Small and Medium-Sized Enterprises in Indian Textile Branch - Research Proposal Example

SMEs Growth and development in Indian textile Industry Summary This study will try to determine the growth and development of SMEs in India particularly in its textile industry since 2004 up to the present time. In order to find this out, the proponent wishes to answer the following research questions at the end of the study: 1. What is the status of growth of Small and Medium Enterprises (SMEs) in Indian Textile Industry since 2004 and up to the present time? 2. What influences the status of growth of SMEs in Indian Textile Industry since 2004 and up to the present time? 3. What is the role of government in raising Indian Textile Industry? Chapter 1. Introduction Just like India, many developing countries have tried to adopt various strategies in order to obtain sustainable development through poverty mitigating programs. According to Agbeibor (2006), these programs are financed through development aid and these go beyond the economic objective such as poverty reduction and resulted to determination of upward spiral growth on creation of wealth. It is in this regard that Agbeibor (2006) was able to study how small and medium enterprises (SMEs) were able to develop solutions to fight poverty and obtain economic growth. India is noted of its distinct pattern of development for it placed great importance on service compared to manufacturing. Thus, it can be justified why it focuses on skill- intensive manufacturing rather than labor-intensive manufacturing (Kochhar et al., 2006). Understanding this paves way to how it tries to achieve development of its small medium enterprises (SMEs). There are many approaches made in order to improve economic performance of small scale enterprises. In the case of small scale brick enterprises in India, energy efficiency has been viewed significant in their economic performance, the reason why labour efficiency has been widely studied as an alternative approach (Subrahmanya, 2006). Another approach is technological innovations. According to Beck and Kunt (2006), SMEs form a huge part of private sector in many developed and developing countries. Subrahmanya (2005) found out that even though the policies of technological innovation given to the Northeast England as the leader in technology and Banglore India as adopter of technology are quite different, the pattern applied among SMEs is identical. This proves the fact that technological innovation is a great concern among SMEs wherever part of the world they belong. The Indian textile industry has recommended and approved extension of technology upgradation fund scheme (TUFS) beyond 2007. TUFS is the scheme under which the Indian government has allocated Rs.250 billion subsidies to the textile sector. It is predicted that by 2010, additional investment of Rs.1,400,000 would be invested in Indian textiles due to TUFS. These developments could make India a much stronger competitor than it already is (Indian Textile Industry Statistics). The Indian government is paying more than half of the interest on the loans which the industries have taken from the banks to support its industry and gear it toward further expansion plans. Considering that there are various strategies made in order to elevate the status of SMEs in India, there must be a certain remarkable growth that can be observed today. This study will try to find out the growth and development of SMEs in India particularly in its textile industry since 2004. In line with this, it is important to find more information about the status of Indian Textile Industries and role of government in its current position. In order to investigate this further, the following are research questions that the study will consider: 1. What is the status of growth of Small and Medium Enterprises (SMEs) in Indian Textile Industry since 2004 and up to the present time? 2. What influences the status of growth of SMEs in Indian Textile Industry since 2004 and up to the present time? 3. What is the role of government in raising Indian Textile Industry? The proponent believes that there is an increasing trend in growth and development of SMEs in Indian Textile Industry since 2004. Aside from the important role played by the government in the development of SMEs in India, there are some other significant factors that influence their present status of growth. Chapter 2. Review of Related Literature SMEs tend to find difficulty to have an access for external financial sources in order to compete globally and finally end up with huge growth constraints (Beck and Kunt, 2006). The different business concepts that are applied to this include an alteration in how business is developed in other regions of the world. There are changes that are happening specifically within India as a developing country. The imports and exports that have been developed within this have created a different set of growth with finances as well as with the way in which business is being developed. The result is a changing industry with textiles as well as the concepts that apply to this (Kumar and Siddharthan (1994), Katrak (1989)). This section talks about the growth and development of SMEs in developing countries and finally talks about the case of Indian enterprises and in particular its textile industry. Growth and development of SMEs in developing countries Little (1987) describes the development of small manufacturing enterprises in developing countries as well as how this is altering and affecting the way that business is developing in other regions. The relationship that is noted in particular is one that has seen a difference in the size of the business to the pattern and efficiency that is used within developing countries. Small manufacturing enterprises within regions such as India have begun to change because of the policies on financial and institutional development as well as the way in which the different companies are established. More importantly, developing countries have begun to develop from the World Bank and outside resources. Little (1987) noted that the current conditions, set up of the businesses and the policies from external resources have altered the way in which firms are developing. Thus, this has specifically changed because the countries are required to have more labor intensive counter parts that are part of the country. For this to develop differently, new policies for financial and institutional development for industries need to be set up to assist with the imbalances within business (Little, 1987). Tybout (2000) pointed out that while there are more opportunities with developing countries because of the expansion and growth into globalization, there are still limitations. The ability for a small company to succeed in the current markets causes limitations with small firms, specifically because there are institutional obstacles from governmental policies, trade policies, and instability of various procedures and a questioning of whether the trade should be opened in specific countries. These several obstacles are hindering rather than helping business to achieve a larger amount of success especially if they are small to medium sized (Tybout, 2000). The examination of both approaches as presented by Little (1987) and Tybout (2010) showed that there are several hindrances for smaller manufacturing enterprises. The occurrence of Globalization and its underlying issues have influenced why smaller companies come face to face with limitations. Most specifically, Little (1987) and Tybout (2010) examined the policies and procedures for financial opportunities and how these are creating opportunity or hindering a specific company. More importantly, the companies show how the limitations are set by the competitive options from larger manufacturing companies and are causing more obstacles especially on financial aspects for smaller enterprises because of the smaller size. While the ideas presented by Little (1987) and Tybout (2010) are also able to show the comparative variables within this, there are also several limitations though. For this to be more effective in the argument, alternative methods with regard to helping smaller businesses to survive as well as providing a well-rounded examination of both the strengths and weaknesses of changing businesses and the economy need to be shown. However, it is not only on financial consideration and underlying governmental aid that small to medium enterprises must depend on. They also have the ability to stand on their strategic management competencies in order to survive tough competition. Thus, they need to stand on their capacity to consider the strategic management elements presented by Hitt et al. (2004) and Pryor et al. (1998). These strategic management elements are presented in Table 1, Appendix D. The case of Indian enterprises (the Indian Textile Industry) As highlighted by Kashyap (1988), the growth of small-size enterprises in India is influenced by poverty eradication and elimination of regional imbalances without affecting the long-term objective for economic success. It is seen that the opportunities in India are dependent on the ability to expand into a modern setting. According to Katrak (2002) in the development of R&D, the expenditures that are available and the imports of technology are the main factors for the development in India. The textiles that are available and the ability to move into specific areas of competition will only develop when these three factors are a part of the organization. If these are limited, then there are difficulties with expansion and with competition both inside and outside of India (Katrak, 2002). Katrak (2002) analyzes different countries based on the development of Indian enterprises. It can be found out that the country as a developing world is one that has several contentions because of the limited resources that are part of the region. At the same time, the development of technology, firm size and exports is beginning to change the way the businesses are functioning. The first understanding created the focus on small to medium sized enterprises. The companies are known to have limited resources, specifically within technology, which is hindering the amount of textiles that can be used and manufactured. This is allowing larger companies that are moving into the developing countries to have more access to what is available. To combat this, there are several firms that are focused on the development of types of firm sizes and organization for best functioning. This is the way in which the textile industries that are smaller in size are able to compete with larger corporations that have technology within the region. However, there are also several disadvantages to this, specifically because of the export business within textiles. This is one of the largest industries in India for exports. The small to medium sized enterprises; however, are unable to move into the correct positioning because of government and export obligations with the manufactured exports. These competitive problems are leading to limitations within the textile industry in India (Kumar, Siddharathan, 1994). It is noted that India is working towards development and competition on a larger basis with exports and imports. However, the hindrance each is facing is based on a limitation of resources that are available. The manufacturing is then unable to move into specific positions and is not able to create the responses desired. The difference between both articles is based on the limited resources available. In one, the limitations are noted from technology and the R&D that is available and on the obligations, policies and infrastructure. The limitations of both show some of the main problems with business development in the region. Concluding remarks The concepts related to small to medium enterprises in developing countries and towards the textile industry in India show a strong correlation of how the internal and external environment is altering within a developing country. The observations that have been noted among businesses are ones that will able to provide a deeper understanding of the complications from the government, policies (eg. Financial related and etc.), regulation and export rules within small to medium size companies. Thus, the following propositions can be derived: Proposition 1. Internal and external environments have significant contribution to the development of SMEs in India. Proposition 2. Government policies on financial related aspects for economic growth and development of the country has significant effect to the growth and development of SMEs particularly in the textile industry in India. Chapter 3. Methodology This study will try to find out the growth and development of SMEs in India particularly in its textile industry since 2004. In order to investigate this further, the following are research questions that the study will consider: 1. What is the status of growth of Small and Medium Enterprises (SMEs) in Indian Textile Industry since 2004 and up to the present time? 2. What influences the status of growth of SMEs in Indian Textile Industry since 2004 and up to the present time? 3. What is the role of government in raising Indian Textile Industry? The proponent believes that there is an increasing trend in growth and development of SMEs in Indian Textile Industry since 2004. Aside from the important role played by the government in the development of SMEs in India, there are some other significant factors that influence their present status of growth. In order to investigate and find answers for the study, the following are the needed method to be applied. 1. Philosophical Approach 1.1 Paradigms According to Saunders and Thornhill (2007), paradigms are the research philosophy that utilizes the idea of both the positivist and the phenomenologist. It pertain a practical approach, incorporate different perception to facilitate in data collection in interpretation. For this research study non positivisim paradigms has been selected. The research philosophy is intended with the investigation of interpretive epistemology as the topic will depend on conducting research among people thoughts, opinions and experiences which will be shown through the questionnaires’ responses and the interviews’ answers. 1.2 Preferred Approach Inductive approach: In this approach the data is collected through research analysis, from this analysis the theories are created. Data for research should be qualitative and quantitative data. The individuals explore new concepts from the collected information and then compare them to the existing information. (Saunders and Thornhill, 2007) The Inductive approach will be used in this research which is part of the Subjectivism research approach as the investigations will depend on building theory through small sample of people perceptions regarding the situation that will be discussed to understand the reality of the study and to get their feelings about what is going on in order to identify better the nature of the problem and analysing those data. The results will give some solutions for the study along with evidences that will provide a clear picture for the target people to accomplish their goals. 2. Research Design 2.1 Research Methods The primary data is to be collected by conducting field research that involves face to face interviews, surveys, questionnaires and focused group interviews. Primary research involves the usage of primary data for the collection of data. Primary data are that information that is collected for the first time. The primary research will be especially useful since it will provide a guideline to the most current data available on this topic. The secondary research method will include gathering data on the subject from different newspapers, magazines, online articles, press releases, academic journals, textbooks and other library books. Combining the knowledge gained from all these sources and both research methods will provide a lot of detail about the topic that can be used to develop suitable conclusions and recommendations for the future. This data will help to provide a formal structure to the paper so that it relates to a real research project with past researchers’ input for offering future strategies that the government can develop for the growth and development of SMEs. The study will follow all of the journalistic ethical guidelines and confidentiality agreements for its research methods and let the participants know their participation will be kept anonymous, which will enable them to give honest answers. 2.1.1 Interview Structured interview will be used in order to obtain both qualitative and quantitative information from the chosen respondents in a span of 30 minutes using the question and answer paradigm. Since this is to be a face to face interview, then a person to person characteristic of the interview will be employed. In order to obtain much reliable information, participants to be interviewed must have the relevant knowledge of the subject matter so they have to be competent enough to answer the questions. On the other hand, the respondents must have to be informed about the activity and they must also be readily available when interview has to be conducted. In order for the interview to be implemented successfully, respondents will be informed through an approval letter to be sent to the company or personally to the respondent whichever is most feasible. The interview will take place at the city of Surat (Gujarat), the textile hub of India. The proponent has remarkable number of contacts of people with textile background in the mentioned city. 2.3 Case Study Aside from the primary and secondary data, the proponent will also present different types of SMEs in the textile field in India. This is to be able to give specific examples of the current trend of SMEs in the textile field in India and to give a link with the results to be obtained from primary and secondary data. 2.2 Instrument The study will refer to a research design using a primary research method of questionnaire which will be developed with questions to be given to a sample group of 50 respondents from different SMEs of Textile Industries. Questionnaire is an inexpensive way to obtain responses from large population. It is the easiest way to get responses to do statistical analysis and find a conclusion. A well design questionnaire is critical for achieving the purposes of survey research. Additionally, concerns with validity (which is the degree of the intended instrument measurements) and reliability (which is degree of consistent measurements provided by the instrument) these must always be at the forefront of the questionnaire selection/construction process. By far interviewing is the most commonly used as a selection tool. There are two structured interview techniques; they are behavioural and situational interview. During interview, there will be discussion about the growth and development of SMEs and about how they are supported in India. The interviews will be taped and script will be prepared for analysis. Researchers, working independently, categorized the statements derived from the interviews. The proposed questions on the interview and questionnaire are all presented in Appendix B and Appendix C. 2.3 Data Collection The survey method will be used as the means by which data is collected. This method is one of the collection methods stated by Collis and Hussey (2009). Prior to initiating the data collection phase of the study, permission to conduct the survey, will be obtained from appropriate managerial people. Data collection will commence once approval granted. The data collection will involve gathering the information from both interview and questionnaires and then analyzing the results to find out what insight can be gained from them. 2.4 Data Analysis Qualitative data will be analyzed to identify theories and trends and the NVIVO software will be used for the analysis and in order to process and organize the quantitative data; a database will be created by using a computer data base software program, (i.e., SPSS). The questionnaire selected may have a scale response format, which will allow for a number to be assigned for which response given for each item. For each respondent, the numerical response provided for each item as well as descriptive data obtained during survey, then entered into the database during the data-coding phase of the study. 3. Respondents 3.1 Population The population of interest for this study includes selected SMEs industrialist. It is projected that the sample will consist of 50 respondents, from them 30 for quantitative analysis and 20 for interviews. 3.2 Sampling Strategy For the purpose of study a form of non-probability sampling will be used. As explained by Trochim (2001), in purposive sampling, the researcher samples with a purpose in mind from one or more specific and predefined groups, believed to be representative of the larger population of interest. Saunders and Thornhill (2007) noted that one of the benefits of purposive sampling is that it can be very useful for situations in which the researcher wants to reach a targeted group that otherwise might not be readily available. 4. An outline of chapters to be included in the dissertation Chapter 1. This includes the background of the study, objectives, research questions and hypothesis are to be introduced. Chapter 2. This section will contain information related to the study. Chapter 3. This is the section that will present the methods used in order to satisfy the objectives of the study, particularly its research questions and hypothesis. Chapter 4. This is the section in which the results of the study will be discussed comprehensively. Chapter 5. This is the section in which the recommendation and conclusion of the study will be concisely presented. 5. Limitations There might be few limitations when we will find the result of this study, firstly as we are going to analyse the particular group in a particular country, so there may be change in outcomes if we will analyse SMEs of different industries and countries. Another thing, since the result of the study will depend on the primary information to be given by the respondents, it is then of great concern to consider the level of response of respondents in the study. The success of the study can be determined by the level of response of the respondents. This means that their ability to coordinate with the researcher is a big factor in order to determine quality data and information for the analysis. The level of response and the interpretation of the respondents on the questionnaire and interview will be outside the bound of researcher’s full control, in which the inability to obviate these concerns should be indicated as a study limitation. Chapter 4. Conclusion There is a good reason to study the relationship between SMEs and the growth and development of textile industry in India. In particular, the SMEs of textile industry in India need to be investigated further. This is to ensure that the trend in growth and development of SMEs in Indian Textile Industry since 2004 will be clearly investigated. This is also to be able to find out if aside from the important role played by the government in the development of SMEs in India, some other significant factors that influence the present status of growth will be discovered. All of these are in line with finding the relationship existing between the internal and external environment in India and the SMEs in the textile industry. The information that will be obtained after the study will be more on how to support the growth and development of SMEs in textile industry in India. Finding this will pave way to promising competency or growth and development of SMEs in textile industry in India. Not only that, the good result of such growth will further enhance the economic growth in India as far as increasing the level of competency of its SMEs in textile industry is concerned. References Agbeibor, W. Jr. (2006) “Pro-poor economic growth: Role of small and medium enterprises.” Journal of Banking & Finance, Vol. 30 (1): 35-40. Beck, T. and Kunt, A. D. (2006) “Small and medium-size enterprises: Access to finance as a growth constraint.” Journal of Banking & Fianance, Vol. 30 (11): 2931-2943. Collis, J. and Hussey, R. (2009) “Business Research: A practical guide for undergraduate and postgraduate students.” 3rd ed. USA: Palgrave Macmillan. Hitt, M. A., Ireland, R. D. and Hoskisson, R. E. (2004) “Strategic management.” 6th ed. United States: Thomson/South-Western. Indian Textile Industry Statistics. [Online] Available at: http://www.bharattextile.com. (Accessed: March 2010). Kashyap, S. P. (1988) “Growth of small-size enterprises in India: Its nature and content.” World Development, Vol. 16 (6): 667-681. Katrak, H. (1989) “Imported Technologies and R&D in an Newly Industrializing Country: The Experience of Indian Enterprises.” Journal of Development Economics, Vol. 31 (1): 123-139. Kochhar, K., Kumar, U., Rajan, R., Subramanian, A. and Tokatlidis, I. (2006) “India’s pattern of development: What happened, what follows?” Journal of Monetary Economics, Vol. 53 (5): 981-1019. Kumar, N. and Siddharthan, N. S. (1994) “Technology, firm size and export behavior in developing countries: The case of Indian Enterprises.” Journal of Development Studies, Vol. 31 (2): 289-309. Little, I. M. D. (1987) “Small manufacturing enterprises in developing countries.” Journal of International Bank for Reconstruction and Development, Vol. 1 (2): 203-235. Pryor, M. G., White, J. C. and Toombs, L. A. (1998) “Strategic quality management: A strategic, systems approach to quality. Thomson Learning. Saunders, M., Lewis, P. and Thornhill, A. (2007) “Research methods for business students.” 4th ed. USA: Prentice Hall. Subrahmanya, M. H. B. (2005) “Pattern of technological innovations in small enterprises: a comparative perspective of Banglore (India) and Northeast England (UK).” Technovation, Vol. 25 (3): 269-280. Subrahmanya, M. H. B. (2006) “Labour productivity, energy intensity and economic performance in small enterprises: A study of brick enterprises cluster in India.” Energy Conversion and Management, Vol. 47 (6): 763-777. Trochim, W. (2001) “The research methods knowledge base.” 1st ed. OH: Atomic Dog Publishing. Tybout, J. (2000) “Manufacturing firms in developing countries: How well do they do and why?” Journal of Economic Literature, Vol. 38 (1): 11-44. Appendix A. Research Plan (Gantt Chart) Tasks Weeks 1 2 3 4 5 6 7 8 9 10 Research on Internet for journals and library for books                     Take notes on articles and books, work on how to format research data                     Start writing the Literature Review & ask for teacher's feedback                     Final Modification for the Literature Review                     Actual Submission "Literature Review Report"                   Make questions for questionnaires and interview                     Get the teacher's feedback on the questions                     Submit Final Form of questionnaires and Interview questions                   Distribute 150 questionnaires among the selected people                     Conduct the Interview                     Collect the questionnaires and put together statistical results for analysis                     Analyze results using SPSS and NVivo                     Writing final draft of study and seek the teacher's comments                     Perform all editing and complete the "Final Chapter of Research Project"                   Appendix B. Proposed questions on the interview First Part: Building rapport Self- introduction Stating the purpose of the interview Asking further permission from the part of the respondent Checking the willingness of participation of the respondent Second Part: Interview proper Introduction: Please be rest assured that the information you will impart with me today will be treated with strict confidentiality and shall only be used for educational purposes. 1. What can you say about the SMEs in India? 2. What can you say about the textile industry in India? 3. What do you think is the current status of development of SMEs in India compared from the previous years, say from 2004? 4. What do you think is the current status of textile Industry in India compared from the previous years, say from 2004? 5. Do you have any relevant information to show the status of growth of SMEs in India since 2004 and up tot the present time? If so, please present to me the information that might prove your opinion on this subject matter. 6. Do you have any relevant information to show the status of growth of Indian Textile Industry since 2004 and up to the present time? If so, please present to me the information that might prove your opinion on this subject matter. 7. How to ensure growth and development of SMEs in India? 8. How to ensure the growth and development of textile industry in India? 9. Do you think Government can be of great help to ensure growth and development of SMEs and textile industry in India? If so, how? Appendix C. Proposed questions on the questionnaire Introduction: Please be rest assured that the information you will impart with me today will be treated with strict confidentiality and shall only be used for educational purposes. Name: (Optional) ____________________________ Length of years in the business: _________________ Position: ___________________________________ 1. What do you think is the status of growth of Small and Medium Enterprises (SMEs) in India since 2004 and up to the present time? a. increasing b. slightly increasing c. no changes d. slightly decreasing e. decreasing 2. What do you think is the status of growth of Indian Textile Industry since 2004 and up to the present time? a. increasing b. slightly increasing c. no changes d. slightly decreasing e. decreasing 3. What influences the status of growth of SMEs in India since 2004 and up to the present time? Please rate the following factors from the most significant to the least significant. Put 1, 2, 3, 4 or 5 on the space provide for your answer. The least rating you can give on each of the following items is 1. ____Political factors ____Economic factors ____Social factors ____Technological factors ____Legal factors ____Environmental factors ____Others (please specify): ____________________________________________ 4. What influences the status of growth of Indian Textile Industry since 2004 and up to the present time? (Please rate the following factors from the most significant to the least significant. Put 1, 2, 3, 4 or 5 on the space provide for your answer. The least rating you can give on each of the following items is 1. ____Political factors ____Economic factors ____Social factors ____Technological factors ____Legal factors ____Environmental factors ____Others (please specify): ____________________________________________ 5. What is the role of government in raising Indian Textile Industry? (Please rate the following factors from the most significant to the least significant. Put 1, 2, 3, 4 or 5 on the space provide for your answer. The least rating you can give on each of the following items is 1. ____Improving policies and procedures for financial development ____Giving capital to the textile industry ____Programs on economic sustainability issues ____Allowing more foreign trade ____Globlization of textile industry ____Improvement of technology ____Others (please specify): ___________________________________________ 6. What is the role of government in the growth and development of SMEs in India? (Please rate the following factors from the most significant to the least significant. Put 1, 2, 3, 4 or 5 on the space provide for your answer. The least rating you can give on each of the following items is 1. ____Improving policies and procedures for financial development ____Giving capital to the SMEs ____Programs on economic sustainability issues ____Allowing more foreign trade ____Globlization of SMEs ____Improvement of technology ____Others (please specify): _________________________________ Appendix D. Table 1. Strategic management elements Strategic Elements Definition SWOT analysis Internal strengths and weaknesses and external threats and opportunities are all parts in the analysis Mission Finding out the reason of organization’s existence Vision Knowing where the organization wants to be in the days to come Core Values Those that influence the behavior of people in the organization Goals and objectives Specific, measurable, achievable, realistic and time bounded outcomes that will make the vision a reality Strategy formulation Involves the plan on how and when to achieve the goals Strategy deployment Execution of the plan Measurement and control Involves the evaluation, measurement and adjustment needed in order to achieve the goals Critical success factors Doing the right thing to succeed Distinctive competencies Competitive advantage of an organization Read More