Unlocking the potential of small and medium-sized enterprises in an emerging economy: A critical analysis of enablers and barriers

Abstract

Small and Medium Enterprises are crucial to the socioeconomic development of nations. They contribute to employment generation, bolster local economies, and drive regional growth. Nonetheless, SMEs face numerous challenges. This study explores the prospects and challenges of SMEs in Saudi Arabia using a qualitative case study. Thirty semi-structured interviews and four focus group discussions were conducted with SME employees and owners, selected through convenience and snowball sampling. Thematic analysis revealed that SMEs create jobs, diversify the economy, and are involved in innovation and technological advancement. However, they face challenges, including administrative charges, bureaucratic hurdles, financial constraints, technological issues, inadequate staff development, and insufficient marketing information. The study recommends establishing a specialized SME bank or fund, simplifying regulatory procedures, and offering subsidies or tax breaks for digital transformation. These findings provide valuable insights into the role of SMEs in Saudi Arabia's economic transformation and offer recommendations for policymakers and industry stakeholders.