THE CONTRIBUTION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN THE ALGERIAN ECONOMY: AN ENTROPY INDEX APPROACH

Authors

DOI:

https://doi.org/10.7251/ACE2441153K

Keywords:

Small and medium-sized enterprises, gross domestic product, employment, exports, Algeria

Abstract

The role of small and medium enterprises in the economic development of nations cannot be overstated. These businesses, ranging from small family-owned bakeries to medium-sized manufacturing plants, play a vital role in job creation, innovation, and overall economic growth. Numerous studies have established the crucial significance of SMEs to economic success and the development of regions. Our research aims to investigate the extent to which SMEs in Algeria contribute to the country’s economic development and diversification. Considering the economic status of Algeria as a developing nation heavily reliant on oil revenues, it presents a unique case for study. To achieve our research objectives, over 120 official government reports published between 2001 and 2022 are analysed. Descriptive data analysis was conducted, and the Entropy index was calculated to address the problematics and verify the hypotheses. The results reveal that SMEs in Algeria make considerable contributions to employment rates and GDP values. However, their numbers in export operations are very low. The study found that SMEs in Algeria are potent locally, but their performance in global markets is very poor.

Author Biography

  • Kamilia Loucif, Oum El Bouaghi University, Algeria

    Doctor grade -A-, The Department of Economy

References

Alaskari, O., Pinedo-Cuenca, R., & Ahmad, M.M. (2021). Framework for Implementation of Enterprise Resource Planning (ERP) Systems in Small and Medium Enterprises (SMEs): A Case Study. Procedia Manufacturing, FAIM 2021, 55 (January), 424–30. https://doi.org/10.1016/j.promfg.2021.10.058.

Amoah, J., Belas, J., Dziwornu, R., & Khan, K. A. (2022). Enhancing SME Contribution to Economic Development: A Perspective from an Emerging Economy. Journal of International Studies 15(2), 63–76. https://doi.org/10.14254/2071-8330.2022/15-2/5.

Ardic, O. P., Mylenko, N., & Saltane, V. (2011). Small and Medium Enterprises: A Cross-Country Analysis with a New Data Set. Policy Research Working Papers. The World Bank. https://doi.org/10.1596/1813-9450-5538.

Ayandibu, A., & Houghton, J. (2017). The Role of Small and Medium Scale Enterprise in Local Economic Development (LED). https://www.semanticscholar.org/paper/The-role-of-Small-and-Medium-Scale-Enterprise-in-Ayandibu-Houghton/96a91bb9e5a8d99da088219ec39339b8cff1f4a6.

Bank of Algeria. (2022). Quarterly Statistical Bulletins. Bank of Algeria. https://www.bank-of-algeria.dz/html/bulletin_statistique_EN.htm.

Berry, A., Rodriguez, E., & Sandee, H. (2001). Small and Medium Enterprise Dynamics in Indonesia. Bulletin of Indonesian Economic Studies, 37(3), 363–84. https://doi.org/10.1080/00074910152669181.

Birch, D. G. W. (1987). Job Creation in America: How Our Smallest Companies Put the Most People to Work. SSRN Scholarly Paper. Rochester, NY. https://papers.ssrn.com/abstract=1496185.

Bolton, J. E. (1982). The Future of Small Businesses: A Review of Developments since the Committee of Inquiry (1969-71). Journal of the Royal Society of Arts, 130(5310), 305–20.

Chaldun, E. R., Yudoko, G., & Prasetio, E. A. (2022). Underlying Internationalization Process Theories for Small and Medium Enterprises (SMEs): A Systematic Literature Review and Classification of Research Streams. Jurnal Manajemen Indonesia, 22(2), 199. https://doi.org/10.25124/jmi.v22i2.4063.

Croitoru, A. (2012). Schumpeter, J.A., 1934 (2008), The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle. Transaction Publishers, New Brunswick (U.S.A) and London (U.K.). Journal Of Comparative Research In Anthropology And Sociology, 3(January),137–48.

Cui, F., & Song, J.-H. (2022). Impact of Entrepreneurship on Innovation Performance of Chinese SMEs: Focusing on the Mediating Effect of Enterprise Dynamic Capability and Organizational Innovation Environment. Sustainability, 14(19), 12063. https://doi.org/10.3390/su141912063.

Dobrosavljević, A., & Urošević, S. (2019). Analysis of Business Process Management Defining and Structuing Activities in Micro, Small and Medium-Sized Enterprises. Operational Research in Engineering Sciences: Theory and Applications, 2(December), 40–54. https://doi.org/10.31181/oresta1903040d.

Dushime, E., Muathe, S., & Kavindah, L. (2021). The Interplay of Entrepreneurial Innovation, Government Regulation and Performance: Any Lessons for The SMEs. A Theoretical Review. European Scientific Journal ESJ, 17(12). https://doi.org/10.19044/esj.2021.v17n12p235.

Economic Research Institute Bulgarian Academy of Sciences, & Angelova, M. (2020). The Definition of Small and Medium Enterprises - Challenges in Accessing Support Measures. In The Law and the Business in the Contemporary Society: Conference proceedings of the 3-rd National Scientific Conference (pp. 26–33). University publishing house Science and Economics, University of Economics - Varna. https://doi.org/10.36997/LBCS2020.26.

Elkhalek, A. M. A. A. (2019). SMEs’ Contribution to Sustainable Development: an Applied Study Focusing on OECD Countries. https://www.semanticscholar.org/paper/SMEs-’-Contribution-to-Sustainable-Development-%3B-an-Elkhalek/d4a98d757e1b1e5a0c5fab6c4aebe045e156ef92.

General Directorate of Customs. (2022). Periodic Reports of Algeria’s Foreign Trade Statistics. Directorate of Studies and Foresight. https://www.douane.gov.dz/spip.php?article315.

Gibson, T., & van der Vaart, H. J. (2008). Defining SMEs: A Less Imperfect Way of Defining Small and Medium Enterprises in Developing Countries, 01–29.

Glonti, V., Manvelidze, R., & Surmanidze, I. (2021). The Contribution of SME to Regional Economic Development: On Example of Adjara Autonomous Republic. European Journal of Sustainable Development, 10(1), 513. https://doi.org/10.14207/ejsd.2021.v10n1p513.

Heileman, M., Pett, T. L., & Mayer, A. J. (2016). Small-to-Medium-Sized Enterprise Characteristics and Performance: An Exploratory Examination of the Census Bureau’s Survey of Business Owners. Journal of Business and Entrepreneurship, October. https://www.semanticscholar.org/paper/Small-to-Medium-Sized-Enterprise-Characteristics-An-Heileman-Pett/4ffa0aec4bf7719c0bcea97e36d05cf76aa0e46a.

Hendry, C., Jones, A., & Arthur, M. (1991). Skill Supply, Training and Development in the Small-Medium Enterprise. International Small Business Journal, 10(1), 68–72. https://doi.org/10.1177/026624269101000105.

Horowitz, A., & Horowitz, I. (1968). Entropy, Markov Processes and Competition in the Brewing Industry. The Journal of Industrial Economics, 16(3), 196–211. https://doi.org/10.2307/2097560.

Ibidunni, A. S., Ufua, D. E., & Opute, A. P. (2022). Linking Disruptive Innovation to Sustainable Entrepreneurship within the Context of Small and Medium Firms: A Focus on Nigeria. African Journal of Science, Technology, Innovation and Development, 14(6), 1591–1607. https://doi.org/10.1080/20421338.2021.1975355.

Kirchhoff, B. A., & Phillips, B. D. (1988).The Effect of Firm Formation and Growth on Job Creation in the United States. Journal of Business Venturing, 3(4), 261–72. https://doi.org/10.1016/0883-9026(88)90008-0.

Kurdgelia, N. (2021). Some Aspects of Comparative Analysis of SME Standards in the EU and Georgia. Economic Profile, 15(1(20)). https://getbootstrap.com/docs/4.4/examples/blog/.

Leone, N. M. de C. P. G. (1991). A dimensão física das pequenas e médias empresas (P.M.E’s): à procura de um critério homogeneizador. Revista de Administração de Empresas, 31(June), 53–59. https://doi.org/10.1590/S0034-75901991000200005.

Liesch, P. W., & Knight, G. A. (1999). Information Internalization and Hurdle Rates in Small and Medium Enterprise Internationalization. Journal of International Business Studies, 30(2), 383–94.

Mei, W. (2012). The Characteristics and Analysis on Management of Small and Medium-Sized Enterprise in Food Industry. https://www.semanticscholar.org/paper/The-Characteristics-and-Analysis-on-Management-of-Mei/444f997b2f5ab0dff4e46e84bfc1322db64d0f30.

Ministry of Industry and Pharmaceutical Production. (2022). SMEs Statistical Information Bulletins. General Directorate for Strategic Intelligence, Studies and Information Systems. https://www.industrie.gov.dz/?Bulletin-de-veille-statistique.

OECD. (2023). OECD SME and Entrepreneurship Outlook 2023. https://doi.org/

1787/342b8564-en.

Official Gazette of the Algerian Republic. (2001). The Directive Law for the Promotion of Small and Medium-Sized Enterprises.

Official Gazette of the Algerian Republic. (2017). The Directive Law for the Promotion of Small and Medium-Sized Enterprises.

OPEC. (2014). Annual Statistical Bulletin. Organization of the Petroleum Exporting Countries. https://www.opec.org/opec_web/en/publications/202.htm#.

OPEC. (2016). Annual Statistical Bulletin. Organization of the Petroleum Exporting Countries. https://www.opec.org/opec_web/en/publications/202.htm#.

Prince, M. J., & Felder, R. M. (2006). Inductive Teaching and Learning Methods: Definitions, Comparisons, and Research Bases. Journal of Engineering Education, 95(2), 123–38. https://doi.org/10.1002/j.2168-9830.2006.tb00884.x.

Quartey, P. (2003). Financing Small and Medium Enterprises (SMEs) in Ghana. Journal of African Business, 4(1), 37–55. https://doi.org/10.1300/J156v04n01_03.

Ramdani, B., Raja, S., & Kayumova, M. (2022). Digital Innovation in SMEs: A Systematic Review, Synthesis and Research Agenda. Information Technology for Development, 28(1), 56–80. https://doi.org/10.1080/02681102.2021.1893148.

Romijn, H. (2001). Technology Support for Small-Scale Industry in Developing Countries: A Review of Concepts and Project Practices. Oxford Development Studies, 29(1), 57–76. https://doi.org/10.1080/13600810124790.

Saguy, I. S., & Sirotinskaya, V. (2014). Challenges in Exploiting Open Innovation’s Full Potential in the Food Industry with a Focus on Small and Medium Enterprises (SMEs). Trends in Food Science & Technology, 38(2), 136–48. https://doi.org/10.1016/j.tifs.2014.05.006.

Schreyer, P. (1996). OECD Science, Technology and Industry Working Papers. Text. 1996. https://www.oecd-ilibrary.org/science-and-technology/oecd-science-technology-and-industry-working-papers_18151965.

Shen, Y., Shen, M., Xu, Z., & Bai, Y. (2009). Bank Size and Small- and Medium-Sized Enterprise (SME) Lending: Evidence from China. World Development, Law, Finance and Economic Growth in China, 37(4), 800–811. https://doi.org/10.1016/j.worlddev.2008.07.014.

Soriano, D. R. (2005). The New Role of the Corporate and Functional Strategies in the Tourism Sector: Spanish Small and Medium-Sized Hotels. The Service Industries Journal, 25(4), 601–13. https://doi.org/10.1080/02642060500092469.

The National Office for Statistics. (2022). Economic and Employment Indicators. Annual report. https://www.ons.dz/spip.php?rubrique220.

Vaněček, D., & Fára, P. (2013). Some Essentials Charakteristicks of Small and Medium Sized Enterprises. Acta Universitatis Bohemiae Meridionalis, 15(2), 83–94. https://doi.org/10.32725/acta.2012.017.

Yolande, S.. (2012). A Literature Review of Small and Medium Enterprises (SME) Risk Management Practices in South Africa. African Journal of Business Management, 6(21). https://doi.org/10.5897/AJBM11.2709.

Youfeng, Z. (2007). Evaluation of the Management Performance of Listed Small and Medium-Sized Enterprises. Journal of Zhejiang Shuren University. https://www.semanticscholar.org/paper/Evaluation-of-the-Management-Performance-of-Listed-Youfeng/f474bd9087e9dd469a24797e82f6708540ae82ba.

Zahoor, N., & Al-Tabbaa, O. (2020). Inter-Organizational Collaboration and SMEs’ Innovation: A Systematic Review and Future Research Directions. Scandinavian Journal of Management, 36(2), 101109. https://doi.org/10.1016/j.scaman.2020.101109.

Zeb, A., & Ihsan, A. (2020). Innovation and the Entrepreneurial Performance in Women-Owned Small and Medium-Sized Enterprises in Pakistan. Women’s Studies International Forum, 79(March), 102342. https://doi.org/10.1016/j.wsif.2020.102342.

Downloads

Published

2024-12-26

Issue

Section

Review Scientific Paper

How to Cite

THE CONTRIBUTION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN THE ALGERIAN ECONOMY: AN ENTROPY INDEX APPROACH. (2024). Acta Economica, 22(41), 153-174. https://doi.org/10.7251/ACE2441153K

Similar Articles

1-10 of 165

You may also start an advanced similarity search for this article.

Most read articles by the same author(s)

1 2 3 4 5 6 7 8 9 10 > >>