and Welsch, H. P. (2004). Strategic Entrepreneurial Growth, 2nd ed., Mason South Western, OH

Lange, T., Ottens, M. and Taylor, a. (2000). SMEs and Barriers to Skills Development: A Scottish Perspective. Journal of European Industrial Training. 24(1), 5-11

Leech, N.L., K.C. Barrett and G.A. Morgan, (2005). SPSS for Intermediate Statistics, Use and Interpretation. 2nd Ed. Lawrence Erlbaum Associates Inc. New Jersey.

Levy, B. (1993). Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical Assessment. The World Bank Economic Review, 7(1), 65-83.

Lukács, E. (2005). The Economic role of SMEs in World Economy, Especially in

Europe. European Integration Studies, 4(1), 3-12.

Mabey, C., and Thomson, A. (2000). Achieving Management Excellence. London: Institute of Management.

Magableh, I and Al-Mahrouq, M. (2007). Small and Medium Enterprises (SMEs): Concepts, Characteristics, Importance, Merits and Obstacles. A paper prepared at Small Enterprises: An Effective Tool to Address Poverty Forum, Yarmouk University Jordan 29-31July.

Magableh, I. K., Kharabsheh, R., and Al-Zubi, K. A. (2011). Determinants and impact of training: the case of SMEs in Jordan. International Journal of Economics and Finance, 3(5), 104.

Matlay, H. (1997). The Paradox of Training in the Small Business Sector of the British Economy. Journal of Vocational Education and Training, 49(4), 573-589.

Matlay, H. (2009). Entrepreneurship Education in the UK: A Critical Analysis of Stakeholder

Involvement and Expectations. Journal of Small Business and Enterprise Development, 16(2), 355-368.

Medarova, V., Bures, V., and Otcenaskova, T. (2012). A Review of Obstacles to Successful eLearning Deployment in SMEs. Journal of Innovation Management in Small and Medium Enterprises, 12, 1–9.

Millman, C., Li, Z., Matlay, H., and Wong, W. C. (2010). Entrepreneurship education and students' internet entrepreneurship intentions: Evidence from Chinese HEIs. Journal of Small Business and Enterprise Development, 17(4), 569-590.

Millman, C., Matlay, H., and Liu, F. (2008). Entrepreneurship Education in China: a Case Study Approach. Journal of Small Business and Enterprise Development, 15(4), 802-815.

Moy, J. W., and Luk, V. W. (2003). The Life Cycle Model as a Framework for Understanding Barriers to SME Growth in Hong Kong. Asia Pacific Business Review, 10(2), 199-220.

Mutalemwa, D. (2009). Barriers to SMEs Development in the Manufacturing Sector: Evidence from Tanzania. African Journal of Business and Economic Research, 4(2), 93–111.

Nichter, S., and Goldmark, I (2009). Small Firm Growth in Developing Countries. World Development, 37(9), 1453-1464.

OECD (2009). Top Barriers and Drivers to SME Internationalization. Report by the OECD Working Party on SMEs and Entrepreneurship.

Okpara, J. (2011). Factors Constraining the Growth and Survival of SMEs in Nigeria Implications for Poverty Alleviation. Management Research Review, 34(2), 156–171.

Okpara, J., and Kabongo, J. (2009). An Empirical Evaluation of Barriers Hindering the Growth of Small and Medium Sized Enterprises (SMEs) in a Developing Economy. African Journal of Business and Economic Research, 4(1), 7–21.

Omar, S.S., Arokiasamy, l. and Ismail, M. (2009). The Background and Challenges Faced by the Small Medium Enterprises. A Human Resource Development Perspective. International Journal of Business and Management, 4(10), 95-102.

Panagiotakopoulos, A. (2011). Barriers to Employee Training and Learning in Small and Medium-sized Enterprises (SMEs). Development and Learning in Organizations, 25(3), 15-18

Peci, F., Kutllovci, E., Tmava, Q., and Shala, V. (2012). Small and Medium Enterprises Facing Institutional Barriers in Kosovo. International Journal of Marketing Studies, 4(1), 95– 107.

Pissarides, F., Singer, M., and Svejnar, J. (2003). Objectives and Constraints of Entrepreneurs: Evidence from Small and Medium Size Enterprises in Russia and Bulgaria. Journal of Comparative Economics, 31(3), 503-531.

Quader, M. (2008). Human Resource Management Issues as Growth Barriers in Professional Service Firm SMEs. Journal of Services Research, 7(2), 115–161.

Rhaiem, M. (2012). Determinants of Export Effort in Innovative Manufacturing SMES: An Empirical Study. International Journal of Business Strategy, 12(3), 81–93.

Saini, D., and Budhwar, P. (2008). Managing the Human resource in Indian SMEs: The Role of Indigenous Realities. Journal of World Business, 43(4), 417–434.

Salikin, N., Wahab, N. A., and Muhammed, L. (2014). Strengths and Weaknesses among Malaysian SMEs, Financial Management Perspective. Social and Behaviour Science, 129, 334-340.

Sambrook, S., and Stewart, J. (2000). Factors Influencing Learning in European Learning Oriente Organisations: Issues for Management. Journal of European Industrial Training, 24(2/3/4), 209-219.

Schuler, R. S., Jackson, S. E., and Tarique, I. (2011). Framework for Global Talent Management: HR Actions for Dealing with Global Talent Challenges. Global talent management, 1736.

Sherazi, S. K., Iqbal, M. Z., Asif, M., Rehmanand, K., and Hussain Shah, S. S. (2013). Obstacles to Small and Medium Enterprises in Pakistan: Principal Component Analysis Approach. Middle-East Journal of Scientific Research, 13(10), 1325-1334.

Siaw, C., and Abdul, R. N. (2012). Critical Review on the Regulatory and Legislation Challenges Faced by Halal Start-up SMEs Food Manufacturers in Malaysia. ProcediaSocial and Behavioural Sciences, 57, 541–548.

Sparrow, P., Farndale, E., and Scullion, H. (2013). An Empirical Study of the Role of the Corporate HR Functions in Global Talent Management in Professional and Financial Services Firms in the Global Financial Crises. International Journal of Human Resource Management, 24, 1777-1798.

Storey, D. J. (2004). Exploring the Link, among Small Firms, between Management Training and Firm Performance: A Comparison between the UK and other OECD Countries. The International Journal of Human Resource Management, 15(1), 112-130.

Thomson, A., Mabey, C., Storey, J., Grey, C., and Iles, P. (2001). Changing Patterns of

Management Development, Blackwell, Oxford,

Trianni, A., and Cagno, E. (2012). Dealing with Barriers to Energy Efficiency and SMEs: Some

Empirical Evidences. Energy, 37(1), 494–504. http://dx.doi.org/10.1016 /j.energy.2011.11.005

UNIDO, (1999). SMEs in Africa Survival Against all Odds, http://www.unido.org/doc/view?document_id=3927andlanguage_code =en

VanVuuren, J., and Botha, M. (2010). The Practical Application of an Entrepreneurial Performance Training Model in South Africa. Journal of Small Business and Enterprise Development, 17(4), 607-625.

Walsh, J. P., and Ungson, G. R. (1991). Organizational Memory. Academy of management review, 16(1), 57-91.

Wang, F. (2016). What are the Biggest Obstacles to Growth of SMEs in Developing Countries?A Picture Emerging from an Enterprise Survey (No. 2016/09). Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies.

Warren, H. (2012) Employee Perception of Training and Development Program: Case of Innocent. A Thesis Submitted in Partial Fulfilment of the Requirements of Manchester Metropolitan University Business School for Bachelor Degree in Business and Psychology.

Webster, B. Walker, E. and Brown, A. (2005). Australian Small Business Participation in Training Activities. Education and Training, 47(8/9), 552 –561.

Westhead, P. and Storey, D. (1996). Management Training and Small Firm Performance: Why is the Link so Weak?†International Small Business Journal, 14, 4, 13-24.

Wignaraja, G., and Jinjarak, Y. (2015). Why do SMEs not Borrow more from Banks? Evidence from the People’s Republic of China and Southeast Asia. Asian Development Bank Institute Working Paper Series 509.

Xie, X., Zeng, S., and Tam, T. (2010). Overcoming Barriers to Innovation in SMEs in China: A Perspective based Cooperation Network. Innovation: Management, Policy and Practice, 12(3), 298–310.

Zaied, A. N. (2012), Barriers to E-Commerce Adoption in Egyptian SMEs. Information Engineering and Electronic Business, 3, 9–18.

Published

2018-04-17