The influences of local authorities on Malaysian micro enterprises business performance

The Small and Medium Enterprises (SMEs) is an engine of economic growth, socio-economy development, and political stability. The SMEs are facing numerous interrelated challenges in the era of information and communication technology (ICT), as well as striving to survive, and meeting their economic obligations by
upgrading as well as improving their business performance. This study used The Social Exchange Theory and Institutional Theory to explain how a company's business performance might eventually increase efficiently and effectively when they are facilitated by relevant government agencies. The main question arises is on
whether SMEs have been effectively facilitated by local authorities (LAs) in fulfilling their requirements and needs or not. Therefore, the main purpose of this research is to find out the impact of LA 's policy, bureaucracy, physical planning, and physical facilities on the Micro Enterprises (MEs) business performance. The MEs owner's entrepreneurial spirit (ES) is used as a moderator variable between the independent variables and the ME's business performance. A total of 457 questionnaires were returned and after preliminary screening, a total of 315 questionnaires were used during data analysis. Smart PLS-SEM application was used to test the hypotheses between the variables in this study. The findings revealed that LA's physical planning does not have a significant impact on the MEs business performance. In addition, the results also indicate that MEs owner's ES plays a significant role in moderating the relationship between the LA 's policy, physical
planning, and physical facilities with the MEs business performance. This study contributes to the existing literature by explaining that LA's policy and physical facilities have a significant relationship on the ME's business performance either without or with owner's ES. The research findings may be valuable especially to MEs, future researchers, and related government agencies in crafting strategies for the survival, growth, and development of MEs. It is recommended that researchers and interest groups may use these research findings as a basis for further research by
testing different variables and settings in relation to SMEs business performance.