Revisiting advisory assistance programs for micro, small, and medium-sized enterprises in regional rural areas: Insights from Australia

ABSTRACT

The article investigates how the dynamics and complexities of regional–rural areas in Australia influence micro-, small, and medium-sized enterprises’ (MSMEs) engagement with business advisory assistance services. Understanding these issues can be an important contribution to the entrepreneurial revolution that promotes equal distribution of resources and social inclusion of MSMEs and their communities. Data were collected from MSMEs and assistance providers using face-to-face interviews. Key findings that have practical implications include varied drivers for utilizing assistance programs, context-driven barriers to accessing services, and the dynamic nature of sources of information. Practical implications include recommendations for policy makers to design targeted and differentiated programs, investment in inclusive awareness campaigns, and a migrant outreach engagement strategy. These strategies should be supported by an inclusive small business policy that promotes entrepreneurial revolution that enables equitable access to resources, enhancing income distribution and livelihoods of regional–rural MSMEs and their communities.

KEYWORDS:

• Regional–rural
• small business enterprises
• business advisory assistance

Introduction

This article primarily investigates how the dynamics and complexities of regional–rural areas in New South Wales, Australia, influence the behavior of micro-, small, and medium-sized enterprises’ (MSMEs) use of business advisory assistance services (BAAS) before the COVID-19 pandemic. This is done to explore the key issues that shape the interaction between the MSMEs and providers of assistance, of which the government is the central player. These issues are investigated from the context of the different forms of MSMEs, namely intenders, start-ups, and established. The gaps addressed by this article respond to calls for expanding research on MSMEs in regional–rural areas (Battisti et al., 2013; Khoshmaram et al., 2020) and calls for increased investigation of broader issues affecting small businesses beyond the constraints they face (K. F. Mole, 2007; K. Mole, 2016).

Significance of the research

Any agenda on the entrepreneurial agenda should consider the state of support and inclusion for MSMEs in regional–rural areas because of possible high levels of inequality and limited access to support services. The current discourse on MSME behavior is focused on studying phenomena during the COVID-19 pandemic era, thereby trivializing the importance of challenges and contexts before the pandemic that could influence entrepreneurial revolution. Our study addresses this gap by asking four pertinent research questions useful for practical recommendations for policy makers and MSMEs. By addressing these questions, practical guidelines for policy makers and MSMEs can be identified and be part of the entrepreneurial revolution that promotes resource equality distribution and social inclusion.

Literature review

A resource-based view of the regional–rural MSME’s environment would posit that small business enterprises (SBEs) operate in a resource-constrained context (Anderson et al., 2010; Beynon & Pickernell, 2021; Chikweche & Bressan, 2021; Kraus et al., 2020; Peón & Martínez-Filgueira, 2020). This is characterized by limited resources, remoteness, slow economic growth, and infrastructure gaps (Gherhes et al., 2021; Peón & Martínez-Filgueira, 2020; Tambunan, 2021). There is a record of research on the impact of assistance programs on SBEs in urban and regional–rural areas (Cowling et al., 2020; Herbane, 2019; Pulka et al., 2021; Sawang et al., 2016). This is evolving and continues to be a growth research stream (Chikweche & Bressan, 2021). The article conceptualizes BAAS, broadly speaking, as small businesses’ requirements for direct assistance for various purposes. There is a perception that MSMEs in regional–rural areas do not necessarily utilize formal external support as much as they should (Edwards, 2016; Sanders & Galloway, 2013; Sonfield, 2014). There is evidence of some resistance to uptake of this support (K. Mole, 2016), while there is a broad stream of extant literature on what motivates MSMEs to utilize assistance programs and the barriers they face when accessing assistance programs (Dalborg & von Friedrichs, 2021; Deckert, 2019; Hulsink & Rauch, 2021). However, these studies do not investigate the potential influence of the nuances and complexities of regional–rural areas on these issues. This is a gap that our article addresses through an investigation of pertinent questions that provide practical guidelines for policy makers and MSMEs.

Research questions and methodology

The literature review recognizes various important areas that need expansion of knowledge and new insights by answering the following research questions:

RQ1: What regional–rural trends can influence MSMEs’ use of business advisory services?

RQ2: What are the focus areas for business advisory services for MSMEs in regional–rural areas?

RQ3: What factors influence MSMEs to use business advisory services in regional–rural areas?

RQ4: Which barriers inhibit MSMEs from accessing business advisory services in regional–rural areas?

RQ5: Which sources do MSMEs in regional–rural areas use to get information on business advisory services?

This research is an exploratory study that adopts qualitative methods in face-to-face interviews and ethnographic observations. Twenty-four business advisors (Bas), four business center managers, 19 MSMEs not accessing assistance programs, and 46 MSMEs currently accessing assistance programs comprised the sample.

Findings: Regional–rural trends

Proposition 1: MSMEs’ utilization of business assistance services and their interaction with BAs in regional–rural areas is influenced by diverse trends contextual to regional–rural areas.

Key distinct regional–rural trends that emerge from the study that potentially influenced the utilization of assistance services are outlined in Figure 1.

Figure 1. Nature of regional–rural trends that impact SBEs’ engagement of BAAS.

These created unique nuances and complexities in using assistance programs; in this case, primarily government-sponsored. Economic challenges in the form of job redundancies and the impact of drought affected the demand side for the MSMEs, thereby diminishing the use of advisory services. The study provides insights on the lack of infrastructure, such as internet connection, from the context of MSMEs’ interaction with BAs. Critical social and demographic trend findings from the study include changes in lifestyle, setting up of business models such as home-based MSMEs, and the growth and challenges of migrant ethnic-owned MSMEs.

Motivation to seek assistance

Proposition 2: The different MSME formats use assistance programs for various purposes linked to regional–rural nuances.

A critical insight is the variation of focus areas for assistance across the three different MSMEs formats, namely intenders, start-ups, and established that are influenced by regional–rural nuances. For example, intenders seek assistance to address the basics of setting up a business and legal and compliance issues such as Australian Business Number registration and tax requirements. On the other hand, 62 percent of established MSMEs on the Government Assistance Programs (GAP) indicated that their focus was on seeking assistance to build their business in the changing regional–rural economic environment. A key finding among the MSMEs on GAP, which MSMEs also corroborated not on GAP, was the recognition of lack of management skills by owners, which motivated them to seek assistance to attain such skills. This was evident across all the formats, although the 51 to 60 age group among intenders and start-ups felt particularly weak in this area. Our study confirms previously established drivers for seeking assistance by MSMEs. However, we have extended this by corroborating insights from MSMEs already using assistance with those not currently seeking assistance. Pressure from the regional–rural nuances has resulted in the different formats considering the use of assistance to militate against these nuances.

Impact of location on motivation to seek assistance

Proposition 3: The location of providers of BAAS and the MSME is a crucial influencer on whether MSMEs use these services.

Location was significant for these MSMEs, given the geographic spread of the area covered by service providers. New South Wales is more extensive than some countries in Europe. Thus, it was a key influencer of their motivation for using the providers. The MSMEs’ location and service providers’ location impacted motivation to seek assistance. However, there were variations in the impact of location across the different MSMEs stages. Intenders were not deterred from seeking assistance by the location of service providers; they were prepared to go to service providers for face-to-face interaction with advisors.

Impact of language, internal migration, and ethnicity on motivation to seek assistance

Proposition 4: The influence of language, migration, and ethnicity on motivation to utilize assistance services varied among the different MSMEs.

The impact of language on motivation to seek assistance was not very evident in MSMEs on GAP because most owners cited English as their primary language. The situation for MSMEs not on GAP was different because these were predominantly run by resettled ethnic migrants for whom English was a second language. These MSMEs indicated that part of their lack of motivation to seek assistance was based on the assumption that no programs were delivered in their languages. Part of the driver for this notion was the reliance on ethnic and familial networks for getting information, such that older generation migrant businesses shared their experience and perceptions of assistance programs with any new, younger generation of MSME owners. Yet the status of information would have potentially changed. Our finding contributes to the discussion of the influence of ethnicity on how MSMEs engage government assistance by providing a new dimension that is based on a deliberate clustering of MSMEs from different ethnic groups who are re-settled in regional-rural areas.

Barriers to seeking assistance

Proposition 5: Different barriers shaped by the regional–rural context prevent MSMEs from utilizing business assistance services.

The study confirmed previous findings on the key barriers faced by MSMEs when accessing support services. These are summarized in Figure 2.

Figure 2. Summary barriers to accessing BAAS.

Our study provides extended coverage by getting insights from MSMEs that are currently not on government support. MSMEs not accessing government assistance perceived advisory services as expensive and were unaware of available assistance programs, which had an initial free consultation provision, such as the current government programs. The MSME owners did not trust anyone else to have expertise in running their businesses besides themselves; they believed they knew the business better than anyone else and therefore did not see any need for external assistance. This contributed to their skepticism of the usefulness of assistance programs. Moreover, there was a lack of trust in government involvement in assistance programs. MSMEs not accessing GAP were mostly from multicultural ethnic backgrounds and relied on their ethnic networks for information and authentication of any forms of assistance programs. Poor broadband internet connection was a critical Achilles heel in the regional–rural areas. Our study reinforced some established barriers that prohibit MSMEs from seeking assistance. A key pattern of the barriers is the influence of perception as opposed to the reality of the barriers outlined, which indicate some gaps, such as lack of awareness on programs and benefits of support programs. The issue of collective perceptions of ethnic migrant groups is also an extension of known points about barriers.

Perspectives on sources of assistance

Proposition 6: Community-based groups, such as local chambers of commerce, business councils, and social networks, are emerging as sources of formal and informal assistance and information for MSMEs.

Both BAs and MSMEs identified four potential sources of assistance: government, commercial, business associations, and familial. Community-based groups, such as local chambers of commerce, local councils, and business councils, have become vital sources of formal and informal assistance for MSMEs. The increase in multiple players in the unregulated sector impacted the quality of service delivery, unethical practices, and duplication of services. These issues confused MSMEs and had long-term equity and inclusion implications. A key pattern is the higher proportion of familial and ethnic networks among non-GAP MSMEs, mainly migrant communities.

Practical implications and implementation of findings

Findings from the study have practical implications for policy makers and MSMEs, which can impact key entrepreneurial revolution aspects such as enhancing the social inclusion of migrant ethnic MSMEs. The barriers to accessing assistance cited by MSMEs extend inequalities and exclusion of MSMEs in regional–rural areas. There are practical implications for MSMEs and policy makers.

Targeted and differentiated program focus

Policy makers should have targeted and differentiated assistance programs for MSMEs in regional areas, given the higher entry of new small business owners due to the collapse of traditional industries such as mining and agriculture-based industries.

Awareness and visibility of assistance programs

A critical barrier is the lack of awareness and visibility of government assistance programs available for MSMEs. Awareness refers to the lack of knowledge of existing programs by MSMEs currently not accessing assistance programs. Visibility refers to the lack of comprehensive promotion of programs of which MSMEs might be aware, but that is not necessarily communicated to their target markets well enough to access them easily. An integrated marketing communication approach should be used to communicate assistance programs effectively. This should constitute above-the-line tools, such as radio, television, and online, and below-the-line activities, such as word of mouth and more direct methods. Integrated marketing communications are likely to expand the reach potential of the message. Anecdotal evidence of marketing communication indicates the effectiveness of an integrated approach. For the MSMEs, a key practical implication is the need to invest time in finding out about assistance programs instead of relying on perception or limited information from ethnic and familial sources. An extension of this is the need for the ethnic multicultural MSME owners to embrace social integration into the broad ecosystem of their communities because this can be important in helping them access assistance programs.

Awareness of assistance programs assumes an essential role in regional–rural areas, given the likelihood of a high entry of intenders and start-ups due to the need for alternative sources of income. The close interconnectedness of the different sources of assistance cited in this investigation provides an opportunity for enhanced awareness creation using integrated marketing communications. Local newspapers in regional–rural areas could be used to promote assistance programs. Close community links will also potentially result in more word-of-mouth communication of the awareness promotion campaigns to which residents would have been exposed.

Migrant outreach and engagement strategies

In migrant communities settling in regional areas, a key challenge is the lack of knowledge of such groups’ culture and behavioral traits. These can potentially impact how they engage in assistance programs. An outreach strategy to engage these prospective MSMEs in their own space is essential because this will create trust with the MSMEs. This will also enable service providers to understand nuanced cultural traits, such as their conceptualization of issues such as making and committing to appointments, personal space, communication, and hierarchical structures.

Small business policy for regional areas

There is a need for an inclusive policy framework on regional small business sector development beyond current policy provisions. The framework should focus on:

• Investigating and providing solutions for addressing the challenges of integrating migrant small business owners, especially in areas where refuge communities are being resettled and plan to set up businesses.

• Identifying infrastructure gaps in the regions and lobbying for increased state and federal government-accelerated interventions to address these gaps. Advocacy could also include engaging the private sector to encourage public–private partnerships to address these gaps.

Disclosure statement

No potential conflict of interest was reported by the authors.