Literature review(The financial support of SMEs and their development role in Saudi Arabia) - Research Paper Example

rganizations therefore creates the desired multiplier impact on the level of employment as well as economic progress made in the country (Port, 2010). Despite their importance, SMEs, however, lack the required financial support in order to expand in size and contribute more towards the economic progress of the country.(Hertog,2012). Hertog (2012) focused upon exploring the impact of lack of financial resources on the development of SMEs. Gulf areas in general and Saudi Arabia in particular, is an oil rich region with the economy being driven by the large oil producing organizations.

However, despite such dependence upon oil and other large organizations, SMEs in the country and region are flourishing too, creating further employment opportunities and further progress in the economy. The required financial support for the SMEs, in order to strengthen their capability to further contribute towards the progress of Saudi Arabia’s economy, is however somewhat lacking. This is despite the fact that SMEs have a really great developmental potential.( Publishing Research Consortium,2009) Though SMEs exist all over the world and in large numbers, there is still no concrete definition for SMEs due to various practical reasons. Fu(2011) focused on exploring the overall criteria for defining SMEs and suggested that it differs from country to country and are based upon different variables such as number of employees, revenue, nature of trade etc.

(Fu, 2011). Normally, the number of employees for SMEs are defined at less than or equal to fifty for relatively small organizations whereas for medium organizations, the upper limit of number of employees is normally between 100 to 250.(Capitas,2013) Within Saudi Arabia, various organizations define SMEs according to different criteria and are followed by different organizations. There are two important criteria used in defining SMEs within Saudi Arabia. One criteria followed by the SME Development Center is to have less than or