Effects of branding on performance of small to medium-sized enterprises (SMES) in Klang Valley

Abstract

This study is undertaken to determine the effects of branding on performance of SMEs in Klang Valley, Malaysia. Quantitative research methodology is adopted to identify branding factors affecting SME performance. Data is collected from 175 SMEs, indicating a high usable response rate of 86.63%. Five factors emerge from the factor analysis. They are Branding Practice, Branding Management, Branding Strategy, Branding Media & Technology, and Branding Association. Subsequently, multiple regression technique is used to test the hypotheses.The results of multiple regression support the hypotheses on the relationship between branding factors and performance. Branding factors comprising Branding Practice, Branding Strategy and Branding Association have significant relationship with Company Performance. This is rather expected which firmly supports branding literature and the Resource-based View (RBV) theory that states firms possessing valuable, rare, imperfectly imitable, and non-substitutable resources have capability to achieve superior performance. On the other hand, Branding Management and Branding Media & Technology are tested negative with no significant relationship with performance. This could be explained that SMEs have limited resources and therefore, do not adopt Branding Management as much as the large organizations. Similarly, SMEs do not readily adopt Branding Media & Technology due to high cost of acquiring and maintaining media and technologies. This study therefore contributes to the body of knowledge in strategic management and marketing for SMEs in Klang Valley. Branding could enhance their performance and help them contribute towards achieving higher Malaysian GDP target in the future. With the introduction of much anticipated Trans-Pacific Partnership Agreement (TPPA) and its implementation in the next two years, SMEs in Klang Valley will face greater opportunities and challenges. Branding could be the answer to equip the SMEs, that would allow them to uniquely differentiate their products and services.Further research on the subject is highly recommended to identify other possible branding factors, or to acquire deeper insights that could further contribute to the increase of SME performance.