Business environment analysis and growth of small enterprises in Kerala

Abstract

In recent times, enhancing small-scale enterprises have been viewed as an effective way of fostering the private sector s contribution to the economic development of a nation. Small-scale enterprises play a key role in the industrialization of a developing country like India. The survival and success of a firm mainly depends on the business environment existing in the State or country where it exists. There seems to be an agreement among researchers that the more conducive the business environment, the more likely new business will emerge and grow. The State of Kerala has a very high HDI and excellent standard of living. But Kerala s industrial sector, especially the micro and small-scale manufacturing sector, has not been performing well for a quite long period of time. If Keralites can be more entrepreneurial in other States or countries than in Kerala, the reason should be attributed to the prevailing business environment in Kerala and not to the venturesome or lethargic character of Keralites. In this context, an investigation was conducted in the State of Kerala to determine the impact of different business environmental factors on the micro and small- scale manufacturing enterprises. The study identified the main problems in the functional areas of production, marketing, finance and human resource management. The study identified the impact of micro environmental factors upon the functioning of micro and small manufacturing enterprises. The impact of factors connected with the customers, the public, the marketing intermediaries and the regulatory agencies was found as favourable. But the impact of the competitors, the suppliers and the financiers was found as unfavourable to the entrepreneurial community. The collective impact of seven micro environmental factors is favourable to the entrepreneurial community. As per t test analysis, there is no significant difference between micro enterprises and small-scale enterprises regarding the overall positive impact of micro business environmental factors.