Although increasing attention started to be paid to SMEs elsewhere in the world in the 1990s, it is only in recent years that SMEs became a center of attention in Thailand and inspired more serious studies with respect to their true contribution to the economy7). Looking at the industrial structure of Thailand by size, SMEs occupy about 80% of the total industrial establishments. However, as seen in Table 1, their contribution to industrial employment is very small, and their share in output and value added is even smaller relative to LEs. This creates a doubt as to why SMEs need to be brought to the attention of the public and why they were strongly emphasized by the Thai government in 1998.
According to Regnier(2000), Thailand’s intensive government support toward SMEs resulted from the economic crisis in 1997. Although the crisis was triggered mainly by the mismanagement of large firms, it was the SMEs that suffered most from the crisis, sparking criticism and concern for the sector. Both foreign and Thai researchers suggested that to bring back the economy, Thailand needed to emphasize on strengthening SMEs, especially those of the middle-sized and growth-oriented enterprises, as their base for recovery8). Furthermore, dominance of LEs in terms of employment and output may have been induced by preferential government policies. In the past, the Thai government has overemphasized the development of conglomerates and large enterprises, neglecting SMEs’ role