Risk-Taking in Malaysian Small and Medium-Sized Enterprises (SMEs): An Exploratory Factor Analysis
DOI:
https://doi.org/10.37231/jmtp.2025.6.1.455Keywords:
Risk-Taking,, Small and Medium Size Firms (SMEs),, Exploratory Factor Analysis (EFA)Abstract
Small and medium-sized enterprises (SMEs) contribute significantly to the economic growth of emerging economies. However, SMEs often face challenges in maintaining their performance levels. Thus, SMEs need to be able to take risks to showcase their capability, sustainability, and growth. This paper explores the impact of risk-taking on SMEs. It validates the risk-taking construct instrument through EFA, specifically in the context of SMEs in Malaysia. This study adopted a quantitative and cross-sectional research design with SMEs in all sectors, with the SME owners and the top management as the units of analysis. The researcher employed a closed-ended, structured questionnaire to gather primary data on risk-taking among SMEs from 130 respondents, utilizing a random sampling method. The data was then analysed using SPSS version 25. The items were adapted and modified to suit this study. The study's findings established a validated and reliable instrument for measuring the risk-taking construct among Malaysian SMEs, which could potentially inform the development of a process to facilitate risk-taking within SMEs. The study findings also provide valuable guidance for owners and top management of SME firms, encouraging them to take reasonable risks in order to enhance the workforce's performance in their respective sectors. Future researchers could further extend the instrument presented in this study by cross-examining it across underdeveloped, developing, and developed countries. This study will enhance the growing body of knowledge on business, management, SMEs, and particularly innovation performance. It will provide valuable insights for business scholars, industry experts, and SME researchers within the social sciences. Additionally, this research will aid in understanding the diverse modes of innovation performance in SMEs. Systematic academic studies that explore the benefits of innovation performance in the context of Malaysian SMEs are currently limited.
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