| Abstract |
Small and Medium Enterprises (SMEs) are the backbone of Malaysian economy. In fact, in 2016, the sector comprised 98.5% of business establishments, contributed to 65.3% of all employment and 366% of the gross domestic product (GDP). Currently, Malaysian SMEs are facing internal and external challenges, such as lack of managerial capabilities, lack of experience, and lack of financing, in addition to shouldering the burden of the regulatory environment. It has also been highlighted that one of the major reasons for the poor performance of Malaysian SMEs is poor governance. Good corporate governance (CG) practices lead to reduction of mismanagement, thereby ensuring success and sustainable growth. Unfortunately, in spite of encouragement given by the regulatory bodies, the absence of mandatory compliance for SME governance means that actual awareness and compliance are at very low levels in Malaysia. Therefore, this study proposes to examine the behavioral aspects of SMEs in adopting CG. The conceptual model integrates both Technology-Organizational-Environment framework, and Decomposed Theory of Planned Behavior. The chosen sample is the SMEs with international or national standard certification obtained from the directory of the Federation of Malaysian Manufacturers, 2017, as they must have a certain level of governance in place to ensure compliance. The targeted respondents are owners or managers of the selected SMEs, chosen because they have enough experience to be informed respondents. This study contributes to the development and promotion of CG principles in Malaysian SMEs by providing an insight into the current situation in the country, as well as by making up for the general lack of knowledge on SME governance in the country. It is also hoped that the findings help policymakers in crafting strategies regarding SME governance. |