Investigating the effects of organizational and owner : manager characteristics on environmental scanning practice of enterprise 50 (E50) small medium enterprise (SMEs) in Malaysia

Abstract

The influence of complex business environment has resulted in a continuous and increasing pressure for SMEs to adapt and change. Success in adaptation and change will come if they are able to match the threats and opportunities by understanding the business environment, and the key area of concern is environmental scanning. A review of the literatures has suggested a widening gap between the environmental scanning practices of small and large companies. SMEs are crucial in Malaysia’s economy and the development and progress of SMEs are growingly important. However, little is known about the environmental scanning activities of Malaysia SMEs particularly the E50 SMEs. The study investigates the extent of environmental scanning practice, the factors related to information sources that E50 SMEs utilized for environmental scanning and the effects of organizational and owner/ manager characteristics on environmental scanning practice of E50 SMEs.. The study employed the survey method. A total of 102 questionnaires were collected. Analysis of data found that E50 SMEs most frequently scanned the business environment using human/ oral information sources for customer information followed by scanning the technological sector. It was revealed that the main predictor of environmental scanning practice of E50 SMEs to be the resources for environmental scanning from the organizational characteristics factors and the study substantiates the hypothesis of the combined effects of the owner/ manager characteristics and organizational characteristics on the environmental scanning practice. The findings of the study provides an environmental scanning practice of E50 SMEs that can be emulated by SMEs in Malaysia to acquire meaningful signals from the environment that replaces gaining experience as a principal guide to the future. The findings of the study provides a basis for helping to identify owner/ manager requirements and necessary training programs to overcome environmental scanning barriers with respect to the utilization of information sources.