SMEs are important in facilitating economic activities and in providing employment especially in the developing
countries. Good corporate governance enhances competitiveness of SMEs and is crucial for the continued
development of SMEs. Based on review of extant literatures, it can be argued that SMEs do not necessarily benefit
from applying the same CG framework as that of the listed companies. Literatures also found that SMEs who are
closely held may not hinder productivity. This gives rise to the argument that a custom made framework may be
more beneficial for SMEs, the framework should be flexible and dynamic and the process of developing the
framework should be participatory; one can argue that one size does not fit all. This is similar to principal of having
a separate set of IFRSs for SMEs.
However, in order for the development of a separate framework for SMEs to be successful, more parties should
be involved especially the regulators. Guidance should be provided to SMEs on issues related to corporate
governance. In addition, regulators should take up the responsibility to create greater awareness among SMEs on the
importance of good governance practices, perhaps through incentive system via the tax structure or award
recognition for good governance by SMEs. Currently, there is still very limited awareness among SMEs on the
importance of adopting good corporate governance and one of the major obstacles is high cost involved in
implementing corporate governance, hence the aversion in adoption among SMEs.
SMEs are driving the economies of the developing nations, it is therefore inevitable that these enterprises have
good governance in order to stay competitive and continue to grow. Awareness and commitment by all parties
involved are crucial for the success of implementing good governance in SMEs.