Abstract:
In a developing country economic growth can be sustained by the expansion of private
sector, as they are the engines of growth. Majority of Private sector in developing
countries consists of Small and Medium Enterprises (SMEs), which consist of
entrepreneurial skills and capable of quickly adapting to the market changes. Also lend a
hand to reduce the unemployment and make a significant contribution to the GDP. As a
consequence it is important to accelerate the growth of SME in order to gain sustainable
development in this era.
In Sri Lanka most of SMEs have not succeeded to gain the advantages of economies of
scale because business units operate in isolation with the inadequate total assets and
management skills. Due to this reason number of SMEs were shut down and others are
also discouraged to launch new businesses. Thus, it is compelled to promote the
horizontal business linkages and may potentially affect the SME development in order to
carry out an effective participation of the SME for the development of country.
The objective of this paper is to find the nature of the existing SMEs’ horizontal business
linkages in Sri Lanka and make suggestions to improve them. The information was
gathered through the questionnaires distributed among 50 SMEs. Through the data
analysis it was discovered that the SMEs in Sri Lanka have poor horizontal business
linkages and it is suggested to improve them to gain the competitive advantages.
