State of Growth Barriers of SMEs in Pakistan: A Review based on Empirical and Theoretical Models

  • Akhtiar Ali et al., 3Assistant Professor, Department of Management Sciences, Bahria University, Karachi
Keywords: Growth of SMEs, SMEDA,, growth barriers, Entrepreneurial activity


Across the globe, SMEs are emerging as an unswerving accelerator of economic growth with a sizable contribution to job creation and customer need serving. Regardless of such support, the growth of SMEs in developing countries, with specific reference to Pakistan, is constrained. Surface facts pin down various underlying reasons for the inhibited economic growth of SMEs; however, veracity sticks to few, as principal wheelers of shackling prospects of small firm growth. Interestedly, this review paper is an attempt to provide the critical review of theoretical and empirical extent of literature on the state of SMEs in Pakistan. Findings of the review advise critical role of attitude towards technology, supplier relations, product innovation, human capital, regulatory requirements and access to finance in impeding smooth business progress and sustainable growth of SMEs in Pakistan. Findings of this review have implications for policymakers in devising, reforming and enforcing lucrative regulatory and legislative framework to stimulate entrepreneurial activities across manufacturing and non-manufacturing sectors. In additions, it is also imperative for SBP and SMEDA to control access to finance issues by creating a regulatory environment with fair allocation of formal private and public institution funds to SMEs across all sectors of the economy. As for existing and potential entrepreneurs, this review paper has strived to sketch out situational analysis of critical dimensions which they need to consider while devising the strategy for business expansions with proactive and preventive measures against suggestible barriers to firm growth.