Does Strategic Change Enhance the Relationship between Firms’ Resources and SMEs Performance in Pakistan?

Sheema Matloob, Mónica Lorena Sánchez Limón (), Halia Mayela Valladares Montemayor (), Ali Raza and Julio Cesar Castanon Rodriguez
Additional contact information
Sheema Matloob: Department of Business Administration, Sukkur IBA University, Sukkur 65200, Pakistan
Mónica Lorena Sánchez Limón: Faculty of Business, Autonomous University of Tamaulipas, Cd. Victoria, Tamaulipas 87000, Mexico
Halia Mayela Valladares Montemayor: Quest University, Squamish, BC V8B 0N8, Canada
Ali Raza: Department of Business Administration, Sukkur IBA University, Sukkur 65200, Pakistan
Julio Cesar Castanon Rodriguez: Faculty of Business, Autonomous University of Tamaulipas, Cd. Victoria, Tamaulipas 87000, Mexico

Sustainability, 2023, vol. 15, issue 3, 1-20

Abstract: There are approximately 3.2 million SMEs in Pakistan. It is believed that more than 90% of the economic establishments are SMEs. They contribute 40% of the economic growth and create 70% of Pakistan’s overall employment opportunities. Despite substantial presence and contribution, 95% of SMEs fail within the first five years. Out of the remaining 5%, 25% of the SMEs survive up to four more years, adversely impacting economic growth, employment, and living standards. Previous studies indicated SMEs’ low performance as a significant cause and provoked entrepreneurs to shut down their businesses. Therefore, this study aims to examine the performance of SMEs in Pakistan. Based on the problem, the study contextualized the research model that investigates the relationship between financial capital availability (FCA) and innovative work behavior (IWB), which is believed to be crucial for enhancing small and medium-sized businesses’ performance through accelerated strategic change (SC). In addition, the moderating role of Government support (GS) on SMEs’ performance was also considered. The quantitative, cross-sectional research design was considered appropriate for this research. Data was collected through a structured questionnaire to 340 SMEs in the Pakistan manufacturing sector. The hypothesized relationships were tested through structural equation modeling (SEM) using Smart-PLS 4. Results showed a positive link between FCA, IWB, and SMEs’ performance. Furthermore, FCA and IWB are the key drivers to achieving an optimum level of SME performance, which translates the SC process within the SMEs in Pakistan. Additionally, this research discovered that SC partially mediates the relationship between FCA and IWB on SMEs’ performance. Moreover, GS strengthens the relationship between SC and SMEs’ performance. The present findings offer valuable insight to SME owners, policymakers, and first-line managers to understand the radical change in the process. The study also outlined policy interventions to uplift the diminishing SMEs’ performance.

Keywords: SMEs’ performance; financial capital availability; strategic change; innovative work behavior; government support (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/15/3/1808/pdf (application/pdf)
https://www.mdpi.com/2071-1050/15/3/1808/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:15:y:2023:i:3:p:1808-:d:1039062

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().