Expounding the Environment of Small and Medium Enterprises (SMEs): A Qualitative Study Conducted in Pakistan

Abstract

The aim of this study is to expound the environment of SMEs by way of identifying, ranking and classifying factors that affect growth of SMEs. The overall design of the study comprises of review of literature, data collection from primary sources and application of   modeling techniques. This is a qualitative study that comprises of literature review along with experts’ opinion for exploring environmental factors affecting growth of SMEs. The experts are selected on the basis of non-probability based purposive sampling and data is collected by face to face interview through a questionnaire. The factors are ranked in different levels of importance using Interpretive Structural Model (ISM) which later on are classified in independent, dependent, autonomous and linkage using MICMAC. The results of literature review and experts’ opinion show that there are fifteen important factors that are critical. The results of ISM show that the least critical factors occupying Level I includes ‘age of enterprise’, ‘experience of owner’ and ‘education of owner’, whereas, ‘trade internationalization’ is the most critical factor occupying Level IX. Remaining eleven factors are with effects that range on the continuum of moderate to severe moderate occupying middle position of the model. The results of MICMAC reveal that trade internationalization is categorized as the important independent factor along with seven other factors. Six factors are categorized as dependent factors. Only one factor is classified as autonomous, and as such no factor is categorized in linkage. This is a seminal research study that contributes to the literature by providing new firsthand information on the phenomenon under study by using novel mathematical modeling techniques. This study is helpful to all stakeholders including Government, industry, researchers and academicians in prioritizing the critical factors for revolutionary growth of SME sector.