Graduates ’ Work Experiences in Small and Medium Enterprises in the Northern States of Malaysia

This paper was designed to examine university graduates’ expectations and experiences of employment in small and medium enterprises (SMEs) in the Northern States of Malaysia. A self-reported questionnaire data was gathered from 84 graduate employees. Graduates reported positive experiences in many areas. These often exceeded their expectations, and in general over-met expectations were much more common than under-met ones. The graduates’ work appeared to offer quite high autonomy, the chance to develop a wide range of skills, and to progress towards career goals, at least in the short term. In line with previous research, there were signs that pay; within enterprise career prospects and training were relatively weak areas. Taken as a whole, the results substantiated previous research done and challenge more negative images of employment in small enterprises, and also the preoccupation with under-met expectations in the literature on new entrants to enterprises.


Introduction
Small and medium-sized enterprises (SMEs) are considered to be an engine for growth in both developed and developing countries.They have the potential to play a crucial role in supporting balanced growth across the economy (Bannock & Albach, 1991).The benefits of a vibrant SME sector include: the creation of employment opportunities; the strengthening of industrial linkages; the promotion of flexibility and innovation; and the generation of export revenues (Harvie & Lee, 2001;Lerner, 2002;Mensah, 1996).
To sustain growth, an economy needs to be supported by its SMEs, because large-scale enterprises (LEs) might have negative as well as positive effects on the stability of a country (Moy & Lee, 2002).SMEs have the ability to innovate, diversify, and create new jobs (Garavan and O'Cinneide, 1994;Lauder et al., 1994).Policy makers in South Korea and the Eastern European countries believe that SMEs could bring their economies out of recession (Sohal & Ritter, 1995).However, A World Bank Report (World Bank, 1978) and ILO studies (International Labour Office, 1982) have shown that increasing employment, and thereby income, is the main reason for encouraging SME development in many countries.
In Malaysia, the role of SMEs will be increasingly important especially helping the nation towards becoming a fully-industrialised country by the year 2020 (Malaysia, 1991).A nationwide Census on Establishment and Enterprises conducted in 2005, found that SMEs represented 99.2 percent or 518,996 of the total number of businesses in Malaysia (Bank Negara Malaysia, 2005).Most of the SMEs (86.5 percent or 449,004) are in the services sector, mainly engaged in the retail, restaurant, wholesale, transportation and communication, and professional services businesses.The manufacturing sector (mainly in the textile and apparel, metal and mineral products, and food and beverage industries) and the agriculture sector (mostly in food crops, market produce and horticulture and livestock) accounted for 37,886 or 7.3 percent and 32,126 or 6.2 percent of the establishments respectively.(Note 1) In terms of contribution to the economy, SMEs generated RM154 billion or 47.3 percent of value added and RM405 billion or 43.5 percent of output in 2003.The Census also showed that 4,257 SMEs exported their goods and services totalling RM38 billion in 2003.Productivity levels of SMEs are found to be significantly lower than Large Enterprises (LEs) recording value-added per establishment of RM0.3 million compared with RM41 million for LEs.
The Census results confirmed that SMEs are a major source of employment, providing jobs for over 3 million workers or 65.1 percent of total employment in these business establishments.Out of the 3 million workers, 2.2 million workers were employed in the services sector, while 740,000 and 131,000 workers were employed in the manufacturing and agriculture sectors respectively.SMEs, like LEs, cited work schedules and lack of funding as hindering plan to train their workers.In addition, SMEs also cited lack of on-site training facilities and absence of suitable training schemes as reasons limiting worker training.However, according to Moy & Lee (2002), the effectiveness of the training fund, like other SME support measures, has been questioned by professional members of society, as low subsidy allows only a small number of beneficiaries, even when employers are willing to give their staff time off for training.Another criticism is that the fund might not have an immediate impact (Tien, 2001;Wong, 2001).LEs cited job-hopping after training, and lack of trainers as bigger stumbling blocks for their training programmes.
Both SME and LEs similarly ranked improved job performance, better product quality, higher productivity and better employee satisfaction as the major benefits participating in training programmes when it came to assessing the benefits gained from worker training programmes (Pembangunan Sumber Manusia Berhad, 2003).
Mohd Salleh et al. (2002) provided evidence of low graduates employment in SMEs.Out of the 1,587 Universiti Utara Malaysia graduates that responded to the study, only 3 graduates found employment as entrepreneurs or working in SMEs.Little research has been reported that examines these issues through an analysis of the experiences of recent graduates in SMEs in Malaysia. Arnold et al. (2002) recommended that this study to be replicated in the same work in other countries since the sample of respondents in their study is relatively small.The main intention of examining the Northern States of Malaysia was to explore whether the results are indeed generalizable.Compared to Perlis and Kedah which is predominantly considered an agriculture states and Penang and Perak where many firms concentrated in manufacturing and services, some discussion of the regional context is appropriate.Barkham et al. (1996) found that a regional study on SMEs may suffer from bias, if differences in the characteristics of SMEs exist between regions.However, evidence from previous studies has refuted regional and locational factors as being important in the study of SMEs (Mahmud, 1981;Hakim, 1989;Storey et al., 1989;and Keasy & Watson, 1994).

Objectives of this study
The specific objectives of this study were as follows: 1.1.1To examine the expectations and experiences of university graduates' working in small and medium enterprises; The structure of the paper is as follows.The following section describes essential background information on graduates' work experiences propagated by previous literatures.The next section reviews the methodology employed.Finally, the paper highlights and discusses the results on graduates' work experiences in SMEs in the Northern States of Malaysia.

Literature review
In much of Western Europe, the employment market for university graduates is dominated by large enterprises as opposed to small ones (Harvey et al., 1997;Mason, 1996).Large enterprises make great efforts to market themselves to graduates, university careers staff seek to foster links with them, and university students tend to prefer the prospect of the employment in a large enterprise over employment in a small one (Belfield, 1999).
Managers in small enterprises in general seem less willing and/or are able to participate in the graduate recruitment competition (Johnson & Pere-Verge, 1993).Often they fear that they will be unable to meet graduates aspirations in term of quality of work and material rewards (Johnson & Pere-Verge, 1993;Read, 1997).They may also doubt whether graduates have appropriate practical skills, even though it seems that the technical and specialist know-how offered by many graduates contribute substantially to the performance of small businesses (Bosworth & Wilson, 1993;Freel, 2000).Some of the available research evidence suggests that graduates have good reason to prefer employment in large enterprises rather than small ones.The training provided in small enterprises has fairly consistently been found to be more limited in quality and scope than in larger enterprises (Marshall et al., 1993).SMEs tend to perceive training as a cost rather than an investment in Malaysia (SMIDEC, 2004).There is also clear evidence that pay is lower even allowing for sector (Belfield, 1999;Mellow, 1982).University students also perceived that small enterprises have fewer promotions and other career opportunity than large ones (Belfield, 1999).
On the other hand, there is also some reason to believe that small enterprises will in some respects offer graduates better employment experience than large ones.Extrapolation from this might suggest that recent graduates' work in small enterprises offers more development of a range of skills, and more responsibility and autonomy than in the large enterprises.Research on enterprise size indicates fairly clearly that large enterprises are more structured and centralized than small ones, and the roles are defined more closely (Ingham, 1970).
Furthermore, earlier research suggested that career development is often experienced as surprisingly restricted and/or unclear in large enterprises (Arnold & Mackenzie Davey, 1994), perhaps because of the prevalence of downsizing and restructuring.Even training might not be a major issue if good learning and development happen on the job, and there is some evidence that this is indeed the case in small enterprises (Joyce et al., 1995, Westhead & Storey, 1996).Recent contributions to the fairly abundant literature on training in SMEs have tended to question whether training is necessarily a causal factor in business success (Patton et al., 2000;Bannock, 2000).
There is long tradition of comparing experiences with expectations among young people entering employment (Wanous et al., 1992;Mabey et al., 1996).It has generally been found that newcomers have high expectations and that these are frequently not fully met, with negative consequences for outcomes such as newcomer tenure and commitment (Dean et al., 1988).The high expectations of newcomers are believed to be fuelled by the efforts of the employing enterprise's recruiters to emphasize the virtues of the post on offer and the enterprises as a whole as they try to attract high quality newcomers.There have been some attempts to counter this by developing the realistic job previews (Wanous, 1989), which attempt to portray the job and enterprise as the insiders see them.
Recruiters in small enterprises are likely to have more detailed knowledge of the jobs they are recruiting to than those in large enterprises (Rynes & Barber, 1990).They may also more careful to be accurate, because they may well have to work closely with the successful candidate.Robertson (2000) found that around the quarter of students across several European countries came from a background where their parents ran their own business, so some graduates should be aware of what to expect.Furthermore, the literature already reviewed gives some reason to believe that graduates' expectations of small enterprises are likely to be relatively realistic.All this may mean that unmet expectations of graduate newcomers are not a frequent problem in small enterprises.Arnold et al. (2002) examined university graduates' expectations and experiences of employment in small enterprises in the UK and the Netherlands.From the study of 126 graduate employees in small enterprises, they found that graduates reported positive experiences in many areas such as they were offered quite high autonomy, develop a wide range of skills, and to progress towards career goals.Nevertheless, in line with previous research, there were some signs that pay, training and within-enterprise career prospects were relatively weak areas.

Respondents and data collection
The list of names and addresses of the small-medium enterprises (SMEs) from the Ministry of Entrepreneur Cooperative Development (MECD) databases comprised the population frame for this study.The sample of the respondents (graduates) for the study was selected from the listing of the firms in the Northern States in Malaysia (Perlis, Kedah, Penang and Perak).Letters with translation in Malay and Chinese were sent to 300 firms' addresses selected randomly enquiring them about graduates' employment in their firms and permission for their graduates to answer the structured questionnaires.
The responses from these firms were quiet poor and only a few firms replied.The reasons for non-participation by the selected firms illustrate the problems of conducting research in a mixed-race, multi-lingual, developing country (Boocock & Mohd Shariff, 1996).For example: it was not possible to locate a number of firms, as the addresses were not up-to date; and others were not willing to disclose any information.
However, 90 respondents were willing to participate in the study and a follow-up letters together with the questionnaires were sent to them.Non-participants were not replaced, mainly because of constraints on time and resources.Of the 90, six were excluded from this study because either they were not graduates, or they had been employed too long, or they worked in an enterprise with 150 or more employees.This represents a response rate of 28 percent of the sample size.The sample size is considered appropriate compared to the previous study conducted by Boocock & Mohd Shariff (1996), where the researchers only managed to interviews 32 respondents.Research conducted by Arnold et al. (2002) also received a total of 77 responses representing a response rate of 25 percent of the 308 questionnaires that being sent out.

Questionnaire
The questionnaire used was divided into eight sections.The first and second section addressed the background of the respondents and their employing enterprises.Section three of the questionnaire aimed to capture information on the graduates' experiences at work by adopting instruments from previous literature reviews (Mackenzie Davey & Arnold, 1992;Freese & Schalk, 1997).
These were grouped into the following twelve categories; autonomy, responsibility, training, skill development, pay and benefits, working conditions, respect, boss, co-workers, organizational career, career progression and security.A five-point Likert scale (1 = strongly disagree; 2 = disagree; 3 = neither agree nor disagree; 4 = agree; 5 = strongly agree) was used for the items and fitted well.The fourth section focused on the match between expectations and experiences and was assessed using 12 items (Arnold et al., 2002), each reflecting one area of experience at work.Examples are "I received relevant training', and 'my co-workers are helpful and supportive'.For each item, respondents were asked 'To what extent have your experiences met the expectations you had when you started working for this organization?'Answers were given on a five-point scale (1 = much less than I expected; 2 = somewhat less than I expected; 3 = as I expected; 4 = somewhat more than I expected; 5 = much more than I expected).Section five focused on the graduates settling in the organization and based on 6 open-ended questions.Section six highlighted the graduates expectation of themselves in terms of having made a promise or commitment to their employers based on the 11 items "yes" or "no" answer.Examples are 'Assists others with their work', and 'shares the organization's values'.It they believed that they have made a promise or commitment, answers were given (1 = not at all; 2 = partly; 3 = completely).A final items (open-ended question) were given to gauge the respondents' views of any significant changes in what they consider to be their commitments or promises to their employers.
Attitudinal variables were also assessed in Section Seven.Eight item scales for affective commitment (i.e.emotional attachment) and continuance commitment (i.e.belief that the costs of moving would be too great) to the organization were drawn from Allen & Meyer (1990).A 4-item measure of trust was used.This was adapted from the longer measure employed by Robinson (1996).Finally, the 5-item measure of intention to leave developed by Mackenzie Davey & Arnold (1992) was also included.
Lastly, Section 8 discussed on the changes in graduates' attitudes to their organization and reasoned for those changes.A 3-item measure of changes in attitudes was adopted from Arnold et al. (2002).Answers were given on a five point-point scale (1 = considerable negative change; 2 = moderate negative change; 3 = no change; 4 = moderate positive change; 5 = considerable positive change.

Reliability test result
To determine the reliability of the responses given by the respondents, a reliability test was conducted to the dependent variable.The result of the test for the Cronbach's alpha for the above scale was obtained (Table 1).This shows that the responses given by the respondents were highly reliable as the Reliability Coefficient is closer to 1 (one).

Characteristics of respondents
Table 2 shows the characteristics of the sample.The graduates had worked with their employers for an average of more than two years.The mean age of the graduates were 27 years.About three-quarters of the graduates reported being in a job intended specifically for a graduate.Nearly half of the graduates were females.Almost two-thirds of the graduates worked in enterprises with fewer than 50 employees.The majority of them studied business, economics, social science and information technology.Most common jobs held were marketing, general management, and accounting.Nearly three-quarters had obtained Bachelor's degrees.There was quite a lot of variation in perceptions of the employing organization's economic performance, though these perceptions tended towards positive.
Table 3 shows the number of graduates reporting that their expectations had been under-or over-met in each of the 12 areas.This results support the first prediction.In both the Perlis/Kedah (P/K) and Penang/Perak (P/P) and sub-samples under met expectation was only one and far between.The mean number for Perlis/Kedah graduates was 3.5, and for Penang/Perak graduates were 3.6.Furthermore, these were far exceeded by over-met expectations, with mean of 6.7 in Perlis/Kedah group and a mean of 6.4 for Penang/Perak group.More than half the sample in the 10 areas indicated to a greater extent than they had expected.This is consistent with some earlier works on surprises experiences in employment by new graduates (Arnold, 1985;Arnold et al., 2002).Almost as many reported more responsibility, skill development and helpful co-workers than they had expected.The only area in which expectations was more frequently under-met than over-met was pay and benefits.Even here, however, more than half of the respondents reported under-met expectations, and about less than one-third of the respondents reported over-met expectations.The area of training was inconsistent with the earlier findings by Arnold et al. (2002), where more than two-fifth of the respondents reported over-met expectations than under-met expectations.
The idea that most newcomers have high expectations many of which are inevitably unmet (Wanous, 1989) is definitely not supported in this case.It is not possible to be certain whether this was simply because expectations were very low, and therefore almost any reality represented an improvement on them.However, the quite high mean scores on most of the experience scales suggest that this was not a case of rock bottom expectations being exceeded by mundane experiences.
There was a tendency for the Perlis/Kedah sub-sample to report fewer under-met expectations than the Penang/Perak sub-sample.For under-met expectation, this difference was most marked by pay and benefits.As mentioned earlier in the area of training, however, this results support the earlier findings by Arnold et al. (2002) in terms of Penang/Perak sub-sample reporting under-met expectations than the Perlis/Kedah sub-sample.Among the over-met expectations, the gap between the groups of states was biggest for skill development, responsibility and co-workers.The ratio between under-met and over-met expectations was however similar for both sub-samples (1:1.9 for the Perlis/Kedah graduates and 1:1.8 for the Penang/Perak graduates).
Data concerning prediction 2 and 3 are shown in Tables 4. Table 4 shows scores on the experience and attitude scales (i.e. the sets of questions designed to reflect key constructs).Some circumspection is required when comparing means on the different scales because mean scores may depend partly on how the questions in different scales were worded.However, 'extreme' words (e.g.very highly) were avoided in the questions, so any distortion should not be major.The first point to note (Table 4) is that all the means for the 12 experience scales were above the midpoint of the response scale.This suggests that experience scales were on the whole quite positive.The highest means were for Co-workers and Skill Development.The Penang/Perak sub-sample scored very significantly higher than Perlis/Kedah sub-sample on Autonomy and Working Condition; while Perlis/Kedah scored very significantly higher than Penang/Perak sub-sample on Training.
Prediction 2 stated that experiences concerning pay, training and within enterprise career development would tend to be less positive than others.This was largely supported by the data derived from the experience scales (see table 4): the mean scores for Organizational Career (3.10) and Pay and Benefits (3.26) were the lowest of the 12 areas, and Training was twelfth.There were two differences between the sub-samples.Experiences concerning Pay and Benefits were better for the Penang/Perak graduates than the Perlis/Kedah graduates, in terms of both mean score and rank order in the 12 experiences.Training was lower in rank order among the Penang/Perak graduates than the Perlis/Kedah graduates in terms of both mean score and rank order in the 12 experiences.Prediction 3 was that experiences regarding Responsibility, Autonomy and Skill Development would be amongst the most positive than most other areas in the present sample.Table 4 shows strong support for the prediction in the cases of Skill Development (in both sub-samples only the Co-workers mean score was higher).The prediction is also supported regarding Autonomy in the Penang/Perak sub-sample, but not the Perlis/Kedah sample.The prediction is also supported regarding Responsibility in the Perlis/Kedah sub-sample, but not the Penang/Perak sample.Some hunches and assertions about the nature of work in SMEs were supported by these results.The graduates seem to have experienced a lot of freedom to do things in their way and (perhaps as a consequence) to develop their skills.The Penang/Perak graduates in particular reported high autonomy, perhaps reflecting a tendency for more delegation in Penang/Perak SMEs.This is consistent with an image of SMEs as being relatively free of procedural constraints and tightly defined job descriptions.
Trust in the employer was quite high between both the Perlis/Kedah and the Penang/Perak graduates, but Affective Commitment (that is, a sense of emotional attachment) is distinctly provisional especially for the Perlis/Kedah sub-sample.Continuance commitment reflects the idea that the costs of leaving are too great to sustain, and/or the alternatives too few.This form of commitment is relatively high, though significantly higher among the Perlis/Kedah than the Penang/Perak graduates.Even so, Intention to leave is also somewhat lower, though significantly higher among the Perlis/Kedah than the Penang/Perak graduates.

Conclusion
This study extends our understanding of graduates' experiences in small and medium enterprises by providing quantitative data from 84 people in their first four years of post-graduation employment in enterprises with fewer than 150 employees in the Northern States of Malaysia.The most general and pervasive finding is that experiences were predominantly positive, probably to a greater extent than most existing literature would lead one to expect.Experiences were certainly more positive than the graduates themselves had expected.
On the whole, the results support those who argue that employment in small and medium enterprises tends to offer a great deal of freedom and skill development.This appeared not to be the case for some aspects of responsibility though.As predicted, experiences of training, pay and benefits and career prospects within the enterprise tended to be weak spots.But even this was not universal.The Penang/Perak graduates were relatively positive about pay and less negative than the Perlis/Kedah about training.
The results present a contrast to much of the unmet expectations literature, in that expectations were considerably more likely to be over-met (over one-third of expectations) than under-met (less than one-sixth).In a sense this might be taken to support the idea that newcomers in enterprise frequently experience 'reality shock' (Hughes, 1958).However, that term usually has connotations of getting less than expected rather than more.The present results are in line with Arnold's et al. (2002) finding that the majority of surprises experienced by new graduates were either positive or neutral in tone.
The results from this study provide further evidence that pay benefits, organizational career and (especially) training are relatively weak point for small and medium enterprises in the Northern States of Malaysia.They add to past work by showing that these areas are not relatively weak, but also tend to fall short of graduates' expectations.It may well be that good experiences in other areas compensate for this.An example is that high scores on skill development may mean that deficiencies in formal training matter relatively little to graduates.Nevertheless, recruitment and retention of graduates by small and medium enterprises may be helped either by improving graduate training, working condition and pay or by being very clear and accurate about what new recruits can expect in those areas.
Graduates' relatively negative perceptions of career prospects within the SMEs also accord with speculations in the literature.Here again, though the Penang/Perak graduates were more positive than their Perlis/Kedah counterparts.Almost by definition, one might think, SMEs offer less scope for career progression because there are few alternative positions or promotion ladders available.On the other hand, careers are supposedly more fluid and less defined by organizational structures than they once were (Arthur & Rousseau, 1996).This might mean that the changeable and diverse nature of work in SME businesses, with the accumulation of skills and experiences that implies, constitute a desirable career in itself.However, the data obtained here suggests otherwise-that these graduates saw careers in terms of formal positions, and that SMEs offered few of them.Yet most of them felt that at present they were making good progress towards their career goals, which perhaps indicates that they viewed their employment as fine for now but not for the longer term.It is not clear whether graduates in the present study aspired to set up their own small business, or whether they wanted to move to a larger enterprise.Evidence from a small number of follow-up interviews suggests that initiatives in entrepreneurial education are having only limited impact (Johnson & Tilley, 1999).
Other aspects of the results are perhaps less in line with common perceptions of employment in SMEs.First, it seems that at least one barrier to access to training (pressure of work) may be rather less salient in SMEs.Again, though, caution is needed here because pressure of work may well increase in enterprises of all sizes over the last decade (Worral & Cooper, 1998).Second, although opportunities for the development of range of skills were very positively perceived by graduates in this study, they were seen almost as positively by those in the large enterprises (Arnold et al., 2002).Third, the notion of responsibility probably needs to be broken down.It seems to be more individualized phenomenon in SMEs than in large ones; concerned more with making one's own decisions and less with supervising others.It is therefore inappropriate to state that work in SMEs involves more responsibility without specifying what the responsibility is for.
Perhaps the most significant practical message to be taken from these results is that SMEs appear to be underselling themselves to graduates.In both the Perlis/Kedah and Penang/Perak sub-samples, graduates tended to report receiving more than expected of things that are normally regarded as desirable.This is the reverse of the pattern suggested by most of the literatures in graduate recruitment and work-role transitions.Supplementary analyses showed that the number of over-met expectations correlated moderately positively (0.247) with graduates' affective commitment to the enterprises and negatively (-0.173) with the intention to leave, so this form of unmet expectations appears not to be a problem from the employer's point of view -indeed, rather the reverse.Nevertheless, if one is prepared to assume that low expectations put off potential applicants, then SME employers can afford to be less modest about the work they offer to graduates.It will be important not to be err in the opposite direction of course, but on the basis of these results there would be some distance to travel before that happened.
Finally, some limitations of the research reported here must be acknowledged.Although drawn from the Northern States of Malaysia, the sample size is relatively small and there is no guarantee that those who responded are representative of graduates entering SMEs in the Northern States of Malaysia.Also, the relatively high non-response rate may have led to a sample that is biased in unknown ways.Data about expectations were retrospective, so it is impossible to be sure that what have said at the time of joining.On the other hand, their sense now of met and unmet expectations can be considered valid experiential data in themselves, irrespective of what the graduates might have indicated in the past.On that basis, the main conclusion of this work is that on the whole graduates were quite please with their experiences of working in SMEs, both in absolute terms and relative to expectation.Arnold, J.R., Schalk, R.,Bosley, S., & Van Overbeck, S. (2002).Graduates'experiences of works in small organisations in the UK and the Netherlands.International Small Business Journal, 20(4), 477-497.Arnold, J.R., Schalk, R., Bosley, S., & Van Overbeck, S. (2002).Graduates' experiences of works in small organisations in the UK and the Netherlands.International Small Business Journal, 20(4), 477-497.Arnold, J.R., Schalk, R., Bosley, S., & Van Overbeck, S. (2002).
Graduates' experiences of works in small organisations in the UK and the Netherlands.International Small Business Journal, 20(4), 477-497.
1.1.2To examine experiences in the areas of pay, training, and within-enterprise/organization career development than other experiences; 1.1.3To determine experiences regarding responsibility, autonomy, and skill development than most other areas.

Table 1 .
Test result of the reliability analysis of the responses

Table 2 .
Characteristic of respondents Description for the above table.Source: Adopted from

Table 3 .
Number of respondents reporting under-met and over-met expectations in each of twelve areas