Abstract
The main goal of the research is to investigate how absorptive ability influences innovation and company performance. Employing Partial Least Square Structural Equation Modeling (PLS-SEM). The data from registered medium-sized manufacturing firms in Punjab, the study aims to provide valuable insights for academicians, CEOs/managers, and policymakers. In order to evaluate the research hypotheses, the planned operational study model was verified using PLS-SEM. Through innovation and absorptive capacity, negotiation examination was used to investigate the dependent variable's indirect impacts of independent variables. Furthermore, the research contributes to enriching theories in the field and offers practical implications for enhancing SME competitiveness and fostering economic development. Through an analysis of key economic indicators such as employment, value addition, and exports, the study sheds light on the SME growth is essential to Pakistan's economic development.
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