The role of local government in developing small and medium-sized enterprises

Abstract

The aim of this study is to determine the local government support needed for increasing the performance of Small and Medium-sized Enterprises (SMEs). There are contradicting points of view among researchers with regard to the necessity for the government to intervene in the operation of the enterprises. This study attempts to answer questions on the effect of such interventions in a developing country. The data were collected through questionnaires that were distributed to the SMEs in certain territories in a developing country. Structural Equation Modeling was used to analyze the data. The results show that the government support process, the government support policy and social networking have a positive influence on the performance of SMEs. The government support process exhibits the strongest effect on SMEs’ satisfaction as a moderating variable.