Determinants of entrepreneurial small and medium enterprises performance with the interaction effect of commercial loans

Muhammad Asif Khan,Le Thi Minh Huong,Zahid Sarwar,Asima Siddique,Qaiser Nadeem

doi:10.1108/apjie-11-2019-0079

Abstract

PurposeThe purpose of this study is to investigate the interaction effect of commercial loans in between trade Credit, retain earning, and entrepreneurial small and medium enterprises (SMEs) performance.Design/methodology/approachIn this research, the cross-sectional research design was used, and data were collected from 362 SMEs located in Pakistan by using a questionnaire. Correlation and regression analysis was adopted to establish the interaction effect of commercial loans in between trade credits, retain earning and entrepreneurial SMEs performance.FindingsThe results demonstrated that commercial loans, trade credit and retain earning have a positive relationship with entrepreneurial SMEs performance. The findings also confirmed the interaction effect of commercial loans in between retain earnings, trade credit and entrepreneurial SMEs performance.Originality/valueThe study examined the association and interaction effect of commercial loans in between retain earnings, trade credit and SMEs performance in the emerging state (Pakistan). So, this is the first time to study the relationship between these variables, which highly contributes to entrepreneurial SMEs literature.

Highlights

Entrepreneurial small- and medium-sized enterprises (SMEs) plays a vital role in economies all over the world, especially in both developing and emerging economies
The results revealed that more young and educated people are associated with SMEs, so it is confirmed that entrepreneurial SMEs provide a new opening to youth, and this will help in the development of entrepreneurial SMEs
The results confirmed that commercial loans (CL) is played a mediating role between entrepreneurial SMEs performance, trade credit (TC) and retain earning (RE)

Summary

Introduction

Entrepreneurial small- and medium-sized enterprises (SMEs) plays a vital role in economies all over the world, especially in both developing and emerging economies. The formal entrepreneurial SMEs contribute up to 60% to total employment and 40% of total gross domestic product, and this percentage would be more if it took informal SMEs into account. It predicts that four out of five new jobs are anticipated to be created by entrepreneurial SMEs. The study proposes that there are roughly 400 million microenterprises and SMEs in developing economies. The study proposes that there are roughly 400 million microenterprises and SMEs in developing economies This predication shows the importance of SMEs in developing and emerging economies because of such significance governments of different countries foreseeing to strengthen the SMEs and make them more prosperous

Objectives

Results

Conclusion