Challenges and Opportunities for SMEs in Saudi Arabia: Contributing to Vision 2030 and Enhancing Soft Power

Abstract

This study investigates the challenges faced by small and medium enterprises (SMEs) in Saudi Arabia in contributing to the ambitious Vision 2030 objectives, particularly in the areas of economic diversification and global competitiveness. The research is motivated by the critical role SMEs are expected to play in reducing Saudi Arabia's dependency on oil revenues, as outlined in Vision 2030, yet existing literature has inadequately addressed the specific barriers these SMEs encounter, especially within the Saudi context. The aim of this study is to analyse these challenges to provide actionable insights that can help SMEs fulfil their potential in line with Vision 2030’s goals.

The research is structured around three key objectives: evaluating challenges in accessing funding, analysing talent acquisition and human capital development, and assessing the impact of a lack of innovation focus. The study employs a secondary data methodology, drawing on literature and survey data from 2,650 respondents across 470 SMEs in Saudi Arabia conducted by King Abdullah University of Science and Technology (KAUST). Findings indicate significant barriers, including difficulties in securing financing, attracting and retaining skilled talent, and a limited focus on innovation, all of which limit SME growth and their ability to contribute to Vision 2030.

The study concludes that these challenges must be addressed to enable SMEs to play a pivotal role in Saudi Arabia's economic transformation. Recommendations include establishing government-backed financial initiatives, promoting innovation through R&D incentives, and implementing comprehensive talent development programs. These measures will not only support SME growth but also enhance Saudi Arabia’s soft power on the global stage.