The Success Factors of Food on Small Medium Entrepreneurs under

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JOURNAL OF GLOBAL ENTREPRENEURSHIP 

JANUARY 2011. VOLUME 1. NUMBER 1 

THE SUCCESS FACTORS OF FOOD SMALL MEDIUM ENTREPRENEURS UNDER THE 

ONE DISTRICT ONE INDUSTRY PROGRAMME: A CASE ON FOOD 

MANUFACTURING ENTREPRENEURS IN MELAKA 

Othman Aman and Md. Nor Hayati Tahir 

Faculty <strong>of</strong> Technology Management and Technopreneurship 

Universiti Teknikal Malaysia Melaka, Malaysia 

othmanaman@mmu.edu.my 

Izaidin Abdul Majid, Nor Azah Abdul Aziz and Filda Rahmiati 

ABSTRACT 

<strong>The</strong> nurturing <strong>of</strong> Small and Medium sized Enterprises (SMEs) has been given a high priority in Malaysia 

and has been the backbone <strong>of</strong> economic growth. One <strong>of</strong> the Malaysia government initiatives to 

coordinate and monitor the development <strong>of</strong> small medium enterprises is the One District One Industry 

(ODOI) Programme. <strong>The</strong> ODOI Programme is a strategic approach that can improve the wellbeing <strong>of</strong> 

rural population in Malaysia. This research attempts to study the internal and external performance 

indicator for food manufacturing in small medium entrepreneurs under One District One Industry 

Programme in Melaka areas. A sample <strong>of</strong> 60 respondents <strong>of</strong> food manufacturing entrepreneurs was 

surveyed using a structured questionnaire. <strong>The</strong> result shows that entrepreneurial quality was the most 

internal factor, and Government policy was the most external factor. Lastly, the most dominant factor 

contributes to entrepreneurs’ performance is entrepreneurial quality. Recommendations explained to be 

useful and applicable for small medium entrepreneurs in Melaka. Government supports more to 

entrepreneurs in creating an ecosystem and knowledge based entrepreneurship for business incubation 

activities, and facilitate networking, connection with pr<strong>of</strong>essional resources, and finally assist 

entrepreneurs in getting finances from venture capitalist, angle funding and other financing institutions 

are required. 

Keywords: 

SMEs, Entrepreneurs, <strong>Success</strong> <strong>Factors</strong>, <strong>Food</strong> Manufacturing, One District 

---------------------------------------------------------------------------------------------------------------------------------- 

1.0 INTRODUCTION 

<strong>The</strong> development <strong>of</strong> the SME sector in Malaysia has been phenomenal, contributing significantly to the 

economic growth process over the years (BNM, 2005). In spite <strong>of</strong> this sector’s contribution to the 

economy, there has been little effort to identify the impending challenges that SMEs face in undertaking 

their business. Recognition <strong>of</strong> such challenges may assist both the government and industry players to 

take necessary actions to mitigate the identified problems and will eventually help the SMEs to escalate 

to greater heights. 

<strong>The</strong> Malaysian Government’s commitment to, and concern for, the development <strong>of</strong> SMEs has been 

clearly evident since early 1970s. <strong>The</strong> ‘New Economic Policy’ was introduced in 1971, which aimed to 

improve people’s welfare and restructure ethnic economic imbalances. <strong>The</strong> government’s commitment

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to the development <strong>of</strong> SMEs can also be seen in the second Industrial Master Plan (IMP2), which ended 

in 2005, which is followed by the Third Industrial Master Plan (IMP3) 2006 -2020 to coincide with the 

country’s vision for 2020 (MITI,2005). 

SMEs have become increasingly aware <strong>of</strong> opportunities in the convenience and halal food market, and 

strong growth in the sector reflects this trend, which has been estimated at between US$150 billion and 

US$200 billion annually (SMIDP, 2002). Malaysia is well-positioned to capture such opportunities given 

its good standing in the Islamic world, together with the multi-ethnic cuisine. <strong>The</strong> halal and convenience 

food sector also generates strong intra-and inter industry linkages. 

Initiatives taken by the Malaysian government to boost rural income is the One-District-One-Industry 

(ODOI) progamme (Radiah Abdul Kader, et al., 2009). <strong>The</strong> One District One Industry Programme has 

been introduced by Malaysian Government to coordinate and monitor the development <strong>of</strong> small 

medium enterprises including business development programme, training and entrepreneurs’ 

development and products development as well as promotion and sales. 

Based on the above literature review, there is little research about the success factors for Small and 

Medium Entrepreneur under the One District One Industry Programme which emphasis on case study 

on food manufacturing entrepreneurs in Melaka. This study will help to identify the determinants <strong>of</strong> 

internal business success factors and external business factors for food in Small and Medium Enterprise 

under One District One Industry Programme as perceived and experienced by the entrepreneur. 

Objectives <strong>of</strong> study 

• To identify the dominant internal factor <strong>of</strong> food on Small Medium Entrepreneurs performance 

under One District One Industry Programme in Melaka. 

• To identify the dominant external factor <strong>of</strong> food on Small Medium Entrepreneurs performance 

under One District One Industry Programme in Melaka. 

• To identify the most important determinant <strong>of</strong> food in Small Medium Entrepreneurs 

performance under One District One Industry Programme in Melaka. 

2.0 SMALL AND MEDIUM ENTERPRISES (SMEs) 

Based on www.wikipedia.org a small business is a business that is privately owned and operated, with a 

small number <strong>of</strong> employees and relatively low volume <strong>of</strong> sales. <strong>The</strong> legal definition <strong>of</strong> “small” <strong>of</strong>ten 

varies by country and industry. <strong>The</strong>re are many ways in defining small business: by looking at the 

number <strong>of</strong> employees, annual sales turnover, value <strong>of</strong> assets and net pr<strong>of</strong>it (balance sheet), or 

combination <strong>of</strong> them. Small businesses are common in many countries, depending on the economic 

system in operation. Typical examples include: convenience stores, bakery shops, hairdressers, 

tradesmen, lawyers, accountants, restaurants, photographers, etc. 

SME (Small and Medium Enterprise) plays a major role in the Malaysian economy. <strong>The</strong> development <strong>of</strong> 

SMEs has received much attention since the implementation <strong>of</strong> the New Economic Policy (1971-1990). It 

was then emphasized in the Second Long Term Malaysian Plan (1991 -2000). <strong>The</strong> importance <strong>of</strong> small 

and medium-sized businesses in helping the economic development <strong>of</strong> Malaysia cannot be refuted 

(Radient, 2008). Besides creating job opportunities, SMEs play a crucial role in contributing to the

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prosperity <strong>of</strong> big and multinational corporations. <strong>The</strong>y enhance the industry through their creativity and 

innovation. 

A common definition provided by the Small and Medium Industries Development Corporation (SMIDEC) 

which defines SMEs according to two main factors, annual sales turnover and number <strong>of</strong> full time 

workers. As shown in table 1 and 2 below. 

Table 1: SMEs definition based on number <strong>of</strong> full-time employees 

Size 

Sector 

Primary Agriculture 

Manufacturing 

(including Agro Based) & MRS 

Services Sector 

(including ICT) 

Micro Less than 5 employees Less than 5 employees Less than 5 employees 

Small Between 5 & 19 employees Between 5 & 50 employees Between 5 & 19 employees 

Medium Between 20 & 50 employees Between 51 & 150 employees Between 20 & 50 employees 

Table 2: SMEs definition based on annual sales turnover 

Size 

Sector 

Primary Agriculture 

Manufacturing 

(including Agro Based) & MRS 

Services Sector 

(including ICT) 

Micro Less than RM200,000 Less than RM250,000 Less than RM200,000 

Small 

Between RM200,000 & less 

than RM 1million 

Between RM250,000 & less than RM 

10 million 

Between RM200,000 & less than 

RM 1 million 

Medium Between RM 1 million & RM 5 

million 

Between RM 10 million & RM 25 


Between RM 1 million & RM 5 


<strong>The</strong> continuation <strong>of</strong> government’s commitment to the development <strong>of</strong> SMEs can also be seen in the 

second Industrial Master Plan (IMP2), which ended in 2005, which is followed by the Third Industrial 

Master Plan (IMP3) <strong>of</strong> 2006 -2020, to coincide with the country’s vision for 2020 (MITI, 2005). <strong>The</strong> 

Malaysian Government has implemented various policies and strategies under these plans. <strong>The</strong> IMPs 

were formulated to enhance the growth <strong>of</strong> the manufacturing sector across the entire value chain and 

cluster-based industrial developments. Hence, this plan provides an integrated approach to the 

development <strong>of</strong> industrial areas and opportunities for growth <strong>of</strong> SMEs (MITI, 2005). Figure 1 shows the 

phases <strong>of</strong> development <strong>of</strong> enterprise in Malaysia. 

SMEs are recognized as vital in the development <strong>of</strong> a healthy economy. <strong>The</strong> Ninth Malaysia Plan outlines 

the government’s commitment in producing globally competitive and resilient SMEs through relevant 

initiative and programmes. SMIDEC under the International Trade and Industry Ministry ensures SMEs 

development programmes, as well as financial assistance schemes in various ministries and agencies, 

are effectively implemented (Bulletin NPC, 2008; 9th MP, 2006).

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Initiative have also been taken to provide financial advisory services to SMEs, via SME Corporation 

Malaysia, which serves as the central point <strong>of</strong> information and reference for SMEs; Bank Negara 

Malaysia which established the Laman Informasi Nasihat dan Khidmat or BNM-LINK and BNM- TELELINK, 

which is a dedicated Contact Centre for SMEs, and financial institutions which have their SME desks to 

assist the borrowers in their financing needs, including advising them on their business activities (Najib, 

2008). 

Figure 1: <strong>The</strong> phases <strong>of</strong> development <strong>of</strong> enterprise in Malaysia 

High 

Technology Level 

3.Expansion 

4. Maturity Stage 

2. Growth 

Low 

1.Start-up Stage 

Basic 

requirements/ 

Concerns 

Time 

1.Start-up 

Stage 

R & D incubator 

Adequate 

workforce 

Market knowledge 

Adequate raw 

material supply 

Adequate 

infrastructure 

2. Growth 

Certification/Standard 

Technical assistance 

Automated Process 

Tax benefit 

Market Development 

 

3. Expansion 

Technological 

capability 

Management capability 

ICT capability 

Brand development 

Venture Capital 

Outsourcing 

Distribution channels 

4. Maturity 

Design capability 

Brand name promotion 

Industry upgrading 

Investment abroad 

Source: SMIDEC, 2002 

Bank Negara Malaysia’s priority in the development <strong>of</strong> SMEs is to ensure that they have adequate access 

to financing. Bank Negara regards access to financing at all stages <strong>of</strong> the business cycle as an important 

prerequisite for successful SMEs. Recent developments have seen the introduction <strong>of</strong> micro-financing 

arrangements through commercial banks, credit co-operatives and development financial institutions 

such as Bank Simpanan Nasional, Agro Bank and Bank Kerjasama Rakyat. Due to the initiatives 

undertaken by Bank Negara, all banking institutions noe have a dedicated SME unit and have become 

the main source <strong>of</strong> funds for SMEs (Bulletin NPC, 2008).

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3.0 ONE DISTRICT ONE INDUSTRY 

One District One Industry (ODOI) programme is the latest initiatives taken by the Malaysian government 

to boost rural income to facilitate the growth <strong>of</strong> small enterprises. Introduced in 2003, this programme 

was inspired by the success story <strong>of</strong> the One Tambon One Product programme (OTOP) <strong>of</strong> Thailand. Both 

ODOI and OTOP are based on the Japanese One Village One Product (OVOP) concept which began in 

Oita prefectural in 1979. OVOP works on three main principles namely “Think Globally, Act Locally”, 

“Independence and Creativity” and “Fostering Human Resources”. <strong>The</strong> first principle encourages rural 

entrepreneurs to produce at least one product <strong>of</strong> commercial value per village using available natural 

resources, local craftsmanship and creativity. To promote self-reliance, government subsidies area not 

provided for OVOP groups. Instead government aid comes in the form <strong>of</strong> technical assistance and R&D 

support for product development, assistance for marketing and distribution to reduce the transaction 

costs that local entrepreneurs have to bear if they were to execute product development and penetrate 

markets themselves. Finally under the third principle, human resources are developed through training 

in terms <strong>of</strong> leadership, management and community building as communities become engaged in the 

OVOP process. 

In the Malaysian case, the scope <strong>of</strong> the OVOP concept is broadened to one industry per district. This is in 

line with the Malaysian policy <strong>of</strong> integrated rural development that emphasis on the role <strong>of</strong> districts to 

spearhead development <strong>of</strong> the rural sector (Fatimah Mohd Arshad et al., 1997). In 2004, 78 districts out 

<strong>of</strong> 134 districts in Malaysia came under the ODOI programme producing products under four categories 

<strong>of</strong> industries, namely crafts, food products, rural industry products, as well as services and involved 

1,420 entrepreneurs (MECD, 2004). 

<strong>The</strong> One District One Industry (ODOI) programme is indeed a strategic approach that can improve the 

wellbeing <strong>of</strong> the rural population in Malaysia. By revitalizing existing enterprises and creating new small 

businesses within districts, the ODOI scheme generates the multiplier effects <strong>of</strong> rural entrepreneurship. 

It promotes self-employment, new job opportunities, utilization <strong>of</strong> local resources and skills- all leading 

too much needed income, alleviation <strong>of</strong> rural poverty and sustainable growth. In order to reap these 

advantages, it is important that business under the ODOI programme thrive and succeed. 

One District One Industry in Melaka 

<strong>The</strong> Small Medium Entrepreneur is an agency that established which aims to ensure the successful <strong>of</strong> 

One District One Industry Programme in Melaka. <strong>The</strong> agency under Chief’s Minister Incorporation was 

formerly known as Department <strong>of</strong> Manufacturing technology which was established on March 2003. <strong>The</strong> 

purpose <strong>of</strong> <strong>The</strong> Small Medium Entrepreneur Agency is to promote the development <strong>of</strong> SME who <strong>of</strong>fers 

advisory services, physical development, infrastructure, marketing, etc. Moreover, this agency aims to 

reshuffle the small and medium scale industry to become more competitive, be able to handle pressure 

and fully integrated into the manufacturing sector (SME and CMI, 2009). 

Melaka consists or three districts, there are: Melaka Tengah, Jasin, and Alor Gajah which involve in the 

One District One Industry Programme. Numbers <strong>of</strong> entrepreneurs in food manufacturing are 233 

entrepreneurs. Out <strong>of</strong> 233 entrepreneurs, 85 are from Melaka Tengah, 83 are from Jasin, and 65 

entrepreneurs are from Alor Gajah.

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4.0 DETERMINANTS OF SMES PERFORMANCE 

Anwar and Andaleeb (2007) concluded that the factors contributing to the growth <strong>of</strong> small scale 

enterprises are similar to large scale enterprises from which a number <strong>of</strong> characteristics follow. <strong>The</strong>se 

primarily include efficient management practices resulting in high productivity based on higher level <strong>of</strong> 

technology, productivity <strong>of</strong> labor, efficient financial management, etc. it also includes the size <strong>of</strong> the firm 

directed towards attaining the economies <strong>of</strong> scale. As surveyed by Wijewardena and Tibbits (1999), the 

success <strong>of</strong> small firms was attributed to entrepreneurial, managerial, or other personality attributes <strong>of</strong> 

owner-managers. Entrepreneur characteristics, such as gender, education, age, managerial skill, 

experience (Kallerberg and Leicht, 1991; Rowe et al. 1993; Matsuo et al. (2001) as well as physical and 

emotional support from family members (Green and Pryde, 1989), are important factors that influence 

business success. Business characteristics that affect business success are age, size, and location <strong>of</strong> 

business (Kraut and Grambsch, 1987; Kallerberg and Leicht, 1991). 

Storey (1994) argued that there are three key influences upon the growth rate <strong>of</strong> small firms: the 

background and acces to resources <strong>of</strong> the entrepreneur, the characteristic <strong>of</strong> the firm itself, and 

strategic decision taken by the firm once it is trading. Each <strong>of</strong> these three components includes a 

number <strong>of</strong> elements that determine firm performance. <strong>The</strong> three components need to be combined 

appropriately for the firm to achieve rapid growth are: 

• <strong>The</strong> entrepreneur/resource component cover the following elements: motivations, 

unemployment, education, management experience, numbers <strong>of</strong> founders, prior selfemployment, 

family history, social marginality, functional skill training, age, prior business 

failure, prior sector experience, prior firm experience, gender. Those elements refer to the 

characteristics <strong>of</strong> the individual or individual who provide the primary managerial resources <strong>of</strong> 

the small business. 

• <strong>The</strong> characteristics <strong>of</strong> the business itself reflect to the decision made by the entrepreneur upon 

starting in business such as the choice <strong>of</strong> legal form, the location, the ownership pattern, and 

the specific sector. <strong>The</strong> size and the age <strong>of</strong> firm are not related to either the background <strong>of</strong> the 

entrepreneur or the strategy employed by the entrepreneur. 

• Strategy in the third factors which reflects what managerial actions are likely to be associated 

with the growth. <strong>The</strong> strategies could be related to workforce training, management training, 

external equity, technological sophistication, market positioning, market adjustments, planning, 

new products, management recruitment, state support, competition, and exporting. 

Based on Kader et al.(2009), the internal factors contribute to success <strong>of</strong> food manufacturing under One 

District One Industry (ODOI) is: entrepreneurial quality, pricing, delivery, and services, and lastly human 

resources. <strong>The</strong> external successes factors contribute are: government assistance in training and 

extension services, external environment, market support by the government, market accessibility, and 

networking. Later, this paper will identify all the factors from the most important to the least important. 

Government assistance in training and extension services 

<strong>The</strong> importance <strong>of</strong> government assistance to small business success is reported in a number <strong>of</strong> studies. 

Sarder, et al. (1997) conducted a study <strong>of</strong> 161 small enterprise in Bangladesh and found that firms 

receiving support services, such as marketing, management education and training, technical, extension 

and consultancy, information, and common facilities from the public or private agencies experienced a

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significant increase in sales, employment and productivity. Yusuf (1995) in his study on 220 small 

business entrepreneurs in the South Pacific region listed nine factors that would contribute to the 

success <strong>of</strong> small businesses; but the most critical factors were good management, access to financing, 

personal qualities and satisfactory government support. Yusuf additionally found that government 

assistance was more critical for the success <strong>of</strong> small indigenous entrepreneurs than the non-indigenous 

ones. Studies have also indicated that the incorporation <strong>of</strong> technology in a firm’s operations is one <strong>of</strong> 

the most important factors behind a successful SME. Some <strong>of</strong> the other factors that were identified as 

aids for success were government based such as reducing taxes and imposed paperwork (Carol, 1998, 

Muholland et al., 1971). 

Entrepreneurial quality 

<strong>The</strong> second highest success factor contributes to food manufacturing under One District One Industry 

based on Kader et al. (2009) is entrepreneurial quality. This is an internal success factor which includes 

good entrepreneurial behavior and personal attributes namely innovativeness, hardworking, self 

confidence and self reliance. <strong>The</strong>se are innate qualities that differentiate an entrepreneur from a worker 

or manager. <strong>The</strong> entrepreneur is one who has the self confidence to undertake risks and who is willing 

to work hard to explore market opportunities and create new innovations in return for potential 

benefits and pr<strong>of</strong>its (Petrin, 1994). This finding is also consistent with what in the study by Wijewardena 

and Tibbits (1999), Ibrahim and Goodwin (1986), Chaganti and Chaganti (1983) and Yusuf (1995). <strong>The</strong> 

perception among the rural entrepreneurs that such personal entrepreneur characteristics are 

important for small business success denotes that the rural entrepreneurs in substance do not differ 

from entrepreneurs in other areas. 

<strong>The</strong> important <strong>of</strong> entrepreneurship on economics has been investigated from different perspective. 

Dean and McMullen (2007) in their study investigated how entrepreneurship can help resolve the 

environmental problems <strong>of</strong> global socio-economic systems. <strong>The</strong>y argued that environmental economists 

conclude that, environmental degradation results from the failure <strong>of</strong> markets where the 

entrepreneurship literature argues that opportunities are inherent in market failure. As Dean and 

McMullen (2007) discussed that environmentally relevant market failures represent opportunities for 

achieving pr<strong>of</strong>itability while simultaneously reducing environmentally degrading economic behaviors. It 

also implies conceptualizations <strong>of</strong> sustainable and environmental entrepreneurship which detail how 

entrepreneurs seize the opportunities that are inherent in environmentally relevant market failures. 

<strong>The</strong> external environment 

<strong>The</strong> third factor is the external environment. Signals besides individual entrepreneurial initiatives the 

enabling environment supporting these efforts is <strong>of</strong> utmost importance. Infrastructure and facilities 

(transportation infrastructure, communications, buildings, water and power supply, access to capital), 

are necessary input to rural development that will create a favorable environment for rural small 

business to succeed. An environment conducive to small businesses to succeed also depend on the 

domestic economic conditions and policies which refer to incentives and regulations that facilitate small 

business growth. Such enabling environment can only be provided by the government which further 

implies the importance <strong>of</strong> government support for rural entrepreneurs to succeed.

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In the www.businessdictionary.com, external environment is define as conditions, entities, events, and 

factors surrounding an organization which influence its activities and choices, and determine its 

opportunities and risk. In some cases, external environment is also called operating environment. It is 

argued that though the SME sector can be much more responsive and flexible to changes in the 

marketplace, it is also much less able to influence such developments. Limited access to finance, a low 

degree <strong>of</strong> pr<strong>of</strong>essionalism, difficulties in recruiting qualified personnel, dependency on clients and 

suppliers and the absence <strong>of</strong> economies <strong>of</strong> scale are identified as the core SME sector weaknesses and 

the main areas where the SMEs may require special attention (Burns, 2001). In this respect, 

understanding the problems faced by SMEs in the specific context <strong>of</strong> transition could provide the 

necessary background to develop policies for SME support. 

Market support by the Government 

Poor marketing has always been recognized as a problem faced by small businesses (Salleh, 1990). For 

rural businesses, either a local market is not present or transaction barriers exist. In this study, the ODOI 

entrepreneurs perceived that market support provided by the government has been crucial in 

overcoming this obstacle and has helped them pave their way to success. <strong>The</strong> most important support 

has been the ODOI entrepreneurs’ participation in sale expositions or carnivals organized by the 

government at the national or state levels. Other market channels include government-appointed 

distributors, supermarkets, tourist centres, and government procurements. 

<strong>The</strong> Malaysian government has been, and continuous to be, supportive <strong>of</strong> entrepreneurship. It has taken 

steps to promote the development <strong>of</strong> entrepreneurs in general (including providi ng a conducive 

economic environment, various financing and funding schemes, tax incentives, as well as business 

advisory centres. <strong>The</strong> government has regarded nurturing entrepreneurs as a way to facilitate and 

upgrade the industrial structure so as to create industries for the next generation. For this reason, the 

government has paid special attention to the development <strong>of</strong> SMIs/SMEs (Arif and Abubakar, 2003). 

Among the foremost measures undertaken by the government was the setting <strong>of</strong> the Ministry <strong>of</strong> 

Entrepreneurship in 1995. Although the Ministry was intended mainly to build Bumiputera 

entrepreneurship, it has served as a coordinating body for all matters pertaining to entrepreneurship. 

Among the specific services currently <strong>of</strong>fered by the Ministry are a one-stop entrepreneurship 

information centre, the spearheading <strong>of</strong> the franchise and vendor development program and the 

provision <strong>of</strong> entrepreneurship training, subsidized business premises (for qualified entrepreneurs), 

financial assistance in the form <strong>of</strong> grants or loans, and an online resources and information center. SMIs 

are also promoted and upgraded in line with the national industrial policy to create inter and intra 

industry linkages and ensure the success <strong>of</strong> the larger industries. <strong>The</strong> various development programs 

aimed at enhancing SMIs have to a certain extent been able to upgrade the performance <strong>of</strong> SMIs. 

Market accessibility 

Another aspect <strong>of</strong> marketing perceived as an important success factor by the ODOI entrepreneurs is 

market accessibility. This is represented by good networks with supermarket, accessibility <strong>of</strong> products 

into supermarket and tourist centres, establishing good networks with wholesaler and retailers, <strong>of</strong>fering 

comparable quality <strong>of</strong> products, the ability to penetrate niche market, and grabbing market opportunity 

(Kader et al., 2009). Moreover, studies by Murad et al. (2007) found that market pressures at home and 

abroad, costs <strong>of</strong> production and concern for food security have prompted an increased concern for 

more competitive, pr<strong>of</strong>itable and ecologically beneficial ways <strong>of</strong> producing food and fiber.

52 



Networking 

Networking means having connection between entrepreneurs and government <strong>of</strong>ficers in charge <strong>of</strong> 

business assistance besides establishing networks with financial institutions and other business 

associations (Kader et al., 2009). Networking is an essential skill for most business people, but especially 

for entrepreneurs. <strong>The</strong> strong association between the entrepreneurs as a person and his or her 

business demands that entrepreneurs get out into the world and create as well as maintain business 

relationships is compulsory. Being able to build a network <strong>of</strong> relationships and resources has become 

the most important asset for every entrepreneur in order to grow their business, to gain visibility and to 

achieve competitiveness. <strong>The</strong> entrepreneur has to be an excellent “networker” on a local, regional as 

well as on an international scale. Boyer et al. (2008) concluded that one <strong>of</strong> the greatest challenges 

seems to be gaining market access and building networks for distribution <strong>of</strong> products and services. <strong>The</strong> 

establishment <strong>of</strong> these is one good indication that the enterprise is moving towards success. 

Pricing, delivery, and service 

Simpson et al. (2004) in their statistical analysis found that success factors un ique to industry is 

positively related to competitive pricing and quality, in manufacturing to competitive pricing and 

knowledge <strong>of</strong> competitors, and in services to employee relations issues such as training, staff 

involvement in decision making, and job satisfaction. It has also been suggested that one <strong>of</strong> the main 

success factors relates to the interaction <strong>of</strong> the entrepreneur with the delivery <strong>of</strong> the service (Beaver, 

2002). 

Many owner-managers were more interested in providing quality services and products than making 

large pr<strong>of</strong>its and there was a reluctance to take risks (Bellamy at al., 2003). One outcome was that their 

initial objectives were <strong>of</strong>ten just to survive, but once they had succeeded they progresses to the next 

level and pursued “success”, as they perceived it. 

<strong>The</strong>re are five dimensions that are important for time or delivery includes dependable promises, right 

quality, on agreed time and fast delivery (Phusavat and Kanchana, 2007). Delivery measure how fast an 

organization is capable <strong>of</strong> making improvements in products and services (Krajewski et al., 2007). A 

danger for SMEs is from those large firms that enter the market and can compete on price. Thus, SMEs 

operate in classic perfect competition. <strong>The</strong>re are few SMEs that compete in slim market niche whereby 

it show little competition. <strong>The</strong>se firms may influence price or quality sold (Burn, 2001). 

Human resource 

Rose et al. (2006) have been study that human resources are considered an important factor in business 

success. Human resource includes recruiting and retaining employees, human resource policies and 

compensation plan, training and development, delegating and relinquishing control, develop 

performance appraisal and finally, employees’ motivation. Moreover, human resources are found to 

have significant relationship with venture growth. Entrepreneurs who have the necessary competencies 

especially in the area <strong>of</strong> operations, finance, marketing and human resources, and management skills 

required for the business are more likely to be successful at start-up (Prahalad & Hannel, 1990; Swiercz 

& Spencer, 1992).

53 



According to Sen (2007), human resource equipped with real knowledge, know -how, and experiences 

and infrastructure development such as transportation, electricity, telecommunication, and information 

technology will support OVOP in order to link the local products to national and international markets 

are among the key factors for ensuring the success <strong>of</strong> the OVOP. 

As refer to above literature, the entrepreneurs which getting involved in One District One Industry 

programme should have an effective teamwork. Effective teamwork is essential to the success <strong>of</strong> any 

business. As “no man is an island,” the positive effects <strong>of</strong> productive teamwork can cripple an 

organization. An essential ingredient to effective teamwork is attracting and keeping the right team 

members. No matter how hard a group <strong>of</strong> people try to work together and create an effective team, 

without the right people for the job, the team will inevitably fail. 

According to Malaysia Productivity Corporation, emphasis on human capital development and 

knowledge-based economy becomes more important as Malaysia climbs the ladder <strong>of</strong> development. 

<strong>The</strong> key to a company’s competitive advantage in the new era lies in its human capital. It is imperative 

for heads <strong>of</strong> any company to harness their people’s full potential. <strong>The</strong>y must compete and win the right 

type <strong>of</strong> people to work with them, and not solely focus on customers to buy from them. With the right 

quality moving the business, customers will come. <strong>Success</strong>ful businesses are very <strong>of</strong>ten those with 

leaders who know how to mobilize their human resource (HR) to produce better products and services 

compared to their competitors. 

5.0 RESEARCH DESIGN AND METHODOLOGY 

<strong>The</strong> research design is the overall plan for relating the conceptual research problem to relevant and 

practicable empirical research. In other words, the research design provides a plan or a framework for 

data collection and its analysis. It reveals the type <strong>of</strong> research <strong>of</strong> research and the priorities <strong>of</strong> the 

researcher. <strong>The</strong> research methods, on the other hand, refer to the techniques used to collect data. <strong>The</strong> 

type and quality <strong>of</strong> empirical research are greatly influenced by the underlying research design (Gahuri 

and Gronhaug, 2005). 

<strong>The</strong> goal <strong>of</strong> this descriptive study is to describe the most important determinants <strong>of</strong> performance in food 

small medium entrepreneurs under one district one industry programme in Melaka areas. Further, 

hypotheses developed will be test to enhance the understanding <strong>of</strong> relationship that exists among all 

independent variables and dependent variable. 

<strong>The</strong> researcher has distributed to 233 respondents <strong>of</strong> entrepreneurs <strong>of</strong> food manufacturing under ODOI 

Programme in Melaka to cover the objective <strong>of</strong> the study. After taking into considerations all the input 

from the pilot survey, an actual survey was conducted by trained enumerators and lasted for three 

months. Finally, out <strong>of</strong> 233 questionnaires distributed, researcher received 60 questionnaires returned 

and used <strong>of</strong> the final analysis.

54 



<strong>The</strong>oretical framework 

Figure 2: <strong>The</strong>oretical Framework 

Entrepreneurial 

Quality 

Pricing, Delivery, 

and Service 

Human 

Resource 

Internal 

<strong>Success</strong> 

<strong>Factors</strong> 

Government 

Assistance in 

Training and 

Extension Services 

One District 

One Industry 

Programme 

Entrepreneurs’ Performance 

External 

Environment 

Determinants <strong>of</strong> 

Performance 

Market Support by 

the Government 

Market 

Accessibility 

External 

<strong>Success</strong> 

Factor 

Networking 

Independent Variable 

Moderating Variable 

Dependent Variable 

Data collection 

In order to obtain primary data, questionnaire uses as an instrument. <strong>The</strong> questionnaire prepared in 

English and Malay language to have better feedback as the respondents come from various education 

backgrounds. <strong>The</strong> questionnaire divided into four sections consists <strong>of</strong> pr<strong>of</strong>ile <strong>of</strong> the entrepreneurs, the 

business background, internal success factors and external success factors. <strong>The</strong> success factors used 

five-point Likert scales ranging from 1= “Strongly Disagree” to 5 = “Strongly Agree”. 

<strong>The</strong>re are 13 items in internal factors which refer to the inherent characteristics <strong>of</strong> the business or the 

entrepreneur were measured in the questionnaire include entrepreneurial quality (EQ), pricing, delivery 

and service (PDS) as well as human resource (HR). <strong>The</strong>re are 29 items provide the information on the 

external success factors <strong>of</strong> small medium success include government assistance in training and 

extension services (GA), networking (Net), external environment (EE), market support by the 

government (MS) and market accessibility (MA).

55 



Data analysis 

This paper has applied certain method in order to analyze the data collected. <strong>The</strong> method used was <strong>The</strong> 

Statistical Package for Social Science (SPSS) 16.0 will be used to tabulate the data gathered from the 

research questionnaire. It is also will use to test all the hypotheses formed to prove it significance. 

Descriptive analysis was used to summarize the pr<strong>of</strong>ile and business background <strong>of</strong> the entrepreneurs <strong>of</strong> 

food manufacturing entrepreneurs in Melaka areas. 

<strong>The</strong>n, moved on by testing all hypothesizes by using a couple <strong>of</strong> methods depending on the structure <strong>of</strong> 

the hypotheses developed. This research provides correlations and regression to analyze the hypotheses 

the last analysis method on testing hypotheses is multiple regressions. A regression analysis examines 

the relation <strong>of</strong> the dependent variable (response variables) to specified independent variables . <strong>The</strong> 

objective is to identify whether relationship between variables exists, which is usually based on a study 

<strong>of</strong> the correlation between the variables. In multiple regressions two or more independent variables are 

applied to explain/predict the dependent variable. <strong>The</strong> purpose is to make the model more realistic, 

control for other variables, and explain more <strong>of</strong> the variance in the dependent variable (and thus to 

reduce residual). 

6.0 FINDINGS AND DISCUSSIONS 

<strong>The</strong> data presents according to research objectives. Out <strong>of</strong> 233 questionnaires distributed, researchers 

received 60 questionnaires returned and used <strong>of</strong> the final analysis. <strong>The</strong> questionnaires were distributed 

from 10th December 2009 to 10th March 2010 to entrepreneurs in Melaka areas. 

Pr<strong>of</strong>ile <strong>of</strong> entrepreneurs 

Table 3 below shows the pr<strong>of</strong>ile <strong>of</strong> entrepreneurs <strong>of</strong> 60 respondents involved in the survey. <strong>The</strong> majority 

<strong>of</strong> respondents are males <strong>of</strong> 51.7% while females are 48.3%. Malays are major race involved in survey <strong>of</strong> 

96.7%. Common respondents aged 40-49 years old accounted for 35%. Most respondents are married 

(78%) with educational level <strong>of</strong> secondary <strong>of</strong> 62.7% followed by tertiary <strong>of</strong> 28.8% and having 

entrepreneurial experience less than 5 years with 28.8% and the second and third with equal value <strong>of</strong> 

27.1% are 5-10 years and 11-20 years <strong>of</strong> experiences.

56 



Table 3: Pr<strong>of</strong>ile <strong>of</strong> entrepreneurs 

Characteristics Category Frequency Percentage 

Gender Male 31 51.7 

Female 29 48.3 

Race Malays 58 96.7 

Others 2 3.3 

Age Below 30 years 12 20 

30-39 years 11 18.3 

40-49 years 21 35 

50-59 years 6 10 

60 years above 10 16.7 

Marital status Single 13 22 

Married 46 78 

Education background Primary 5 8.5 

Secondary 37 62.7 

Tertiary 17 28.8 

Entrepreneurial experience Less than 5 years 17 28.8 

5-10 years 16 27.1 

11-20 years 16 27.1 

More than 20 years 10 16.9 

Pr<strong>of</strong>ile <strong>of</strong> business background 

Table 4 below presents the pr<strong>of</strong>ile <strong>of</strong> business background using frequency and percentage. Business 

registration status <strong>of</strong> sole proprietorships are the most common <strong>of</strong> 69.5% followed by others <strong>of</strong> 22% and 

last <strong>of</strong> unregistered <strong>of</strong> 8.5%. Mostly business exist before joining ODOI programme <strong>of</strong> 84.2% and after 

joining ODOI programme are accounted for 15.8%. Age <strong>of</strong> present business <strong>of</strong> 29.8% is the most 

common <strong>of</strong> 5-10 years. Second common <strong>of</strong> 28.1% are 11-20 years and the rest are less than 5 years and 

more than 20 years. Numbers <strong>of</strong> workers <strong>of</strong> 1-5 people <strong>of</strong> 39% are majority respondents followed by 6- 

10 people <strong>of</strong> 32.2% and next are above 10 people accounted for 20.3%.

57 



Table 4: Pr<strong>of</strong>ile <strong>of</strong> business background 

Characteristics Category Frequency Percentage 

Business registration status Unregistered 5 8.5 

Sole proprietorship 41 69.5 

Others 13 22 

Satisfaction level with ODOI Programme Unsatisfied 1 1.7 

Neutral 2 3.3 

Satisfied 57 95 

Age <strong>of</strong> present business Less than 5 years 15 26.3 

5-10 years 17 29.8 

11-20 years 16 28.1 

More than 20 years 9 15.8 

Number <strong>of</strong> workers None 5 8.5 

1-5 people 23 39 

6-10 people 19 32.2 

Above 10 people 12 20.3 

Additionally, figure 3 shows the crosstabulation between marital status and entrepreneurial experience. 

It shows that most respondents are married and having entrepreneurial experience <strong>of</strong> 11-20 years. 

Crosstabulation <strong>of</strong> business registration status and age <strong>of</strong> present business are presented in figure 4 

below. Majority <strong>of</strong> respondents are having business registration status <strong>of</strong> sole proprietorship with 41 

respondents in total. 14 respondents are having business for 5-10 years, 10 respondents are having 

business <strong>of</strong> less than 5 years and also 11-20 years. Few <strong>of</strong> respondents having business for more than 20 

years as the result only show 9 respondents with seven <strong>of</strong> them are sole proprietorship. 

Figure 3: Crosstabulation <strong>of</strong> marital status and entrepreneurial experience 

16 

14 

12 

10 

8 

6 

4 

2 

0 

Crosstabulation <strong>of</strong> marital status 14 and entrepreneurial 

experience 

12 

10 

10 

7 

3 

2 

0 

Less than 5 years 5-10 years 11-20 years More than 20 

Married Single 

years

58 



Figure 4: Crosstabulation <strong>of</strong> business registration status and age <strong>of</strong> present business 

Crosstabulation <strong>of</strong> business registration status and age 

<strong>of</strong> present business 

20 

15 

10 

5 

Others 

Sole 

proprietorship 

Unregistered 

0 

< 5 yrs 5-10 yrs 11-20 yrs > 20 yrs 

Factor analysis 

<strong>The</strong> new variables extracted from the factor analysis consisting <strong>of</strong> nine new factors and its related items 

create new loads. <strong>The</strong> factors found in the study are not completely the same with previous study done 

by Radiah et. al.,(2009) original factors. In this study, added new factor and have some modifications on 

the earlier factors available. <strong>The</strong>re are six original factors <strong>of</strong>: government assistance in training and 

extension services, entrepreneurial quality, market accessibility, market support by the government, 

external environment, and human resource. Additionally, three new factors are added: government 

rule, pricing and service, entrepreneurial authority. 

This new factors result from the personal judgement <strong>of</strong> the researchers, pursuant to the idea that the 

new sets <strong>of</strong> interrelated variables included new factors makes this study <strong>of</strong> success factors in small 

medium entrepreneurs under ODOI programme with the case <strong>of</strong> food manufacturing in Melaka areas 

unique result. 

<strong>The</strong> new internal success factors presently divided into four factors are: entrepreneurial quality, 

entrepreneurial authority, pricing and service, and human resource. External success factors are now 

become five factors are: government assistance, external environment, market support by the 

Government, market accessibility, and government rule. Those factors are shown in table 5 below.

59 



Table 5: <strong>Factors</strong> <strong>of</strong> Small Medium Entrepreneurs’ <strong>Success</strong> 

<strong>The</strong> <strong>Success</strong> <strong>Factors</strong> <strong>of</strong> <strong>Food</strong> on Small Medium Entrepreneurs under One 

District One Industry Programme in Melaka 

% <strong>of</strong> Variance 

Government assistance in training and extension services (GA) 40.4 

Entrepreneurial quality (EQ) 12.9 

Market accessibility (MA) 7.8 

Market support by the Government (MG) 4.6 

External environment (EE) 4.1 

Human resource (HR) 3.7 

Government policy (GP) 3.3 

Pricing and service (PS) 2.7 

Entrepreneurial authority (EA) 2.4 

Correlation coefficient results 

Table 6 below illustrates the correlation relationships between the nine variables <strong>of</strong> success factors <strong>of</strong> 

entrepreneurs under ODOI Programme – government assistance in training and extension services, 

entrepreneurial quality, market accessibility, market support by the government, external environment, 

human resource, government policy, pricing and services, and entrepreneur authority. 

Table 6 Correlations <strong>of</strong> Performance determinants 

1 2 3 4 5 6 7 8 9 

(1) Government assistance 

in training and extension 

services 1 

(2) Entrepreneurial quality 

.408 ** 1 

(3) Market accessibility 

.536 ** .521 ** 1 

(4) Market support by the 

Government .683 ** 0.25 .666 ** 1 

(5) External environment 

.659 ** .371 ** .653 ** .658 ** 1 

(6) Human Resource 

.314 * .422 ** .284 * .275 * 0.157 1 

(7) Government Policy 

.467 ** 0.133 .368 ** .490 ** .519 ** 0.21 1 

(8) Pricing and service 

.583 ** .510 ** .407 ** .339 ** .476 ** .378 ** .342 ** 1 

(9) Entrepreneur Authority 

0.185 .466 ** 0.254 -0.02 0.023 0.166 -0.153 .340 ** 1 

It can be seen that there are mostly positive correlation relationships between all the variable except 

the correlation <strong>of</strong> market support by the government and entrepreneur authority with the correlation 

coefficient is at -0.02 and correlation <strong>of</strong> government policy and entrepreneur authority with the 

correlation coefficient is at -0.153. <strong>The</strong> highest positive correlation occurs between market support by

60 



the government and government assistance in training and extension services (0.683), followed by 

market support by the government and market accessibility (0.666). <strong>The</strong> correlation relationship 

between product and the five variables seem to be a positive correlation. <strong>The</strong> positive linear relationship 

will cause an increase in one variable <strong>of</strong> the other is increased. 

Hypotheses testing 

H1: <strong>The</strong> relationship between dominant internal determinants <strong>of</strong> food on Small Medium Entrepreneurs 

under (ODOI) Programme and entrepreneurs’ performance. 

Below shows the regression equation for predicting the dependent variable from the independent 

variables: 

Entrepreneurs’ Performance = f(EQ, HR, PS, EA) 

Table 7 Regression <strong>of</strong> Performance based on Internal determinants 

b B- value t-ratios Sig 

Constant -3.308 -6.016 0.000 

EQ 1.961 0.812 10.206 0.000 

HR 0.069 0.083 1.017 0.314 

PS -0.045 -0.060 -0.776 0.441 

EA 0.112 0.173 2.255 0.028 

Multiple R = 0.841 

Adjusted R 2 = 0.686 

Std. Error = 1.199 

F- statistic = 33.243 

N =60 

<strong>The</strong> result <strong>of</strong> regression analysis, shown in table 7 reveals that the internal success factors <strong>of</strong> food small 

and medium entrepreneurs in Melaka under ODOI Programme has significant relationship with the 

entrepreneurs’ success, Multiple R = 0.841. <strong>The</strong> adjusted R2 <strong>of</strong> this model is 0.686, which indicates that 

68.6 % <strong>of</strong> the variation in ODOI Programme was explained by the internal success factors. <strong>The</strong> significant 

F-ratio (F = 33.243) indicates that the results <strong>of</strong> the regression model could occurred by chance. Two o f 

the internal factors examined are significant independent variables that influenced by ODOI Programme 

as the significant values <strong>of</strong> two variables are less than 0.05.<strong>The</strong>re is entrepreneurial quality and 

entrepreneurial authority. Variable <strong>of</strong> entrepreneurial quality was the most important determinant <strong>of</strong> 

entrepreneurs’ success in the internal factors with the highest standardized coefficient value, 0.812 and 

the highest t-value, 10.206. 

H2: <strong>The</strong> relationship between dominant external determinants <strong>of</strong> food on Small Medium Entrepreneurs 

under (ODOI) Programme and entrepreneurs’ success.

61 



Below shows the regression equation for predicting the dependent variable from the independent 

variables: 

Entrepreneurs’ Performance = f(GA, MA, MS, EE, GP) 

Table 8. Regression <strong>of</strong> Performance based on internal factors 


Constant 1.526 3.838 0.000 

GA 0.262 0.281 2.358 0.022 

MA 0.146 0.326 2.936 0.005 

MS -0.066 -0.151 -1.246 0.218 

EE -0.053 -0.117 -1.039 0.303 

GP 0.208 0.344 3.018 0.004 





N =60 

<strong>The</strong> result <strong>of</strong> regression analysis, shown in table 8 reveals that the external factors <strong>of</strong> food small and 

medium entrepreneurs in Melaka under ODOI Programme has significant relationship with the 

entrepreneurs’ success, Multiple R = 0.607. <strong>The</strong> adjusted R2 <strong>of</strong> this model is 0.310, which indicates that 

31.0 % <strong>of</strong> the variation in ODOI Programme was explained by the internal success factors. <strong>The</strong> significant 

F-ratio (F = 6.296) indicates that the results <strong>of</strong> the regression model could occurred by chance. Three <strong>of</strong> 

the internal factors examined are significant independent variables that influenced by ODOI Programme 

as the significant values <strong>of</strong> two variables are less than 0.05.<strong>The</strong>re is government assistance in training 

and extension services, market accessibility, and government policy. Government policy is the most 

important determinant <strong>of</strong> entrepreneurs’ success in the external factors with the highest standardized 

coefficient value, 0.344 and the highest t-value, 3.018. 

H3: <strong>The</strong> relationship between the most important determinants <strong>of</strong> food on Small Medium Entrepreneurs 

under (ODOI) Programme and entrepreneurs’ success. 

<strong>The</strong> regression model for predicting the relationships <strong>of</strong> the variables (internal and external factors) and 

ODOI Programme shows below: 

Entrepreneurs’ performance = f(GA, EQ, MA, MS, EE, HR, GP, PS, EA)

62 



Table 9. Regression <strong>of</strong> Performance based on all factors 


Constant -2.838 -4.656 0.000 

GA 0.008 0.009 0.107 0.915 

EQ 1.717 0.711 7.378 0.000 

MA 0.071 0.159 2.012 0.050 

MS -0.027 -0.062 -0.718 0.476 

EE -0032 -0.70 -0.892 0.377 

HR 0.088 0.105 1.230 0.225 

GP 0.041 0.067 0.796 0.430 

PS -0.033 -0.044 -0.562 0.577 

EA 0.115 0.177 2.198 0.033 





N = 60 

<strong>The</strong> result <strong>of</strong> regression analysis, shown in table 9 reveals that the factors <strong>of</strong> food small and medium 

entrepreneurs in Melaka under ODOI Programme has significant relationship with the entrepreneurs’ 

success, Multiple R = 0.859. <strong>The</strong> adjusted R2 <strong>of</strong> this model is 0.690, which indicates that 69 % <strong>of</strong> the 

variation in ODOI Programme was explained by the success factors. <strong>The</strong> significant F-ratio (F = 15.582) 

indicates that the results <strong>of</strong> the regression model could occurred by chance. 

Three <strong>of</strong> the internal factors examined are significant independent variables that influenced by ODOI 

Programme as the significant values <strong>of</strong> three variables are less than 0.05.<strong>The</strong>re is entrepreneurial 

quality, market accessibility, and entrepreneurial authority. Entrepreneurial quality is the most 

important determinant <strong>of</strong> entrepreneurs’ success factors with the highest standardized coefficient 

value, 0.711 and the highest t-value, 7.378. 

7.0 SUMMARY AND CONCLUSIONS 

<strong>The</strong> study found the new success factors <strong>of</strong> food small medium entrepreneurs in Melaka as shown in the 

analysis <strong>of</strong> factor analysis. Entrepreneurial quality is the highest factor under internal success factors. 

Government assistance in training and extension services is the highest external factor in small medium 

entrepreneurs <strong>of</strong> food manufacturing in Melaka areas under One District One Industry Programme. 

Based on three hypotheses, researchers conclude by accepting hypotheses. <strong>The</strong>re are relationship 

between factors contribute to the success on food <strong>of</strong> small medium entrepreneurs under ODOI 

Programme in Melaka to the entrepreneurs’ success. 

<strong>The</strong> study suffers from few limitations. Study only caries Melaka areas and concentrated on food 

manufacturing industry. Future research may test for wider areas <strong>of</strong> ODOI Programme in Malaysia as 

well as variety <strong>of</strong> industries covers. 

Recommendations explained to be useful and applicable for small medium entrepreneurs in Melaka. 

Government supports more to entrepreneurs in creating an ecosystem and knowledge based

63 



entrepreneurship for business incubation activities, and facilitates networking, connection with 

pr<strong>of</strong>essional resources, and finally assists entrepreneurs in getting finances from venture capitalist, 

angle funding and other financing institutions are required. 

ACKNOWLEDGEMENT 

<strong>The</strong> authors would like to thank Universiti Teknikal Malaysia Melaka (UTeM) for funding this researc h 

project under PJP/2009/FPTT(5F)S620 grant. 

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