Factors Affecting SME Performance, Competitive Advantage, and Risk Management Practices with the Mediating Role of Public Policy in Pakistan

Abstract

Small and Medium-Scale Enterprises (SMEs) serve as a pivotal force in boosting global economic advancement, with a particular emphasis on their vital role in developing countries. In Pakistan, SMEs account for over 90% of all businesses. Since the Pakistani SME sector includes a diverse range of economic sectors such as manufacturing, services, agriculture, tourism, construction, fishing, mining, etc. Despite government and policymakers' efforts to promote SME development in Pakistan, the sector continues to face persistent challenges, including energy shortages, limited financial literacy, inadequate infrastructure and business information, low value addition, weak strategic planning, limited access to bank financing, and a shortage of skilled human resources. Their contributions extend to foster economic growth, generating employment opportunities, and facilitating exports. This study examines the factors affecting SME's performance, competitive advantage, and risk management practices with the mediating role of public policy in Pakistan. Data was collected through survey questionnaire from 442 respondents. Data analysis was done through SPSS and PLS software. Empirical research demonstrates that SMEs' views towards hazards and their risk assessment are very different from those of large corporations.

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