Policy on SMEs in Pakistan: Relationship between Entrepreneurial Orientation, Firm Performance and Ownership Structure

Abstract

To strengthen growth of SMEs in Pakistan, it is important for the policy makers to understand some significant related variables. For instance, Entrepreneurial Orientation (EO) is one such variable which can affect the performance of any business substantially; however, it is debatable if some of its dimensions do not affect the firm performance. This research investigates the relationship among the EO dimensions, firms’ performance and ownership structure. In this study, the collection of data was done by using a self-administered questionnaire survey using a 5-point Likert scale and Statistical Package for social sciences (SPSS) version 24. The findings revealed that EO has a statistically significant effect on firms’ performance and when checked individually for each dimension of the EO, it was clear that results for innovation were statistically insignificant, because innovation needs certain time and specific environmental conditions to yield significant results, whereas results for risk-seeking, proactive approach, autonomy, aggressive attitude, and competitive spirit were statistically significant and positively linked with the firms’ performance. The findings of this research reveal that ownership structure does play a significant moderating role on the relationship between performance of the firm and EO dimensions (Innovativeness, Proactiveness and competitive Energy) while Ownership structure doesn't play any significant moderating role between firm performance and few other EO dimensions (risk-attitude, autonomy and aggressiveness).

Keywords:     Public Policy, Entrepreneurial Orientation, Firm Performance, Ownership Structure, Small & Medium Enterprises (SMEs), Pakistan