Structure of SMEs and the Banks’ Lending Criteria for SMEs in Qatar

Structure of SMEs and the Banks’ Lending Criteria for SMEs in Qatar
Institutional Affiliations
This report is established on the knowledge that Small and Medium-sized Enterprises (SMEs) are dominant forces in the economy of any country. This also includes the awareness of the financial support available to SMEs in the form of bank support, which creates a channel for the failure or success of most SMEs. The platform for this study is highly based on complaints from most SMEs that there is a lack of a formidable structure for SMEs in Qatar, which has largely contributed to the reluctance of most banks to extend credit facilities to SMEs, thereby making their operation a bit cumbersome and restrained.
Evolution of Small and Medium-Sized Enterprises in Qatar
Traditionally, SMEs have been active participants in the economy of Qatar. Experts indicate that these enterprises run the economy of the country. However, many economists lament that SMEs have been largely ignored in the planning of the economy at the national and individual-financial institutional planning (Blundel et al., 2001). The structure of SMEs has also been lacking definite criteria as most SMEs are quite random with structures, which vary from one SME to another. Until 2012, Qatar did not have any structure or platform to integrate the SMEs in the country towards a common platform for accessing credit facilities (Andreas, 2011). However, 2012 saw the creation of the junior bourse, which provided SMEs in Qatar with the necessary platform for raising funds (EUROSTAT, 2011). Access to capital from major financial institutions including banks was the main reason for the drive towards a permanent solution for SMEs in Qatar especially after identifying that these enterprises create a great diversification in the economy of the country (Burgess, 2002).
However, even the creation of this platform has not yet resulted in extensive listing of SMEs to the junior bourse. Experts in the money market identify the failure of the SMEs to find a broker or any other liquidity provider as one of the reasons for the failure of the SMEs to enlist (McDougall, et al., 1997). Furthermore, experts also show the stringent requirement by the Qatar Financial Markets Authority those SMEs must have a liquidity provider, among other requirements, which are extended due to the high risk profile of SMEs, are a major hindrance to the development of SMEs in the country (SME FDI, 2006). Whereas there are bodies formed by the government and private organization (such as Enterprise Qatar and Qatar Exchange) to steer SMEs towards greater financial capabilities, this dream is still far from actualization. Apart from the previously mentioned restrictive conditions, there are other conditions, which further strengthen the argument that SMEs face greater hardships in accessing financial prowess (Riding et al., 2006). These include the requirement from a minimum track record of one year, together with a free float of 10% and a minimum of 20 shareholders. These conditions are quite cumbersome and form barriers to the progress of SMEs in Qatar to the present day. However, organizations such as Qatar Exchange and Enterprise Qatar have signed Memorandum of Understanding, which is meant to create a conducive atmosphere for SMEs to meet legal requirements, which will enable them to define their structures conclusively and meet the criteria for accessing financial incentives from banks and other organizations (Cruz-Cunha, 2010). The main problematic condition for meeting several criteria from smooth operation of SMEs appears to be their ownership structure. Most of the SMEs in Qatar are individually owned or family-owned and this creates a problem when it comes to accessing credit facilities from banks and other institutions as well as enlisting in organizations and other platforms such as the junior bourse (Haahti et al., 1998).
The Structure and Promotion of SMEs in Qatar
Job creation, innovation, international competitiveness and efficiency are important facilities prompted by SMEs (Levy & Powell, 2005). Consequently, researchers and scholar attribute economic growth and diversification as a contribution of SMEs without discounting the importance of large corporations. Many researchers also indicate that the backbone to success and sustainability of any economy is formed by the SMEs (Abdallah et al., 2011). As much as large corporations bring about huge economic turnovers, the existence of these corporations is embedded on their successful coexistence with SMEs. As much as SMEs have local roots, they are in a position to exploit the diverse opportunities extended by globalization (Salaheldin et al., 2010).
There is a general agreement that the job creation and economic diversification are unachievable without the involvement of SMs, not only in Qatar but also in other regions, in the United Arab Emirates. SMEs contribute greatly in economic activities such as merchandise exports, as well as a service, which makeup a substantial amount of Qatar’s GDP (Bank & Khan, 2012). Almost the entire employed population works in SMEs even though most of them employ less than twenty employees. The rate of growth of employment in SMEs is also increasing at a high rate. The innovation capability of SMEs in products, services and processes, are more efficient in SMEs as compared to large firms. In addition, most citizens develop entrepreneurial skills from SMEs, which enable them to participate in large firms (Al-Somali et al., 2011). One of the biggest potentials of SMEs is to steer growth, which is domestic-led in a manner that creates economic resilience in a competitive economic environment. Evidence suggests that SMEs played a major role in generating the economic growth of developed countries such as Korea and Japan. An assessment of the growth of SMEs through their contribution in major sectors of the economy, which include agriculture, service and manufacturing indicates that SMEs have contributed sixty percent GDP growth in China, fifty seven percent in Germany, and fifty five percent in Japan (Salaheldin, 2009). These statistics extend the argument that SMEs form the backbone for industrial development and growth of the economy. Therefore, there has to be recognition of SMEs and their role in the expansion of the economy, together with infrastructure strengthening (Zain, 2006).
Despite the critical role played by SMEs in Qatar, the structure of SMEs remains undefined as there is no clear definition of SMEs. Consequently, SMEs have not yet lived up to their full potential due to the lack of sufficient information regarding the structure of small and medium-sized enterprises in Qatar and the lending criteria of banks to these SMEs. This research paper aims at filling this gap.
Problem Statement
Most of the research conducted on SMEs considers their place in the economy, as well as their contribution in the economy. The challenges undergone by these SMEs in specific countries, in the world are a topic that lacks credible research. A quick review of research also indicates that there are different definitions of SMEs, which vary from one country to another. In addition, these enterprises seem to make the same great contribution in different parts of the world. The lack of a clear and consolidated definition of SMEs, which culminates from the lack of a clearly defined structure of SMEs in Qatar, appears to be the root of most of the challenges experienced by SMEs in Qatar.
Furthermore, the relationship between the lending criteria of banks to SMEs and the structure of SMEs is another topic that lacks credible research. While the financial position of SMEs is associated with their ability to access credit facilities from different financial institutions including banks, there is very limited research on the effect of the lending criteria of banks to the growth of SMEs in Qatar (Pierce, 2008). Even though the contribution of SMEs in the economy of Qatar is inarguable, the lack of a consensual definition of SMEs in the country is a major problem and it stems from the fact that support policies of SMEs in Qatar are at their infancy level as the sector is largely undifferentiated. Consequently, this research will focus on the structure of SMEs in Qatar as, well as the result of the lending criteria of banks on SMEs in Qatar.
Research Questions
In a bid to cover the research topic comprehensively, succinct research questions need to be identified and followed for effective research to be carried out. Therefore, the completion of this study will aim at answering the following research questions:
1. What is the structure of Small and Medium-sized Enterprises in Qatar?
2. What are the lending criteria of banks to Small and Medium-sized Enterprises in Qatar?
A successful answering of the above research questions will be a platform for judging the successful completion of this research.
Research Aims and Objectives
The main aim for conducting this research was to study the structure of Small and Medium-sized enterprises in Qatar and the bans lending criteria to Small and Middle-Sized Enterprises in Qatar. In a bid to arrive at the aim of this research, the objectives, which will be the platform for conducting this research are as follows:
1. To identify the variations in definition of SMEs in Qatar, as well as other parts of the world
2. To investigate the structure of SMEs in Qatar
3. To identify the lending criteria of banks to SMEs in Qatar
4. To identify the relationship between the structure of SMEs and the lending criteria of bans to SMEs in Qatar
Significance of the Study
This study is conducted in a bid to provide a different perspective to SMEs in Qatar with concern over their credit accessibility, which affects the growth of SMEs in the nation; thereby affecting the growth of the economy. The findings of this research are essential for the government and other planning bodies as they may be applied to steer the economy of Qatar towards the right direction. In addition, the survival of SMEs, which culminate into the survival or rather the livelihood of the majority of Qatar residents can be determined through findings of this study. Therefore, it is imperative for the findings of this research to be taken into consideration for economic purposes.
Structure of the Research
The above section is the introductory part, which describes the background that forms the basis for this research, as well as the problem statement, research questions and objective, which are to be met in this research. The second chapter sets forth the methodology of the research. This section will highlight on the research design and the systematic structure of the research methods used to conduct this research.
Chapter three is critical as it considers several journals, texts and other relevant materials for review of the literature, which is vital before establishing the findings of this research. Eventually, conclusions are obtained on the basis of the findings obtained from research in order to understand the structure of SMEs, as well as the lending criteria of banks to SMEs in Qatar.

3.1 Research Design
This research uses a mixed methods design. Therefore, the study utilizes quantitative as well as qualitative design in the collection and analysis of data. Therefore, the research implements suitable technique in the evaluation of the structure of Small and Medium Enterprises (SME) in Qatar, while placing into perspective the lending criteria that banks use to lend money to SMEs. As a result, the SMEs in Qatar are analyzed using both external environmental factors that describe its structural features, and the internal environmental factors that place into perspective the sustainability, and competitiveness factors that explain the bank lending criteria for the banks and other factors that affect their economic status.
The research designed that is applied is rooted in the case study that focuses on Qatar as the case study country. According to research conducted by Welman et al. (2005), case study method is efficacious in the assessment and examination of complex topics, as it focuses on gaining comprehensive knowledge regarding the current situations based on the theoretical perspective provided in the literature, as well as first-hand information obtained from experiences of people that are affected by the circumstances in question. As such, it is evident from the study conducted by Cahoon (1987), that the research design that is rooted in a case study approach facilitates contextual analysis with respect to the subject matter given a limited number of events under study, hence, providing data that reflect the extent and nature of the relationship between all variables of interest. Consequently is facilitates the qualitative research approach since it places the real-life situation under analysis, therefore, providing an indubitable basis for the interpretation of findings in a manner that indicates the application and generalization of results in a manner that provides valid and objective conclusions.
The fore-mentioned research design is appropriate for the examination of the structural characteristics of SMEs in Qatar, as it is effective in the collection of both quantitative data that focuses on the numerically measurable concepts and the qualitative data that analyzes the opinion, and content in terms of perspectives provided by respondents regarding the subject matter (Panneerselvam, 2004). Additionally, this research uses the study through literature as a significant tool for the collection of valid and reliable data. This technique collects data from secondary sources regarding the subject of interests. In addition a review of literature method enables the researcher to compare the primary data obtained from the study and the secondary data in a manner that examines the validity of the information provided by the research, through determining the consistency of data collected from the study and the results of other authors regarding the same subject (Faisal, 2013).
Research Setting
The setting of the study entails the geographical and demographical factors that characterize the area under study. This research is conducted in Qatar, which is situated in the United Arabs Emirates in Asia. The study covers both the SME and banks populace in an effort to understand the structure of SMEs and the banks’ lending criteria for SMEs in Qatar. This research setting is appropriate for the study given that unlike other nations of the worlds, Qatar’s SMEs’ sector has the smallest contribution to the GDP due to underdevelopment of the sector and the presence of a variety of economic constraints that hinders its sustainability and competitiveness.
Research Respondents
The respondents of this study are selected from a population of SME’s key players such as business owners, and employees, and banks’ employees and stakeholders. The respondents are expected to have a comprehensive understanding regarding the structure of SME and/or the banks’ lending criteria to SMEs. The sample will constitute of 40 respondents. Twenty respondents will be selected from the population of bank employees and stakeholders, while the other twenty respondents will be selected from a population of SMEs’ employees and stakeholders.
Sampling Technique
The respondents will be selected through simple random sampling approach in order to eliminate both personal and subjective bias from the study (Padilla, 2009). The inclusion criteria will be respondents with at least five years of working experience and the ability to communicate in English, while the exclusion criteria will be respondents who have limited knowledge of the subject matter. As a result, the randomized sampling technique is effective in ensuring that the integrity of data and the entire research is protected (Henry, 1990).
Table 1: Information Regarding the Sample
Number and proportion of the sample
Proportion of the gender to the population (in order to asses representativeness) in percentage
18 (45%)
Total number of respondents
40 (100%)

Given that the proportion of the respondents in terms of gender is akin to the proportion of the gender constitute in the population, the research showed a high level of representativeness. As such, the results are not subject to gender bias. In addition personal and subjective bias are eliminated through the use of randomization technique in sampling criterion (Cochran,1977)
Time Frame
This research will be conducted in one week time frame. As such, both the interview and the questionnaire will be sent and responses compiled within a five days period. The remaining two days will entail the presentation of findings, the analysis of results, as well as a drawing of the conclusion. Publication of the data is not considered as part of the research process as all the information under study will have been obtained and the conclusion drawn in a manner that answers all research questions and meets the objectives of the study (Cahoon, 1987). The interviews will be conducted at the time when respondents have their free time for convenience purposes. The respondents will provide information regarding their most convenient time for an interview within a week. On the other hand, the questionnaires will be emailed to the respondents for them to fill at their own convenient time within the five days period (Detterman, 1985).
3.2 Methodology
Strength and weaknesses of Qualitative and Quantitative Methods
Research methods have different advantages and disadvantages (Jha, 2008). As such, the best case scenario entails the use of more than one method such that one method compensates for the other inefficiencies. One of the strengths of qualitative data is that it provides extensive information regarding the subject matter enabling the researcher to understand both the reasons and motives of the target population (Welman et al., 2005). In addition, it lowers the costs of research as it requires a small sample, as small samples provide sufficient information. The main disadvantage is that it does not allow assumptions to be drawn outside the scope of the target population; in addition, it does not permit the use of statistical methods (Tolstoy et a., 2010).
On the other hand, the strength of quantitative research method is that it easy to compile the collected data into diagrammatic representations such as charts and graphs. In addition, it can be conducted in a manner that covers a large sample size providing sufficient data to utilize in statistical analysis. The main weakness id presented by the costly nature of this method that necessitates the use of a large sample. In addition, the measurable concepts that are captured numerically under quantitative methods change regularly necessitating continuous analysis in order to up-date the existing information (Savioz, 2002).
Quantitative Method
Quantitative methods entail the collection of countable and measurable data that exists in a numerical form. As such, quantitative methods produces numerical data that necessitates the use of statistical analytic techniques it requires a large sample size and asks the question that produces statistics that are compiled it into figures and other means of representing data. It utilizes such methods as the use of questionnaires that provide definite results which are in most cases offered under a Likert scale or multiple choices questions form (Biazzo & Garengo, 2012).
Qualitative Method
The qualitative method is geared towards generation of sufficient data that will enable the researcher to draw generalized conclusion of the subject matter. As such, it is effective in monitoring behaviors through gathering of data that shows the attitudes, behavior, and motives of respondents. It utilizes interviews, observations, focus groups, and reviews as the main data collection methods that the probe respondents to provide detailed opinions regarding the subject matter. It entails comparative, opinion, and content analysis of data as it does not allow statistical data analysis techniques (Afsarmanesh, 2012).
Mixed Methods
Mixed methods entail the use of both quantitative and qualitative methods in research. It utilizes both methods to generate sufficient information regarding the field of interest. For example, a researcher may use quantitative research method to determine the number of customers, and how often they do business with the manufacturing company. In addition, the same researcher may use qualitative methods to determine the drivers of consumers’ loyalty, and the reason for increasing demand for particular products (Jones & Tilley, 2003).
Data Collection and Analysis Techniques
This research collects data through the use of questionnaires and semi-structured interviews. The interviews is carried out using telephones and video calls based on respondents’ preferences, while the responses to the mailed questionnaires were also sent to the researchers through email in the form of attached documents. Both the questionnaires and the interview’s questions are designed to produce responses that are consistent with the requirements of the research questions. Moreover, the secondary data is collected by use of the review of literature method. The collected data contains information that reflects the structure of SMEs and the banks’ lending criteria to SMEs in Qatar.
Based on the recommendations of Jha (2008), the analysis of the qualitative data will be carried out in two stages. The initial stage will entail a reduction of data into brief and detailed information that are consistent with the objective of the study by conceptualizing responses obtained from both the interview and the questionnaires and transforming these information into meaningful findings that show the relationship between variables of interest, and general ideas. Nonetheless, the second stage will entail the drawing of accurate and objective conclusions based on the results obtained by the end of the research (Panneerselvam, 2004). On the other hand, the analysis of the quantitative data will entails the reduction of data into meaningful information, the display of data in a manner that utilized diagrammatic representations in accordance to the statistical analysis method used. Additionally it facilitates the drawing of a conclusion based on the displayed data. Such representations facilitate comparative analysis and simplify the findings in a manner that enables the researcher to draw conclusions in an easy and objective manner (Panneerselvam, 2004).
Limitations of the Study
This study is disposed of to the risk of non-response. Consequently, some respondents may lack the motivation to offer all the required information. Moreover, the other threat is presented by language barrier in the case where respondents have partial knowledge of English language. Therefore, this challenge may results in misinterpretation of a portion or the entire set of questions, hence, resulting to a misinterpretation of the question and provision of wrong, irrelevant, or inconsistent results. The limitation presented by potential non-response is addressed using follow-up procedure that entails phone calls, reminder-emails, and resending of the interview participation requests and questionnaires to the respondents (Cruz-Cunha & Varajao, 2011). The limitation presented by the language barrier is addressed through the use of translated materials for respondents with limited knowledge of English upon request, as well as permitting respondents to prepare their responses before the scheduled interview since the sample interview questions will be sent to the respondents prior to the actual interview session in order to acquaint themselves with the topic of interest.
Validity and Reliability of Data
Russ-Eft et al. (1980) state that the reliability concepts as well as the element of validity of data are consistent and inseparable. Therefore, this research assesses the validity of data using use a pilot study. A pilot study was done before the survey. Furthermore, the results from the literature provided significant means of determining the validity through examining the degree of consistency between findings acquired from this research and those obtained from the literature (French, 1981).
The reliability of data was ensured through administering questionnaires and conducting the interview among respondents from the same population (Russ-Eft et al., 1980). Therefore, all respondents hand extensive knowledge regarding SMEs in general. In addition, the interviews were conducted at different times and days in accordance to respondent’s free time in the one week period of the study. The fact that the interview and questionnaires were conducted and administered among respondents selected from two different target populations i.e. SMEs’ employees and stakeholders and bank employees and stakeholder, it provides a greater level of reliability than a research conducted from a single target population (Pallant, 2010).
Ethical Considerations
The respondents will be expected to provide both written informed consent that shows the evidence of their informed states, as well as voluntary participation in the study. Moreover, this study will uphold the confidentiality and anonymity of data in order to protect the privacy of respondents (Dex & Scheibl, 2001). The confidentiality of data will be ensured through limiting access to the stored data such that the researcher alone can have the access. Data will be stored in a password protected computer, where the researcher alone will have access to the information. In addition, the anonymity of data will be implemented through assigning respondents with numerical codes of identification, as opposed to using their names (Hohenthal, 2001). In addition, respondents will be informed that can terminate their participation at any time. Nonetheless, respondents will not be forced to answer any form of questions. Additionally they will not be compelled to provide a specific form of data or manipulated in any manner. Respondents will not be asked to lie or participate any practice that lowers their integrity or personal esteem.

The results obtained from both primary and secondary data sought to provide comprehensive knowledge regarding the structure of SME and the bank lending criteria for SMEs in Qatar. The bank lending criteria was determined directly through analyzing the factors that determine whether the banks will lend money to the SME and the existing policy regarding such a lending. On the other hand, the structure of SME was studied with regard to various of factors that constituted the analysis of both the internal and external environment of the company as well as factors that affect their competitiveness and sustainability. Consequently, these results use various variables in determining the structure of SME, which is rooted on the definition of structure in terms of internal and external environmental components that affect the performance of the organizes and defines SMEs in Qatar.
Features of SME in Qatar
Respondents showed extensive knowledge regarding features of SMEs in Qatar. Therefore, all respondents mentioned at least three features of SMEs. In this case, approximately 50% of the respondents identified a small size and low complexity as a factor. Additionally, 45% of the respondents identified high topological diversity as a factor; this factor indicated that SMEs have their operations all over the country and in a different field of business activities, which are consistent with the nature of the organizational system. In addition, a significant number of respondents identified intensive human dimension in terms of the nature of the relationship, work ethics, working environment, and working culture. Other features include strong interconnection of informal and formal elements, the law degree of organizational system formalization, procedural as well as structural simplicity, high flexibility, entrepreneurial customization, frequent utilization of authoritarian and participative approach, and decisional-centralization.
Table 2: Results on the features of SMEs in Qatar
Features of SMEs
Proportion of respondents who identified the Features
Comparatively frequent utilization of authoritarian, and participative approach
Small size, and low complexity
High Topological diversity
Thorough decisional centralization
Intensive Human Dimensions
Low degree of formalization
Strong personalization
Strong interconnection between informal and formal elements
High flexibility
Comparative simplicity in terms of structure and procedure of the organization

These findings are consistent with the findings obtained from Blackburn (2003), which indicates that SME in Qatar has small size and low level of complexity due to the small size of their organizational systems that are associated with a small number of employees, absence or limited compartments, low control span with the exception of the entrepreneur and the manager, low Hierarchical levels which in the most cases has two levels of managers and employees, and the hierarchical organizational relationship (Sharif & Salaheldin, 2012). The small size and low complexity is an advantageous factor for the management of SMEs in Qatar. Nonetheless, the intensive human dimension in SMEs is associated with the small number of the involved people that generate a direct relationship among themselves, as well as between them and the entrepreneur that generates a high level of team work and collaborative efforts that result in increased productivity and efficiency (Ashrafi & Murtaza, 2010). The low extent of formalization with the organizational performing and functional system is associated with the notion that SMEs in Qatar formalization is not an objective of the business but rather a means to facilitate the performance of the organization (Aba-Bulgu & Islam, 2007).
These findings are consistent with the findings obtained from Rainey (2010), which states that SMEs in Qatar show a strong association between informal and formal elements based on the formal nature of centralized and authoritarian approach of control and decision-making process, and the informal perspective demonstrated by extensive social dimensions and low degree of formalization. In addition, these findings show that the simplicity in the structural and procedural components of the SMEs is presented by the limited labor processes due to the small companies’ sizes. As such, the mall size of the organization results in a low procedural, which necessitates the completion of one task at a time (Blackburn, 2003). The SMEs in Qatar have high flexibility demonstrated by its ability to adjust in accordance to customers’ needs and its ability to implement change strategy in accordance to changing market patterns and consumers’ behavior (Rainey, 2010). The flexibility of SMEs is attributed to the small quantity of organizational resources, low level of procedures and processes, and the presence of organizational inertia with respect to the organizational system. Additionally, the SMEs in Qatar have high perceptive ability to exogenous elements due to constant interaction with real-life situations with respect to the markets of products and services, supply chains, and other components of the business environment (Rahman & Ramos, 2012). Nonetheless, the flexibility aspect of SMEs in Qatar results from the ability of entrepreneurs to exercise high decision-making skills that result in the implementation of the optimal strategy in reaction to both exogenous and endogenous factors that affect the performance of the company.
These findings of this study are consistent with the findings of Stonehouse (2004), the state that the knowledge, experience, and expertise of entrepreneurs in SMEs in the case of Qatar determines the decisions, and manner in which the system of the company is implemented, developed, maintained and evaluated. As such, entrepreneurial customization of SMEs places the entrepreneur as the main determinant of the size, procedures, profile, technology and economic power of the firm. As such, the small size of SMEs increases the influence of entrepreneurs due to the low level of activity and the simplicity nature of the organizational system (Mead & Andrews, 2009). The centralization of the decision-making process is a significant aspect of SMEs in Qatar. In accordance to the responses obtained from the respondents, the employees in SMEs do not participate in the decision-making processes, as the entrepreneur alone plays the role of formulation of strategies and assigning of roles to the employs in an attempt to implement the formulated change strategy. As such the managerial system is the centralized decision-making body in Qatar’s SMEs (Blass, 2009)
Factors that Influence the Economic Performance and Functionality of SMEs in Qatar
Respondents indicated that both external and internal environment affects the economic performance of SMEs. In addition, approximately 80% of the respondents stated that variables that influence the entrepreneurial of the organization have a significant impact on the economic performance of SMEs. Additionally, 90% of respondents indicated that factors that affect the economic performance of SMEs in other nations of the world are the same factors that affect the economic performance of SMEs in Qatar. The other 10% of the respondents felt that factors that affect SMEs in Qatar are different from factors that affect SMEs in other nations owing to the isolated case in terms of structure and performance of SMEs in Qatar. As such, results obtained from this study shows that variables that affect the internal environment of SMEs affect the entrepreneur and the entrepreneurial construction of the organization, hence, resulting to substantial economic effect. Main actors in the determination of economic performance of SMEs in Qatar are stakeholder’s group that constitutes of employees, managers, trade unions, and the entrepreneur, and the external players such as banks, suppliers, customers, and public administrations.
Figure 1: Results on External Environmental Factors that Influence Economic Performance of SMEs

These results show that 25% of the respondents considered the nature of the existing economic system and its functionality as the main external factor that influence economic performance of SMEs in Qatar. In addition, 40% of the respondents considered societal culture as the main determinant of SMEs economic performance. Consequently, the need that the society have in terms of the usability of the products and lack of substitutes determines the sustainability of SMEs and the suitability of these products to the consumers’ behaviors and market patterns (Stonehouse, 2004). Additionally 25% of the respondents identified demand as a significant factor, while 10% of the respondents stated that the completion is the main determinant of the economic performance of SMEs in Qatar.
Figure 2: Results on External Environmental Factors that Affect the Economic Performance and Functionality of SME
These findings show that 25% of the respondents identified organizational size as a factor that affects economic status of SME. Additionally, 10% of the respondents identified organizational culture as a factor that influence economic performance of SMEs because it dictates the manner in which employees relate and the impact of social times on productivity of the company such as participative or authoritarian decision-making process. Moreover, 25% of the respondents identified team-work and employees expertise in terms of skills, experience, and knowledge as a factor that affect the economic performance of SMEs in Qatar. Knowledge experience and expertise of the entrepreneur was identified by 10% of the respondents, who believed that the economic performance of SMEs in Qatar depended on the social-intellectual skills of the entrepreneur. Knowledge management was mentioned by 10% of the respondents. This is based on the role of information acquisition, storage, application, and creation in gaining competitive advantage and sustainability hence resulting to the economic impact on SMEs. Nonetheless, 15% of the respondents identified the Cost of production as a factor that determines economic functionality and performance of SME. Salaheldin (2009) states that the cost of production determine profitability of the organization that translates to the economic impact on the organization.
Competitiveness of SMEs in Qatar
These results show that the competitiveness of SMEs in Qatar is determined based on five factors. When asked to select factors that affect competitiveness in SME, 40% of respondent’s selected competitive strategy (CS). Competitive strategy entails the differentiation of products, cost reduction, empowerment and training of employees, strategic partnership, and knowledge management among other factors. Nonetheless, 10% of the respondents selected production (PR) as a significant competitive factor. In this case, production constitutes of innovative strategies, quality checks and assurance, effective and efficiency in production, outsourcing, Research and development facilities, production renovation and reinvention, advanced technological practices, and opportunity competencies and so on. Additionally, 20% of the respondents selected Customer management and relations (CMR). CMR entails customer’s relationship competencies, sales force, customer information management, value creation, communication, innovation, collaboration, cooperation, networking, understanding customers’ needs, and customer knowledge. Approximately 5% of the respondents Identified Corporate culture (CC), which entails communication, organizational competency, staff training, language competency, collaboration, leadership, environmental management, and commitment competences. On the other hand, 15% of the respondents indicated ICT as the determinant of competitiveness in SMEs. ICT entails Internet applications, e-business, corporate websites, and other ICT tools.
Results from the literature provided data regarding SME’s competitiveness in Qatar in comparison to the rest of the world’s organization with normalization scored (z-score) of at least one. The results are normalized and the following data re obtained.
Figure 2: Normalization results of competitiveness of SMEs in Qatar and the Rest of the World

The world companies with z-score that exceed one are then sorted in descending order indicating a large extent of similarities. As such, the researcher utilized the Spearman’s Rho correlation to measure the extent of similarities in Qatar’s SMEs organizations. In the case of unrepeated data, the findings should show a perfect spearman correlation of +1 or -1.
Table 3: Spearman’s Rho for Qatar companies

Competitiveness in Qatar’s SMEs
Competitiveness in Qatar’s SMEs
These results show that ICT has the highest rank indicating the competitiveness of SMEs in Qatar depends majorly on ICT. On the other hand, the weakest competitive strategy in the combination of ICT and CR factors of competitiveness, which ranks the lowest under the correlation matrix in the figure.
Banks’ Lending Criteria for SMEs in Qatar
Research conducted by () shows that the main challenge facing SMEs in Qatar is access to financial aid from financial institutions. As such, these findings show that most SMEs in Qatar continue to underperform due to lack of sufficient capital to position them in their prospective market position.
As such, 70% of the respondents stated that banks are reluctant to lend money to SMEs in Qatar. The remaining 10% of the respondents indicated that banks readily lend to SMEs in Qatar. Nonetheless, 40% of the respondents stated that banks are reluctant to lend money to SMEs due to the high risk of losing money. On the other hand, 30% of these respondents stated that banks are reluctant because they lack faith in the economic performance of SMEs in Qatar. However, the other 20% of the respondents stated that banks lack the effective support mechanism due to outdated policies that do not support the development of SMEs in Qatar.
Figure 4: Results on Willingness of Banks to lend to SMEs in Qatar

These findings show that the banks have definite lending criteria. Approximately 90% of the respondents had knowledge regarding the entire criteria used by banks to determine whether the SMEs are qualified to obtain a loan. However, the other 10% of the respondents had partial knowledge regarding the lending criteria for banks. As a result, these findings show that bank lending criteria for SMEs in Qatar is founded on comprehensive knowledge of the economic performance and financial status of the organizations. As such the banks begin with analyzing the business profile, financial status, and development pal of the organization. In addition, the bank analyzes internal environmental factors of the organization such as customer management and market penetration in terms of market reputation. In addition it analyzes projected cash flow and the feasibility of the organizational objectives, credit history, industry profiles, and financial performance of the organization in the past. As such, the banks ensure that the organization has a stable financial foundation by analyzing financial statement over the past year in order to understand its liquidity and cash flow.
When asked whether the banking lending criteria for SME s in Qatar favor their development, 80% of the respondents stated that it does not favor the development, while 20% stated that it favors the development of SMEs. The argument based on the responses that bank lending criteria in Qatar does not favor the development of SMEs is based on the notion that they facilitate the expansion of already stable SMEs and limit the opportunity for new companies to develop since they base their lending criteria on existing financial history of the company, offering no financial assistance to for startup capital. On the other hand, the response obtained that the lending criteria favor the development of SMEs is founded that it facilitates the growth of already existing organization leading to their expansion in terms of access to market and outsourcing through opening branches to other areas, while at the same time motivating SMEs to attain high economic performance due to high standards of financial performance for loan qualification.

Conclusion and Recommendations
These findings show that SMEs are essential in the development of efficiency, job creation, innovation, and international competitiveness, hence taking the roles of major drivers of the national economic growth and diversification. SMEs in Qatar have insufficient and partially defined support policies and have limited differentiation (Mead & Andrews, 2009). The SMEs in Qatar constitutes of approximately 15% non-oil economic contribution by the year 2013, and less that 20% employment by the end of 2013 (Rahman & Ramos, 2012). In addition, these findings show that SMEs in Qatar faces significant financial challenges, high risks that come with escalated costs, the absence of supportive legal provisions, and a small local market that has high competition. Nonetheless, the findings show the SMEs in Qatar are affected by both external and internal factors, the external factors constitute of functionality of the general economic system, cultural factors of the society, limited market, and completion (Börner & Grichnik, 2004). On the other hand, internal factors are company’s size dictated by the available financial resources, organizational culture, teamwork and employees’ expertise, entrepreneurial skills and experience, shareholder involvement, knowledge management and cost of production (Rainey, 2010).
The banks’ lending criteria for SMEs in Qatar have limited their access to financial aids with only 0.5% share of total bank lending (Ashrafi & Murtaza, 2010). The lending criteria are based on the financial performance of the banks, and their ability to repay the loan with interests in the shortest time possible. As such, banks’ lending does not benefit startup entrepreneurs who lack evidence of lucrative financial potential. This research recommends that the formulation of SMEs supportive legal structures and financial policies that facilitate both the growth and emergence of new SMEs in Qatar (Faisal, 2013). The provision of financial adviser to help the new entrepreneur in setting up the companies and another business is one of the most beneficial strategies (Salaheldin, 2009).

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