Innovation and Risk-Taking in Small and Medium Enterprises (SMEs): How Cultural and Environmental Factors Influence Business Growth in China
DOI:
https://doi.org/10.53797/ujssh.v3i2.40.2024Keywords:
SMEs, Innovation, Risk-Taking, Cultural Factors, Business GrowthAbstract
This research examines the influence of cultural and environmental factors on innovation, risk-taking, and company expansion in Small and Medium Enterprises (SMEs) in China. Data were collected using a quantitative research strategy using structured surveys directed at SMEs across many industries and geographies. The results indicate that cultural factors, including guanxi (connection networks), collectivism, and Confucian principles, markedly affect SMEs' decision-making processes and growth strategy formulation. Cultural variables frequently promote a prudent approach to risk-taking, reconciling innovation with preserving group cohesion and stable relationships. Environmental factors, such as governmental legislation, availability of financial resources, and market competition, significantly influence SMEs' capacity for innovation and growth. Smaller enterprises, especially micro and small-sized organizations, encounter distinct constraints stemming from constrained resources and limited access to external financing. It shows that these limitations, numerous SMEs exhibit resilience and adaptation, capitalizing on their strengths, including agility and tailored client engagement, to maintain growth. The study underscores the need to cultivate an ecosystem that promotes SME innovation and strategic risk-taking. Policymakers are urged to adopt methods that enhance capital accessibility, provide tax incentives for innovation, and establish regulatory frameworks that foster entrepreneurship. For SME executives, integrating strategy with cultural and environmental realities helps improve decision-making processes. The report recommends further research on the effects of digital transformation, regional disparities, and long-term consequences to investigate the dynamics of SME growth in China.
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