Small and Medium-Sized Enterprises

Afraz, N., Hussain, S. T., Khan, U. (2014). Barriers to Growth of Small Firms in Pakistan: A Qualitative Assessment of Selected Light Engineering Industries. International Growth Centre.

This report explores the impediments faced by Small and Medium Enterprise sector in Pakistan. It is a focal point for industry growth in Pakistan and improvements in the SME sector will have important repercussions for growth and unemployment. The growth of the manufacturing sector has remained fairly stagnant in the recent past and it has been unable to increase its share over the years implying that the sector with the highest value addition has the lowest share in terms of employment. The report synthesizes existing literature explaining key barriers to firm growth and augments this analysis with more insightful evidence built through primary information from two pilot industrial sectors. The report also develops case studies on the fan and sports goods industries of Pakistan; both of which fall in the light engineering sector. Authors conducted detailed semi-structured interviews with a small representative sample of firms in the light engineering sectors. This allowed a greater depth of analysis, complementing the less detailed but large, cross sectional studies already available. The study concludes that the foremost impediment to growth is the lack of ability to innovate and diversify. Better managerial skills and succession planning is also termed as important for businesses. Public sector interventions in the sector to promote innovation and technology have been unsuccessful while Sialkot is a great example of private sector coordination and cooperation in the provision of infrastructure for example.

Ahmed, Y., Pirzada, M.D.S, Khan, M.T. (2013). Strategic Orientation of Small to Medium Scale Manufacturing Firms in Developing Country: A Case of Auto Parts Manufacturing Small to Medium Enterprises (SMEs) in Pakistan. Life Science Journal, 10(3), 517-527.

In today’s industrial world, SMEs contribute significantly in almost all the sectors especially manufacturing. Business and functional strategies of these SMEs are important research areas. In this qualitative research, multiple case study method has been utilized to explore the business strategies of SMEs operating in auto parts manufacturing sector of Pakistan. Business strategies of SMEs are analyzed as prospectors, analyzers, defenders and reactors utilizing Miles and Snow typology (1978). The researchers investigate that how this business strategy is linked to functional strategies of SMEs operating in business environment marked with limited domestic market and low export orientation. Though operating in same business environment, SMEs vary in their competitive priorities and methods to achieve organizational goal in not so thriving auto parts sector. Manufacturing, Human Resource Management (HRM) and marketing being important functional strategies are explored to find the differences and similarities even when SMEs follow the similar strategic posture. The use of multiple methods for finding the business strategies of SMEs has been resorted to understand the implicit and explicit ways of conducting business.

Ghouri, A. M. (2013). Marketing Capabilities in SMES of Pakistan: An Empirical Approach. Ghouri, AM (2013). Marketing Capabilities in SMEs of Pakistan: An Empirical Approach. International Journal of Marketing Practices, 1(1), 52-56.

The role of marketing capabilities in driving superior firm performance has long been of interest to marketing scholars. This study was initiated to discover the relationship of marketing capabilities with firm performance in the SMEs of Pakistan. The survey questionnaire was adopted from the previous researches. The initial data for the study was collected from 36 owners/ managers of the SMEs firms in Karachi, Pakistan for pilot testing. All assumptions made by the authors were authenticated before applied multiple regression to find the variance in firm performance by applying (six) marketing capabilities variables. The findings of the multiple regression suggested that marketing research, pricing, service development, distribution, communication, and marketing management account for 30.8 percent of the variance in firm performance. It was also confirmed that pricing, distribution, and communication are positively significant with firm performance, while marketing research, service development, and marketing management are non significant.

Abro, Q. M. M., Memon, N. A. & Arshdi, P. I. S. (2011). Dynamic Capabilities and Firm Performance: A Case of Two SMEs in Pakistan. Mehran University Research Journal of Engineering and Technology, 30(3), 521-530.

This paper investigates the inter-relationship among entrepreneurship, dynamic capabilities and innovation. Entrepreneur’s foresights and insights of ICT (Information and Communication Technologies) tend to affect their choices of resources and development of dynamic capabilities, leading to different results of innovation. Based on the literature of business innovation and dynamic capabilities, this paper provides a model addressing the links between leadership, with insights and foresights for technology exploration and exploitation, and organizational capabilities of resource integration, learning and transformation to accelerate innovation. A comparative analysis of the two textile manufacturers in Pakistan revealed a cyclical process between the leadership decisions and dynamic capabilities of leveraging ICT for sustained competitiveness in these two SMEs (Small and Medium Sized Enterprises). The result suggests that to build strong capabilities for continuous innovation in today’s dynamic business environment, firms need to have leadership with both the attitude and behavior of entrepreneurship, combining the foresight to capture opportunities through ICT and the insight to guide and manage internal resources to achieve ICT-enabled innovation. This study is conducted on only two textile manufacturers in Pakistan and should be conducted at a larger scale to gather analysis of different sectors.

Gulzar, S. et. al. (2011). Dairy Hub: A Dairy Farmer Capacity Building Project by Tetra Pak. International Growth Centre.

Pakistan is the fourth largest milk producer in the world with an annual production of over 33 billion litres of milk, yet the sector faces numerous issues. One of the major challenges facing the dairy sector is the growing gap between milk supply and demand that is expected to increase to 3.6 billion litres by 2015. Smallholders who had little ownership of land to manage them own more than 92 percent of the animals. The small farmers do not have sufficient resources and lack training in animal husbandry that leads to poor animal health and low milk yield. Furthermore, the small farmers lack knowledge of modern breeding practices. This case study aimed to unpack these challenges, and provide some more context as to the dairy sector in Pakistan. The authors discuss the community development projects currently in place including Engro Model Village Program, Engro Khushaal Livestock Program, Small Entrepreneur Development Project, Model Farm Programme, Cooling Tank Programme and Tamkeen Project. A better understanding of dairy hub operations and its sustainability can provide the government grounds for developing the dairy hubs all over Pakistan and for starting other similar development projects in the sector. The study reveals that they allow improvement in quality and quantity and enable documentation of the rural economy. Dairy Hubs consist of a central building with instant cooling, milk testing equipment, quality control, data recording from all registered producers, veterinarian and training facilities. Veterinary hospitals are established along with mobile clinics and vaccination camps. Furthermore, trainings are a key component of the program. The authors recommend that the government’s full-fledged involvement in establishment of dairy hubs and other developments in dairy sector may help in improving average farmer productivity and as a result milk collection for processors. This case study is part of IGC Pakistan’s work on Firms with support from Secretary, Department of Industries, Punjab.

Ahmed, I., Shahzad, A., Umar,M. & Khilji, B. A. (2010). Information Technology and SMEs in Pakistan. International Business Research, 3 (4), 237-240.

Recent, spectacular technological advances have made the use of modern information technology an important competitive business tool. This study explores the use of IT by SMEs and their degree of satisfaction in using software and hardware. Results show that the use of Microsoft Office including Microsoft Word and Microsoft Excel is comparatively high. However, the use of communication software is very low. There is a greater dissatisfaction amongst respondents with software compared to hardware. One main reason is a lack of proper training. Informal training methods should be adopted.

Bhutta, M. K. S., Rana, A. I., Asad, U. (2008). Owner characteristics and health of SMEs in Pakistan. Journal of Small Business and Enterprise Development, 15(1), 130-149.

A survey from 651 SMEs from the manufacturing sector of Pakistan was conducted in 2003 and statistical analysis was carried out to analyze the data. This paper focuses on the relationship between the health indicators namely, sales/ employee, increase/ decrease in sales, and investment plans and different personal characteristics of the owner. This analysis suggests that education, generation setting up the business and number of partners have a significant relationship with the health of SMEs. Health of the firm is also dependent on owner habits like watching television, reading newspapers and using computers for office work. Other factors like caste of the owner and occupation of the owner’s relatives were also analyzed, but no significant relationship with the health of an SME was observed. This is the only study of its kind in Pakistan.