Small And Medium Enterprises In Pakistan Research Articles

A conceptual study on investigating the effect of innovation, transformational leadership and work stressor on employee performance of SMEs in Pakistan

The understanding of elements contributing to employee performance of small and medium enterprises (SMEs) in Pakistan is still deficient. As the SMEs of Pakistan have had difficulty surviving in their early years, their initial failure rate is 90% -95%. Initially, this is a concept paper to provide useful insights into the relationship between organizational innovation, transformational leadership, and work stressor on employee performance of small and medium enterprises (SMEs) in Pakistan's manufacturing sector. The relationship between organizational innovation, transformational leadership, and work stressor and their effect on overall employee performance is established through a review of the literature. The mediating role of creativity was also an attempt to explore. In order to reach the optimum level of employee performance to increase the outcome of SMEs in Pakistan, it is mandatory to provide an open and supportive environment to employees so they can cultivate their creative ideas. This study mainly focused on the factors that directly influence employee creativity to ensure progress in employee performance. This study emerged from the fact that a very limited study is being carried out on this issue, and further research should be carried out in this field, especially in Pakistan. A model is proposed, and hypotheses will be developing and discussed based on theoretical considerations. The findings of this study can contribute to business practice by informing employee performance, improvement strategies. Business leaders could gain additional insights into strategies to engage and motivate employees to improve performance.

Marketing from Leadership to Innovation: A Mediated Moderation Model Investigating How Transformational Leadership Impacts Employees’ Innovative Behavior

In an increasingly competitive landscape, both researchers and businesses are showing growing interest in promoting employee’s innovative work behavior (EIWB). Although earlier studies have highlighted the significance of transformational leadership (TL) in cultivating innovation among employees, there needs to be more understanding regarding the precise mechanisms and processes by which leaders exert their influence over the IWB of their employees. This study is based on the social exchange theory (SET) and upper echelon theory (UET) to investigate how the relationship between TL and employees’ IWB is mediated by the employees’ intellectual agility (EIA) and the employee’s voice (EV). To the best of researchers’ knowledge, this study represents the pioneering effort to examine the mediating mechanisms of EIA and EV between TL and EIWB within the specific context of small and medium Enterprises (SMEs) in a developing country. An online self-administered questionnaire was utilized to collect data from 430 SMEs in Pakistan. The proposed hypotheses were examined using partial least squares structural equation modeling (PLS-SEM). The study findings revealed a significant influence of TL on EIWB mediated by both their EIA and EV. These findings empower leaders to recognize their pivotal roles in nurturing innovation within their enterprises and crafting an optimal culture and climate conducive to innovative endeavors. Furthermore, this insight enables leaders to establish innovative environments that promote employees’ confident sharing of ideas and concepts. The study also includes a comprehensive finding and their implications, limitations, and suggestions for future research directions.

Management accounting systems and economic sustainability: a qualitative inquiry of SMEs in Pakistan

PurposeThis qualitative inquiry sheds light on using management accounting systems to address economic sustainability concerns in small and medium enterprises (SMEs) of Pakistan. Building on the dynamic capabilities (DC) theory, this research endeavors to address the recent calls on management accounting and economic sustainability in the context of SMEs.Design/methodology/approachQualitative research design was adopted in which 13 semistructured interviews were conducted with SME owners of Pakistan. The transcribed interviews were coded and thematic analysis was performed via NVIVO-12 to generate themes.FindingsBased on the DC theory, the findings revealed that SME owners in Pakistan use management accounting systems to ensure economic sustainability. The authors found that DC are a co-created phenomenon and refer to them as collective DC. Furthermore, the authors found the theme of accounting literacy which played a critical role in the exhibition of DC in a collective manner.Originality/valueThis is one of the earliest studies on management accounting systems that examine economic sustainability in Pakistani SMEs. This research provides novel insights into the use of management accounting systems in Pakistan from the perspective of DC. In Pakistani SMEs, dynamic capacities are co-created and contingent on accounting literacy.

Interplay in Circular Economy Innovation, Business Model Innovation, SDGs, and Government Incentives: A Comparative Analysis of Pakistani, Malaysian, and Chinese SMEs

This study aims to examine the effects of circular economy innovation and BMI (business model innovation) on SMEs (Small and Medium Enterprises) economic, environmental, and social performance along with the mediating role of government incentives in Pakistan, Malaysia, and China. Data were collected through a structured questionnaire in online survey from the owners, CEO, and senior managers of SMEs in Pakistan, Malaysia, and China, and analyzed using PLS-SEM. The results revealed that circular economy innovation and BMI have positive significant effects on SMEs economic, environmental, and social performance in Pakistan, Malaysia, and China. The study also found that government incentives have mediating effects on the relationship between circular economy innovation, BMI, and SMEs economic, environmental, and social performance in Pakistan, Malaysia, and China. This study provides interesting insights about SMEs economic, environmental, and social performance by evaluating the impacts of circular economy innovation, BMI, and amid mediation of government incentives. These useful insights will enable policy makers and practitioners to develop more effective strategies to enhance the economic, environmental, and social performance of SMEs. By reviewing the literature on circular economy innovation, BMI, and government incentives, the main contribution of this study is the evaluation and analysis of circular economy innovation, BMI, and government incentives as they affect SMEs economic, environmental, and social performance in Pakistan, Malaysia, and China. The theoretical and practical implications for academics and practitioners are displayed at the end of the study.

Green HRM and employee efficiency: The mediating role of employee motivation in emerging small businesses

The modern organizational structure expects that the human resource department should train the employees effectively to sustain the environment. This study aims to understand the role of green human resource management (GHRM) in the efficiency of organizations’ employees in small and medium enterprises (SMEs) of Pakistan. The questionnaire was developed on a five-point Likert scale to collect primary data from the target respondents, and the target respondents of this study were the employees of SMEs in Pakistan. The results of the study indicate that GHRM is an important tool to motivate and train employees, which ultimately increases the efficiency of employees. This study demonstrates that the SMEs in Pakistan need to consider the critical role of GHRM as it is emerging and provides reliable resources as per the organization’s requirements for better performance. This study provides recommendation for future studies to consider and contribute to the literature and to the practices of SMEs in Pakistan for the efficiency of their employees.

THE EFFECT OF STRATEGIC PLANNING ON PROFITABILITY OF SMALL MEDIUM ENTERPRISES

Although attention is paid to the effectiveness of business and political relations in emerging economies, there is not much research that explicitly examines business and political relations in the development of small and medium enterprises (SMEs) in emerging economies. The main aim of this study is to investigate importance of strategic planning in attaining competitive advantage in SMEs of Pakistan. The data was collected from different SMEs of Pakistan based on Non probability purposive sampling technique; the data was collected through questionnaires. Descriptive statistics, correlation matrix, and linear regression model were applied for analysis. The independent variables were Vision statement, mission statement, objectives, values and SWOT analysis. According to the results of the study vision statement, mission statement, and objective were found insignificant in achieving competitive advantage whereas, a positive and significant relationship was found for value statement and SWOT analysis with competitive advantage. The results of the study suggested that in Pakistan less attention is paid on development of vison and mission statement which might be the cause of high percentage of failure among many SMEs in Pakistan. As lack of strategic preparation can cause the business to collapse when managers fail to update their goals and objectives regularly therefore strategic it is very important for SMEs to pay significant attention on its strategic planning process, as they have a very significant role in sustainable economic growth of the country.

Financial Pattern of Small and Medium Enterprises (SMEe) of Pakistan

The study explores the financial pattern of Small and Medium Enterprises (SMEs) in Khyber Pakhtunkhwa (KP) province of Pakistan. Financial pattern including overall management of finances sources, the obstacles in financing and to identify the most lucrative sources of financing. The data is gathered through 200 questionnaires distributed in four districts, namely, Peshawar, Mardan, Swat and Haripur of Khyber Pakhtunkhwa using the snowball sampling technique. The reason for choosing KP province is that it has a meager proportion of about 5% in total 3.2 million SMEs in Pakistan. The research explores the financial reasons for such a low number of SMEs in KP. The results of the study show that major problem to SMEs is an access to formal financing sector including high interest rate, high collateral requirements and the complex documentation process to get loans. The major source of financing in KP is equity capital and re-invested profit made by business. The findings also indicate that majority of managers and owners of SMEs are dissatisfied from the banks and policies of Small and Medium Enterprises Development Authority (SMEDA). The study suggests that SMEDA should have clear and transparent policies and vision to fulfill the financial needs of SMEs from the formal financial Institutions. Similarly, banks should tailor their products and services according to the needs of SMEs.

Linking Entrepreneurial Orientation and Innovation Intensity: Moderating Role of Environmental Turbulence

This research aims to investigate the impact of entrepreneurial orientation dimensions on a firm’s innovation intensity along with the moderation of environmental turbulence. The dimensions of entrepreneurial orientation include autonomy, pro-activeness, risk attitude, innovation readiness and competitive aggressiveness, hence the study includes five direct hypotheses and five moderated hypotheses. The data was gathered through an online questionnaire. The sample size of the study was 386 small and medium enterprises (SME) operating in Pakistan. The questionnaire was filled out by executive managers or executive directors of organizations as company representatives. Smart PLS was used to analyze the data. The measurement model was run to ensure validity and reliability. Moreover, the outer loadings, model fit and important statistics were assured. The structural model estimated the proposed relationships of the study. The findings of the study suggested a positive impact of all the dimensions of entrepreneurial orientation on innovation while the moderation effect of environmental turbulence was found to be significant for all the relationships except innovation readiness. The study finally concluded that EO had a significant impact on innovation intensity. Based on the findings, it is recommended that SMEs should enhance entrepreneurial orientation in their respective organizations in order to intensify innovation. The practical objective of this research was to gain knowledge on entrepreneurial orientation and innovation intensity that is crucial for organizations in the contemporary business world. The study has certain implications for the development of organizations’ strategic orientation. SMEs in Pakistan have great potential and in terms of intensifying innovation in enterprises, it is important to focus on entrepreneurial orientation. Thus, SMEs have to be innovative, proactive, and ready to take risks which may ultimately help them improve their performance.

Empirical nexus between financial and psychological entrepreneur characteristics and its analogy to entrepreneurship financial performance

PurposeThis study aims to examine the key entrepreneurial roles (financial literacy, risk tolerance and competency) in the financial performance of small and medium enterprises (SMEs) in Pakistan and the mediating effects of locus of control and spiritual and emotional quotients.Design/methodology/approachThe study data was collected from 541 SMEs in Pakistan (the target population) through a survey and analysed with partial least squares structural equation modelling.FindingsThe findings revealed that the key entrepreneurial characteristics were positively related to locus of control and spiritual quotient and elevated the financial performance in entrepreneurship. It was also reported that locus of control and spiritual quotient mediated between key entrepreneurial characteristics and financial performance. In this regard, emotional quotient strengthened the existing relationships between key characteristics, locus of control and spiritual quotient.Practical implicationsThis study highlighted sustainable implications for SMEs to develop an effective mechanism and improve financial performance through guidelines that emphasized entrepreneurial characteristics and behaviours towards positive entrepreneurial ventures. This study also enabled policymakers to design policies that catalysed SME performance in Pakistan.Originality/valueThis study contributed a novel concept of key entrepreneurial characteristics by introducing a characteristics tool kit. Consequently, information on a unique framework (by integrating entrepreneurial characteristics and financial performance) and literature on spiritual quotient and locus of control in entrepreneurship were enriched. Contributions to the regulatory focus theory and four-phase Rubicon model in the study context were also made.

An Empirical Investigation of Environmental Turbulence and Fear in Predicting Entrepreneurial Improvisation

This study is designed to test an empirical investigation of the environmental turbulence and fear in predicting entrepreneurial improvisation in small and medium enterprises (SMEs) in Pakistan. This research aims to analyze whether the emotional response of fear drives the decision-makers of SMEs towards the use of improvisation strategy in a turbulent environment in an uncertain business world or not. The target population for this study includes owners, managers, and directors of SMEs listed in the Chambers of Commerce of capital cities of Pakistan. Data were collected through a quantitative survey from 433 respondents by using the cluster sampling technique. Structural equation modeling (SEM) was used to test the hypotheses of the study and conduct path analysis. The findings of this study reveal that environmental turbulence leads the decision-makers towards the use of improvisation strategy by managing their emotions of fear rather than sticking to the plans in SMEs in Pakistan. Moreover, the emotional response of fear in entrepreneurs mediates the relationship between environmental turbulence and entrepreneurial improvisation in SMEs in Pakistan. This study contributes to the field of SMEs by suggesting that entrepreneurs can compete in the frequently changing business world through improvisation. This study helps the Small and Medium Enterprises Development Authority (SMEDA) to understand the importance of entrepreneurial improvisation during uncertainties in the complex business environment, which leads the organization towards innovation.

Impact of Strategic Management Practices on the Business Performance of SMEs in Pakistan

Small and Medium Enterprises (SMEs) in Pakistan are playing a significant role in the economic development, and performance of these SMEs is very crucial to the country. Therefore, the aim of current research is to check the significance of strategic management practices in the SMEs operating in the South Punjab of Pakistan. Three variables were created from the existing literature (strategy development,strategy implementation, and strategy evaluation). Convenient sampling has been used to collect primary data through self-administrative questionnaires. By exercising different Inferential Statistical Techniques, this paper has found a significant link between all the strategic management functions and business performance of selected SMEs in the South Punjab of Pakistan.For this purpose, IBM SPSS Statistics software has been applied.This research has recommended that owners as well as management of SMEs should regularly evaluate and take corrective measures on schedule and the progress of various strategies.

Impact of Lean, Six Sigma and environmental sustainability on the performance of SMEs

PurposeThis paper aims to explore the impact of lean, Six Sigma and environmental sustainability on the performance of small and medium enterprises (SMEs) in Pakistan. The firm performance has been measured in terms of operational, business and environmental performance.Design/methodology/approachA survey-based methodology is adopted for collecting data from the main cities of Punjab, Pakistan. SMEs related to different industries such as service, manufacturing, automotive and retail were targeted. The data gathered were ordinal, and Spearman's correlation test was used as the data analysis technique.FindingsThe findings indicated that the three management styles positively impacted the environmental performance of SMEs. Moreover, no significant relationship was found between the three management styles and the SMEs' business and operational performance.Research limitations/implicationsTo counter the inefficient and wasteful practices of SMEs and their detrimental impact on overall firm performance, SMEs have to refocus and reconfigure their management strategies. It is implied to use lean, Six Sigma and environmental sustainability practices to achieve this goal.Originality/valueThe study empirically investigates the impact of lean, Six Sigma and environmental sustainability on the performance of SMEs in Pakistan, which is the first study to be conducted in the Pakistani context.

A mediation analysis of social media marketing between the relationship of entrepreneurial marketing strategies and the performance of small & medium enterprises in Pakistan

Objectives: The main focus of this study is to find the role of social media marketing between the relationship of entrepreneurial marketing strategies and Performance of Small and medium enterprises (SMEs) in Pakistan. This research will answer the question that how social media marketing can be crucial for the entrepreneurial marketing to increase the performance of small and medium enterprises in Pakistan. Methodology: The SMEs operating in Pakistan have been considered and the respondents are the Marketing Managers of SMEs. The total number of SME’s in Pakistan is 3.3 million having one marketing manager. The total population of study is 3.3 million. Roscoe 1975 technique has used for selecting sample size. The 384 SME’s managers were selected through Roscoe sampling method and survey instrument has randomly been distributed among the marketing managers of SMEs in Pakistan through the primary data collection mode. Discussion: Hypotheses have been tested through “Structural Equation Modeling”. Since SEM is latest second generation tool of multivariate analysis and it has been used in this study to test the hypothesis. Findings: It is found from the results and discussion that entrepreneurial marketing strategies; proactive orientation, value creation,innovativeness and customer focus plays important role in enhancing the SMEs performance in Pakistan and Social media marketing can highly be effective to implement entrepreneurial marketing strategies to improve the performance of small and medium enterprises in Pakistan. Keywords: Entrepreneurial marketing strategies; SMEs Performance; role of social media marketing

Resource and Information Access for SME Sustainability in the Era of IR 4.0: The Mediating and Moderating Roles of Innovation Capability and Management Commitment

In the era of industrial revolution 4.0 (IR 4.0), sustainability has been a serious challenge of contemporary small and medium enterprises (SMEs). Using Natural Resource-Based-View (NRBV), the current paper examines the moderated mediation model of the role of information access in the sustainability of SMEs, through the mediating role of access to resource and innovation capability in the relationship between information access and sustainability, and the moderating role of management commitment in the relationship between innovation capability and SME sustainability. This paper gathered data from 222 SMEs in Pakistan. The study used a purposive sampling technique to distribute the survey questionnaire. Smart-PLS software was used to analyze the data. The study finding indicates that access to information affects both sustainability and innovation capability. Moreover, access to resources affects innovation capability, though it did not affect SME sustainability. Furthermore, innovation capability mediates the relationship between access to resources, access to information, and SME sustainability. Additionally, management commitment moderates the relationship between access to information and innovation capability; however, it does not moderate the relationship between access to resources and innovation capability. Practical, theoretical, and methodological implications are discussed in the study.

Preliminary Insights on the Adoption of International Financial Reporting Standard (IFRS) for Small and Medium Enterprises (SMEs) in Pakistan

This study aims to investigate the perceptions of accountants regarding the possible adoption of International Financial Reporting Standards (IFRS) for SMEs in Pakistan. IFRS for SMEs were issued by the IASB in 2009. The adoption of the IFRS for SMEs in Pakistan has been proposed by the Institute of Chartered Accountants of Pakistan (ICAP) and in 2015 the Securities and Exchange Commission of Pakistan (SECP) has approved the adoption of the 'International Financial Reporting Standard for Small and Medium Sized Entities. We conducted seven semi-structured interviews with the chartered accountants based in Multan that were providing accounting and consultancy services to various SMEs. The findings of the research confirmed the reasonable level of awareness among chartered accountants regarding IFRS for SME. Our respondents perceive high-quality comparable financial information as the most significant advantage of applying IFRS for SMEs whereas cost burdens on firms and lack of trained personnel were perceived as major obstacles for the adoption decision. The findings also suggest that diligent IFRS awareness and training programs must be organized by all regulatory and professional bodies (like SECP and ICAP) on both country and firm level to achieve the true purpose of this adoption.

SMEs' intention towards the adoption of mobile marketing: a case of Pakistan

The fastest growing marketing phenomena, around the world especially in small and medium enterprises (SMEs) of developed and developing economies, is the adoption of mobile marketing which radically influences ways of advertising. However, Pakistani SMEs are less interested towards the adoption of mobile marketing. Therefore, this study aimed to develop and examine a parsimonious structure of multiple constructs comprised as technological (perceived usefulness, perceived ease of use), organisational (subjective norms, financial resources) and environment (competitive pressure, customers pressure and technological support) through the theoretical lens of technology-organisation-environment (TOE). Convenient sampling technique was used for data collection by distributing self-administrated questionnaires among the top-management of SMEs in Pakistan. Furthermore, structural equation modelling with the help of SmartPLS was used to analyse the yielded data. The study results empower the policy makers and academicians to gain in-depth knowledge of the drivers associated with intention to adopt m-marketing by Pakistani SMEs.

Impact of Financing on Small and Medium Enterprises (SMEs) Profitability with Moderating Role of Islamic Finance

Small and medium enterprises (SMEs) are the very significant for the development of economy of the country, grasp the attention of government and policy makers in developed as well as in developing countries. SMEs in Pakistan have their vital role in economic growth. Therefore, it is essential that SMEs have right to use sources of finance. The study used the quantitative approach that was accomplished by survey questionnaires. Two hundred SMEs and seventy bank branches were selected in Faisalabad region in Pakistan, to get response on questionnaires about their financing patterns and effects of Islamic financing as moderator in their fixed assets, set up and current assets financing. The study showed that fixed assets, set up and current asset financing have positive relation with the growth of SMEs and Islamic modes of financing was not behaved as moderator in Faisalabad city in Pakistan.

Exploring the role of employee voice between high-performance work system and organizational innovation in small and medium enterprises

PurposeEmployee voice has emerged as a strong predictor of positive organizational outcomes. Grounding the theoretical model in resource-based theory; this study conceptualizes how high-performance work system (HPWS) can enhance organizational innovation of small and medium enterprises (SMEs) through voice behaviors. Specifically, the purpose of this paper is to empirically test if employee voice mediates the relationship between HPWS and organizational innovation.Design/methodology/approachThis study used a quantitative strategy and cross-sectional survey method for the collection of data from SMEs operating in Pakistan. A list of SMEs was obtained from the federal government organization responsible for the development of SMEs in Pakistan. A self-administered structured questionnaire was distributed and 239 randomly selected SMEs responded to the survey.FindingsFindings confirmed the conceptualized model and revealed that HPWS was significantly and positively related to employee voice and organizational innovation. Employee voice was found as a significant predictor of organizational innovation and mediating factor in the relationship between HPWS and organizational innovation.Research limitations/implicationsThis study is limited in terms of variables included in the conceptual model and relatively small size of the sample that was derived from a single federal organization. More variables and SMEs can be included in future studies to get broader results and, potentially, better findings.Practical implicationsSME managers/owners can design HR function in such a way that employees will be encouraged to raise their voice and participate more in the organization. Scholars should study voice behaviors distinct from citizenship behaviors.Originality/valueThis study is the first of its kind to conceptualize the relationship between HPWS, employee voice, and organizational innovation in SMEs of Pakistan.

Impact of knowledge management enablers on knowledge sharing

PurposeThe purpose of this paper is to examine the mediating role of trust in the relationship between knowledge management enablers (i.e. top management support, organizational culture, knowledge management system quality, and openness in communication) on knowledge sharing in small and medium enterprises (SMEs) in Pakistan.Design/methodology/approachThe study was conducted through self-administered survey of employees of SMEs in Pakistan. Correlation, Baron and Kenny approach (causal steps approach) and PROCESS Macro (normal test theory) developed by Hayes were used to find out the direct and indirect effects of trust among knowledge management enablers and knowledge sharing.FindingsThe results have shown that trust of employees at SMEs was developed through knowledge management enablers which promote knowledge sharing. Therefore, the relationship between knowledge management enablers, trust, and knowledge sharing is positive.Research limitations/implicationsThe current study only considered the single aspect of knowledge management system, i.e. knowledge sharing; some other aspects of knowledge management system such as knowledge creation and knowledge utilization can be used for future studies at SMEs sector.Practical implicationsThe mediation of trust between top management support, culture, openness in communication, and knowledge sharing provided that trustworthy relationships between the members of an organization would lead to enhance the knowledge sharing activities. In order to promote the knowledge sharing attitudes within the organization, the managers should consider knowledge management enablers (top management support, organizational culture, and openness in communication) along with trustworthy environment as an energetic force for the development of knowledge management systems.Originality/valueThe study confirmed the mediating effect of trust between the relationships of top management support, organizational culture, openness in communication, and knowledge sharing, while there is a partial mediating role of trust between knowledge management system quality and knowledge sharing.

Perceptions and practices of corporate social responsibility among SMEs in Pakistan

The purpose of this study is to explore the perceptions and practices of corporate social responsibility (CSR) among small and medium enterprises (SMEs) in Pakistan. To examine the perceptions and practices of CSR in Pakistan, this study used the data collected through two different sources: a survey instrument (questionnaire) and qualitative interviews. The findings of this study reveal that SMEs’ approach to CSR in Pakistan is unstructured; however, they are practicing CSR activities in an informal manner with mixed (internal as well as external oriented) methods in most cases. However, few SMEs are also practicing CSR activities in formal manners with external oriented dominant methods over internal methods. The findings of this study will assist SMEs, supporting groups, policy makers and researchers to identify the present state of SMEs regarding CSR practices in Pakistan. The findings might provide important guidelines for the other developing economies in the region as well, as the concept is also emerging in these economies. The finding of this study will also help to formulate future CSR policy for SMEs in Pakistan.