When SMEs fail as an economic source of income and employment: Evidence from Kuwait*
Talla M Aldeehani

Abstract

This paper investigates the reasons behind Kuwait’s failure to promote small and medium size enterprises (SMEs) as a source of employment and national income. The outcome of this research is based on two-stage data collection and analysis. In the first stage, data was obtained from Kuwaiti entrepreneurs’ responses on a scaled questionnaire adopting the fourteen-pillars of Global Entrepreneurship Index (GEI) on SMEs healthiness. To examine causality, exploratory data reduction as well as structural equation modeling (SEM) techniques were applied. In the second stage, data was acquired from interviewing entrepreneurs, relevant regulators, legislators, and economists. The results reveal that the country has failed to promote SMEs as a source of national employment and income. Corruption among public officials and weak public policy are the main reasons, implying no foreseeable alternatives to either the subsidized national employment programs or the shaky single-sourced national income. To remedy the problem, drastic actions must be taken at the highest level to, sincerely, fight corruption, fix employment regulations including the country’s constitution, and encourage clean energy projects to mitigate the risks of lower demand for fossil energy: the only source of our national income.