Environmental Scanning Practice of Enterprise 50 Small Medium Enterprise (E50 SMEs) in Malaysia Roslina Othman 1 , Siti Rohimi Hamedon 2 1 Faculty of ICT, International Islamic University Malaysia 2 Centre for Foundation Studies, International Islamic University Malaysia 1 drroslina@gmail.com 2 srohimi@iium.edu.my Abstract: This study investigates the effects of organizational and owner/ manager profile on environmental scanning practice of Enterprise 50 Small Medium Enterprise (E50 SMEs) in Malaysia. It investigates the extent of environmental scanning practice and the factors related to information sources that E50 SMEs utilized for environmental scanning. Based on the constructs of the measures, a research scale was developed for the study and data were collected via self-administered mail survey among the E50 SMEs in Malaysia. The results showed positive effects of organizational and owner/ manager profile on environmental scanning practice of E50 SMEs. There are also findings on the extent environmental scanning on the business environment sectors of E50 SMEs with respect to utilization of information sources. Implications of our findings for SMEs owner/ managers and practitioners, the study’s limitations and future research directions are subsequently addressed. Keywords: environmental scanning, information sources, small medium enterprise, SMEs, Enterprise 50, E50 SMEs. 1. Introduction Environmental scanning is the activity by which a company’s decision makers acquire “information about events and relationships in the outside environment, the knowledge of which would assist the management in its task of charting the company future course of action” (Aguilar 1967; Choo & Auster 1992). The term “environmental scanning” (ES) refers to the means by which managers study and monitor relevant business environments (Temtine 2006). Due to the presently complex business environment characterized by globalization and internationalization of markets, according to Simard & Rice (2006), there is a need for greater efficiency, effectiveness and competitiveness is based on innovation and knowledge especially to small medium enterprises (SMEs), as an important segment of domestic industries, which represent a key source of endogenous growth as well as an impetus for broad based economic development must continuously seek to find new sources of growth through strengthening its capabilities and competitiveness. This characterization has put increasing pressure upon the management of these firms especially the SMEs that must now compete globally (Temtine 2006) and that in order to lower their operating costs, increase productivity and quality and respond to the increasing requirements of their customers and other business partners, a number of these firms scan the environment and make sizable investments to improve performance (Burns 2001). 2. Background Environmental scanning linked to information seeking behavior of organizations through its human assets enables it to understand changes in its external environment so that it is able to: avoid surprises, identify threats and opportunities, gain competitive advantage, and improve long-term and short-term planning (Simard and Rice 2006). For managers in any given industry, conditions and trends in the industry determine in large measure what areas of external information will be relatively most important (Aguilar 1967). This study is concern with the environmental scanning practice of owners/ managers with regard to utilization of information sources to acquire external information. It will be examined as the extent of environmental scanning on business environmental sectors, the type and category of information sources that owner/ manager used and regard as important that triggers scanning practice in utilization of information sources. Kourtely (2005) assert that for a firm to possess a competitive advantage, it must constantly monitor several information sources simultaneously. They note that this information sources should provide intelligence on the business environment.