Will lack of innovation cause small businesses to lose their competitive advantage?

Many developed and developing countries in the world attach importance to investment and focus on small business projects. Because it is an economic force that helps development and creates many advantages, including increasing GDP and reducing unemployment. At the local level, the Kingdom aims to increase GDP by 15% through encouragement and stimulation. The SME sector is one of the goals of the Vision 2030 program. Considering the importance of the sector, a directive was issued to establish the General Authority for Small and Medium Enterprises (Monsha’at), which is dedicated to providing services and assistance to SMEs in the qualification, authorization, financing and marketing of the targeted market segments of the industry. On the other hand, we find that some countries in the world have not been successful in increasing domestic production through SMEs. This is because they have not established a dedicated agency or center to help these countries implement programs for this sector, as is the case with our beloved Kingdom (Monsha’at). Instead, we find that what is worse is that these countries have changed the classification of enterprise size, for example, the sales revenue stipulated in the classification of small enterprises has changed from 5 million to 40 million. . Therefore, due to the modification of the enterprise classification by increasing the sales volume index, the proportion of small enterprises has increased, which has led to a temporary increase in domestic products, not for the economic future of the country and has a negative impact on the economy of these countries.

Small business refers to an enterprise with a small number of employees, small sales and little capital. According to this definition, the classification criteria for small enterprises may depend on descriptive classification, that is, the description of the nature of management, independence and sources of capital, since the capital of small enterprises is usually provided by the owner or from a small group of shareholders, and considering the size of the project, it is small compared to the activity to which it belongs, and is also located in a specific local area. Therefore, we find that, in quantitative terms, small enterprises are those projects with little capital, few workers, small sales, limited creativity and innovation, and little or almost no risk. Compared to entrepreneurial projects, there is. If we look closely at the most significant difference between entrepreneurship and small business, the purpose of entrepreneurship is to create financial wealth in a short period of time, and it is continuous and permanent, while the purpose of small projects is to generate continuous income, such as working income, or it exceeds or may decrease, and usually accumulate wealth over a long period of time. Entrepreneurship is characterized by high risk, which explains the exchange of risk for wealth. Without high risk, the project would be small. In addition, entrepreneurial work is characterized by creativity and innovation, which usually transforms ideas into very profitable services or products, and creates wealth, unlike small businesses usually provide … traditional and usual products.

It is worth noting that despite the country’s efforts to develop small and medium-sized enterprises, we found that many small businesses have been eliminated in the competition. Therefore, it left the market. As the Small and Medium Enterprise Administration must work quickly to overcome some challenges for the owners of these institutions, including internal challenges of these institutions, such as weak management, lack of experience, unplanned expansion of the project, or lack of research on the project. External factors include economic factors such as competition intensity, recession, and financing difficulties, fierce industry competition, lack of market information and data, and human resource needs. , Inflation, lack of experience in dealing with government regulations and legislation, in addition to lack of innovation is not considered a reason, or is not considered the main reason for small businesses to withdraw from the competition! Jihad Muhammad Habib

jihadmhabib@gmail.com