The Internal Environmental Factors and Operational Excellence: The Moderating Effect of External Environmental Factor in SMEs Manufacturing Sectors

Abstract

Small and medium enterprises (SMEs) manufacturing sectors in Malaysia has been recognized as an important sector to the nation’s economic growth. However, the contributions of SMEs GDP in 2020 declines compared to the previous year. This study aims to examine the effects of internal and external environmental factors on operational excellence in the Malaysian SMEs manufacturing sector. The literatures have demonstrated that an investigation on operational excellence is lacking particularly in Malaysian SMEs sector. In addition, the impact of external environmental factors on operational excellence has received little attention in the literatures especially in SMEs sector. Therefore this paper presents a conceptual framework based on comprehensive review of previous study which incorporate the operational excellence, internal and external environmental factors. This study concluded that the influence of internal and external environmental factors towards the operational excellence in Malaysian SMEs manufacturing sectors. This study expected will help SMEs owners and managers in the manufacturing sector to have body of knowledge and have a better understanding on the factors that influences the operational excellence to enhance their performance. Further studies are recommended to verify the relationships between all variables in this study for Malaysian SMEs manufacturing sectors.