Abstract:
Large frms are a threat to small businesses in all countries (Wanninayake and
Chovancova 2013). “The Government of Sri Lanka recognizes MSMEs as the back bone of the economy” (Gunawardana 2016, p. 3). MSMEs in Sri Lanka have been
struggling to compete with other frms (Vijayakumar 2013; Gajanayake 2010). In
addition, the postwar environment of Sri Lanka contains huge problems and chal lenges (Shivany et al. 2015). “In 1983, 98% of MSMEs accounted for 48.6% of total
employment and 31.1% of value added. In 2008, 93% of MSMEs accounted for
29.6% total employment and 20.3% of value added, this evidence clearly shows
clearly the poor development of MSMEs” (Vijayakumar 2013, p. 41). Even though
MSMEs have accounted for a vast percentage of establishments in Sri Lanka, their
contribution to the economy is very low (Vijayakumar 2013). Earlier studies empha sized that MSMEs in Sri Lanka have been struggling to compete with nationally and
internationally branded products (Vijayakumar 2013; Gajanayake 2010;
Pushpakumari and Watanabe 2009). “Soon after the war, local productions were
subjected to a market shock as road connectivity resumed to the wider market with
far more advanced production” (Sivatheepan et al. 2018, p. 9). Most of the MSMEs
were collapsed and destroyed by internal war while the remaining enterprises in Sri
Lanka were vulnerable (Sivatheepan et al. 2018). MSMEs in the Northern Province
have not been well developed and have thus diminished over 10 years. MSMEs
make a vital contribution to GDP in Sri Lanka. In the Northern Province, more than
99% of enterprises are MSMEs.
