Micro, small and medium‐sized enterprises development in the Kingdom of Saudi Arabia: Problems and constraints

Abstract

Purpose The purpose of this paper is to shed light on the main problems and constraints faced by micro, small and medium‐sized entrepreneurs (MSMEs) in the Kingdom of Saudi Arabia. Design/methodology/approach To attain the above objective, the study employed a mixed methodology research design where both quantitative and qualitative methods were used. A survey method was used to gather data from 177 MSMEs located in selected cities in Saudi Arabia (i.e. Riyadh, Jeddah, Jubail and Al‐Khobar), and, in addition, 15 of these entrepreneurs were purposefully selected and interviewed. Statistical analysis was conducted to identify the factors constraining the growth and survival of MSMEs in the country. The relevant literature review pinpoints salient issues in the environment of the small business enterprises. Findings The results show that the difficulties in obtaining financial support, bureaucracy, lack of credit options and unfriendly business environment are the main problems and constraints faced by the analysed MSMEs. Other important problems include unfriendly business environment, inadequate government support, unpredictable policy changes, and lack of training. These barriers vary according to the field of activity of the enterprises. Research limitations/implications The instruments used for this study need to be subjected to more statistical tests in order to establish a more robust validity and reliability. In addition, replication of this study using larger samples with more types of business sectors and a broader geographic base is suggested for cross‐validation purposes. Practical implications Policy makers – such as governments (federal, state, local), NGOs, and other stakeholders – can strengthen their MSME entrepreneurs by launching promotional schemes that could lead to entrepreneurial success and design targeted policies and related support programmes that will actively stimulate the development of MSME businesses. Originality/value The paper serves to enrich the understanding on the subject of entrepreneurship in an Arab country and will specially help to fill the lack of academic research available about MSMEs businesses in the Kingdom of Saudi Arabia. In addition, the insights gained from this study contribute to the future development of this line of research, particularly in a non‐Western context. Proper attention to the issues raised and recommendations made could give a significant boost to entrepreneurial activities in the region.