The IUP Journal of Entrepreneurship Development
Barriers to the Growth of Small and Medium Enterprises

Article Details
Pub. Date : March, 2022
Product Name : The IUP Journal of Entrepreneurship Development
Product Type : Article
Product Code : IJED020322
Author Name : Vianny Jeniston Delima
Availability : YES
Subject/Domain : Management Journals
Download Format : PDF Format
No. of Pages : 18



The importance of Small and Medium-Sized Enterprises (SMEs) to a country cannot be overstated since they are the engine that drives the economy. A slew of roadblocks hamper their growth. This study looks at the challenges small businesses face in Sri Lanka. Additionally, the study looks at the link between barriers and SME growth, with a view to finding the most crucial influencing element. A total of 100 SMEs were selected from 294 SMEs in Galle district. For the study, convenience sampling approach was employed. The correlation analysis revealed a strong negative but significant link between all obstacles and SME growth. According to the results of multiple regression analysis, all factors influence SME growth. Also, when all the hurdles to SME growth are taken into account, only financial and legal and government barriers substantially influence SME growth. In contrast, organizational and external barriers have no significant impact. The most influential element in SME growth is financial obstacles.


A Small and Medium-Sized Enterprise (SME) might be either family-owned/operated or a sophisticated organization with several levels of ownership and management. SMEs are a source of employment, competitiveness, economic vitality, and innovation; they increase entrepreneurial capacity and expand professional skill sets. They also have the advantage of a broader regional presence, which contributes to better revenue distribution for the enterprise. Every country classifies SMEs differently, based on their level of growth. The characteristics used to define SMEs includes: the number of workers, turnover, and investment. SMEs are defined as having less than 250 employees. Additionally, turnover should be no higher than e50 mn per year, while the total liabilities must not exceed e43 mn. SMEs are generally considered to be the European economy's most valuable asset (European Commission, 2003).