Building human capital in developing nations through SMEs: a strategic and complementary role for universities and small scale accounting and consulting firms

Abstract

This paper introduces an SME development model, based on a case study of the Malaysian SME enabling environment. It proposes a structure of institutions that specifically addresses the different challenges faced by SMEs (including a lack of technological know-how, market and trade intelligence, advice on quality and capacity enhancements and financing), encased within supporting regulatory policies and synergistically linked with small scale accounting and consulting firms. It proposes establishing small business development units (SBDUs), within comprehensive universities, to strategically harness and deploy the universities’ internal brainpower for boosting nationwide SME development. It also suggests harnessing the power of the free market by promoting small scale accounting and consulting firms, that will serve as information intermediaries between SMEs, SBDUs and various institutions set in place to help SME development. A national human resource accounting policy is proposed to help in the governance of the SME sector. This policy would help to measure, manage and promote human capital development at the level of firms, economic sub sectors and the nation. Various incentives, such as tax exemptions and national level recognition and awards for successful consultants, will further promote SME development. These measures can also be promoted at regional levels, such as the ASEAN and APEC. Given that SMEs are major sources of employment, these measures that help to create robust SMEs that would support sustained long-term economic growth, which would in turn help sustain low unemployment rates and combat poverty.