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


  • Huma Farid Institute of Business & Management, University of Engineering and Technology, Lahore, Pakistan Author
  • Tehmina Fiaz Qazi Hailey College of Banking and Finance, University of the Punjab, Lahore, Pakistan Author
  • Abdul Basit Lahore Institute of Science & Technology, Lahore, Pakistan Author
  • Abdul Aziz Khan Niazi Institute of Business & Management, University of Engineering and Technology, Lahore, Pakistan Author




SMEs, ISM, MICMAC, Environment, Critical Factors Affecting Growth of SMEs


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.


Abbass, K., Asif, M., Niazi, A. A. K., Qazi, T. F., Basit, A., & Al-Muwaffaq Ahmed, F. A. (2022a). Understanding the interaction among enablers of quality enhancement of higher business education in Pakistan. PloS one, 17(5), e0267919.

Abbass, K., Basit, A., Niazi, A. A. K., Mufti, R., Zahid, N., & Qazi, T. F. (2022b). Evaluating the social outcomes of COVID-19 pandemic: empirical evidence from Pakistan. Environmental Science and Pollution Research, 1-13.

Abbass, K., Niazi, A. A. K., Qazi, T. F., Basit, A. and Song, H. (2021). The aftermath of COVID-19 pandemic period: barriers in implementation of social distancing at workplace. Library Hi Tech.

Aboelmaged, M. and Hashem, G. (2019). Absorptive capacity and green innovation adoption in SMEs: The mediating effects of sustainable organizational capabilities. Journal of Cleaner Production, 220, 853-863.

Aquilante, T. and Vendrell-Herrero, F. (2021). Bundling and exporting: evidence from German SMEs. Journal of Business Research, 132, 32-44.

Arza, V., & López, E. (2021). Obstacles affecting innovation in SMEs: Quantitative analysis of the Argentinean manufacturing sector. Research Policy, 50(9), 104324.

Arzubiaga, U., Kotlar, J., De Massis, A., Maseda, A. and Iturralde, T. (2018). Entrepreneurial orientation and innovation in family SMEs: Unveiling the (actual) impact of the Board of Directors. Journal of Business Venturing, 33(4), 455-469.

Attri, R., Dev, N. and Sharma, V. (2013). Interpretive structural modelling (ISM) approach: an overview. Research Journal of Management Sciences, 2319, 1171.

Avinash, A., Sasikumar, P. and Murugesan, A. (2018). Understanding the interaction among the barriers of biodiesel production from waste cooking oil in India-an interpretive structural modeling approach. Renewable Energy, 127, 678-684.

Aysan, A. F. and Disli, M. (2019). Small business lending and credit risk: Granger causality evidence. Economic Modeling, 83, 245-255.

Azevedo, S., Carvalho, H. and Cruz-Machado, V. (2013). Using interpretive structural modelling to identify and rank performance measures: an application in the automotive supply chain. Baltic Journal of Management, 8(2), 208-230.

Bagheri, M., Mitchelmore, S., Bamiatzi, V. and Nikolopoulos, K. (2019). Internationalization orientation in SMEs: The mediating role of technological innovation. Journal of International Management, 25(1), 121-139.

Bai, C., Quayson, M. and Sarkis, J. (2021). COVID-19 Pandemic Digitization Lessons for Sustainable Development of Micro-and Small-Enterprises. Sustainable Production and Consumption, 27, 1989-2001.

Barrett, G., Dooley, L. and Bogue, J. (2021). Open innovation within high-tech SMEs: A study of the entrepreneurial founder's influence on open innovation practices. Technovation, 103, 102232.

Basit, A., Khan Niazi, A. A., Qazi, T. F., Rao, Z. U. R., & Shaukat, M. Z. (2021). Structural Modeling on the Determinants of Effectiveness of SOPs Containing COVID-19 in Mass Gatherings. Frontiers in Psychology, 4754.

Battisti, M. and Perry, M. (2015). Small enterprise affiliations to business associations and the collective action problem revisited. Small Business Economics, 44(3), 559-576.

Cai, Y. and Xia, C. (2018). Interpretive Structural Analysis of Interrelationships among the Elements of Characteristic Agriculture Development in Chinese Rural Poverty Alleviation. Sustainability, 10(3), 786.

Cenamor, J., Parida, V. and Wincent, J. (2019). How entrepreneurial SMEs compete through digital platforms: The roles of digital platform capability, network capability and ambidexterity. Journal of Business Research, 100, 196-206.

Centobelli, P., Cerchione, R., Esposito, E. and Passaro, R. (2021). Determinants of the transition towards circular economy in SMEs: A sustainable supply chain management perspective. International Journal of Production Economics, 242, 108297.

Chidambaranathan, S., Muralidharan, C. and Deshmukh, S. G. (2009). Analyzing the interaction of critical factors of supplier development using Interpretive Structural Modeling-An empirical study. The International Journal of Advanced Manufacturing Technology, 43(11-12), 1081-1093.

Cosenz, F. and Bivona, E. (2021). Fostering growth patterns of SMEs through business model innovation. A tailored dynamic business modelling approach. Journal of Business Research, 130, 658-669.

Degryse, H., Matthews, K. and Zhao, T. (2018). SMEs and access to bank credit: Evidence on the regional propagation of the financial crisis in the UK. Journal of Financial Stability, 38, 53-70.

Deng, P. and Zhang, S. (2018). Institutional quality and internationalization of emerging market firms: Focusing on Chinese SMEs. Journal of Business Research, 92, 279-289.

Denicolai, S., Zucchella, A. and Magnani, G. (2021). Internationalization, digitalization, and sustainability: Are SMEs ready? A survey on synergies and substituting effects among growth paths. Technological Forecasting and Social Change, 166, 120650.

Enjolras, M., Camargo, M. and Schmitt, C. (2019). Are high-tech companies more competitive than others? An empirical study of innovative and exporting French SMEs. Technology Innovation Management Review, 9(1), 33-49.

Flamini, G., Pittino, D. and Visintin, F. (2021). Family leadership, family involvement and mutuality HRM practices in family SMEs. Journal of Family Business Strategy, 100468.

Fu, W., Abbass, K., Niazi, A. A. K., Zhang, H., Basit, A., & Qazi, T. F. (2022b). Assessment of sustainable green financial environment: the underlying structure of monetary seismic aftershocks of the COVID-19 pandemic. Environmental Science and Pollution Research, 1-15.

Gkypali, A., Love, J.H. and Roper, S. (2021). Export status and SME productivity: Learning-to-export versus learning-by-exporting. Journal of Business Research, 128, 486-498.

Haddoud, M.Y., Onjewu, A.K.E., Nowiński, W. and Jones, P. (2021). The determinants of SMEs’ export entry: A systematic review of the literature. Journal of Business Research, 125, 262-278.

Hoang, N., Nahm, D. and Dobbie, M. (2021). Innovation, gender, and labor productivity: Small and medium enterprises in Vietnam. World Development, 146, 105619.

Hou, X., Wang, B., Lian, J. and Ke, K.L. (2021). Do CEO's early-life marketization experiences affect the innovation behavior of SMEs? Journal of Asian Economics, 75, 101339.

Isaga, N. (2015). Owner-Managers' Demographic Characteristics and the Growth of Tanzanian Small and Medium Enterprises. International Journal of Business and Management, 10(5), 168.

Iwanicz-Drozdowska, M., Jackowicz, K. and Kozłowski, Ł. (2018). SMEs' near-death experiences. Do local banks extend a helping hand? Emerging Markets Review, 37, 47-65.

İyigün, N. Ö. (2015). What could entrepreneurship do for sustainable development? A corporate social responsibility-based approach. Procedia-Social and Behavioral Sciences, 195, 1226-1231.

Jaafar, M. and Abdul-Aziz, A. R. (2005). Resource-based view and critical success factors: a study on small and medium sized contracting enterprises (SMCEs) in Malaysia. International Journal of Construction Management, 5(2), 61-77.

Kamali Zonouzi, M., Hoseyni, M. and Khoramshahi, M. (2021). Political factors affecting the survival of SMEs case study: An empirical study in Tehran Grand Bazaar. Asia Pacific Management Review, 26(1), 47-56.

Khurana, S., Haleem, A., Luthra, S. and Mannan, B. (2021). Evaluating critical factors to implement sustainable oriented innovation practices: An analysis of micro, small, and medium manufacturing enterprises. Journal of Cleaner Production, 285, 125377.

Kijkasiwat, P. (2021). The influence of behavioral factors on SMEs’ owners intention to adopt private finance. Journal of Behavioral and Experimental Finance, 30, 100476.

Kim, S. and Park, K.C. (2021). Government funded R&D collaboration and it's impact on SME's business performance. Journal of Informetrics, 15(3), 101197.

Lam, T.T., Mahdjoubi, L. and Mason, J. (2017). A framework to assist in the analysis of risks and rewards of adopting BIM for SMEs in the UK. Journal of Civil Engineering and Management, 23(6), 740-752.

Le Thanh, T., Huan, N.Q., Hong, T.T.T. and Tran, D.K. (2021). The contribution of corporate social responsibility on SMEs performance in emerging country. Journal of Cleaner Production, 322, 129103.

Lee, J.W. (2021). Analysis of technology-related innovation characteristics affecting the survival period of SMEs: Focused on the manufacturing industry of Korea. Technology in Society, 67, 101742.

Li, G., Huang, D., Sun, C. and Li, Y. (2019). Developing interpretive structural modeling based on factor analysis for the water-energy-food nexus conundrum. Science of The Total Environment, 651, 309-322.

Li, M. and Yang, J. (2014). Analysis of interrelationships between critical waste factors in office building retrofit projects using interpretive structural modelling. International Journal of Construction Management, 14(1), 15-27.

Lohaus, D. and Habermann, W. (2019). Presenteeism: A review and research directions. Human Resource Management Review, 29(1), 43-58.

Majumdar, A. and Sinha, S. K. (2019). Analyzing the barriers of green textile supply chain management in Southeast Asia using interpretive structural modeling. Sustainable Production and Consumption, 17, 176-187.

Matsuzaki, T., Shigeno, H., Ueki, Y. and Tsuji, M. (2021). Innovation upgrading of local small and medium-sized enterprises and regional innovation policy: An empirical study. Industrial Marketing Management, 94, 128-136.

Modisane, P. and Jokonya, O. (2021). Evaluating the benefits of Cloud Computing in Small, Medium and Micro-sized Enterprises (SMMEs). Procedia Computer Science, 181, 784-792.

Mothoa, M. S., & Rankhumise, E. M. (2021). Government contribution towards the growth of small and medium-sized enterprises: owners' perspective. International Journal of Entrepreneurship, 25, 1-11.

Ndiaye, N., Razak, L. A., Nagayev, R. and Ng, A. (2018). Demystifying small and medium enterprises’ (SMEs) performance in emerging and developing economies. Borsa Istanbul Review, 18(4), 269-281.

Nguyen, P.V., Huynh, H.T.N., Lam, L.N.H., Le, T.B. and Nguyen, N.H.X. (2021). The impact of entrepreneurial leadership on SMEs’ performance: The mediating effects of organizational factors. Heliyon, 7, e07326.

Niazi, A. A. K., Qazi, T. F. Khan, K. S., Basit, A. and Ahmad, R. (2020c). Identification and Ranking of Employees’ Physical Behaviors Critical to Mergers. International Journal of Management and Emerging Sciences, 10(4), 1-10.

Niazi, A. A. K., Qazi, T. F., & Basit, A. (2019). Expounding the Structure of Slyer Ways of Tunneling in Pakistan. Global Regional Review, 4(2), 329-343.

Niazi, A. A. K., Qazi, T. F., & Basit, A. (2019a). What Hinders to Promote Tourism in Pakistan? Using Binary Matrices for Structuring the Issue. Review of Economics and Development Studies, 5(4), 881-890.

Niazi, A. A. K., Qazi, T. F., & Basit, A. (2019b). Expounding the Structure of Slyer Ways of Tunneling in Pakistan. Global Regional Review, 4(2), 329-343.

Niazi, A. A. K., Qazi, T. F., & Basit, A. (2019c). An Interpretive Structural Model of Barriers in Implementing Corporate Governance (CG) in Pakistan. Global Regional Review, 4(1) 359-375.

Niazi, A. A. K., Qazi, T. F., & Sandhu, K. Y. (2019). Uncovering the Myths of TQM in Readymade Garment Sector of Pakistan: An Interpretive Structural Modeling Approach. Review of Economics and Development Studies, 5(3), 531-540.

Niazi, A. A. K., Qazi, T. F., Ali, I., & Ahmad, R. (2020a). Prioritizing Determinants of Effective Whistle Blowing (WB): An Interpretive Structural Modeling Approach. International Journal of Law and Management, 62(3), 213-230.

Niazi, A. A. K., Qazi, T. F., Basit, A., & Khan, K. S. (2019). Curing Expensive Mistakes: Applying ISM on Employees’ Emotional Behaviors in Environment of Mergers. Review of Economics and Development Studies, 5(1), 79-94.

Niazi, A. A. K., Qazi, T. F., Basit, A., & Khan, R. A. (2019). Expounding Complex Relations among Criticisms on Islamic Banking through Interpretive Structural Modeling. Paradigms, 13(2), 151-159.

Niazi, A. A. K., Qazi, T. F., Hameed, R., & Basit, A. (2020b). How They Get Stuck? Issues of Women Entrepreneurs: An Interpretive Structural Modeling Approach. Paradigms, 14(1), 73-80.

Niazi, A.A.K., Qazi, T.F. and Basit. A. (2020). Investigating Critical Resemblances of Islamic Banking with Conventional: Binary Matrices as Solution Methodology. Journal of Business and Social Review in Emerging Economies, 6(1), 351-366.

Nordhagen, S., Igbeka, U., Rowlands, H., Shine, R.S., Heneghan, E. and Tench, J. (2021). COVID-19 and small enterprises in the food supply chain: Early impacts and implications for longer-term food system resilience in low-and middle-income countries. World Development, 141, 105405.

Nyoni, T. and Bonga, W.G. (2018). Anatomy of the small & medium enterprises (SMEs) critical success factors (CSFs) in Zimbabwe: Introducing the 3E model. Dynamic Research Journals' Journal of Business & Management (DRJ-JBM), 1(2), 01-18.

Obafemi, T. O., Araoye, F. E., & Ajayi, E. O. (2021). Impact of tax incentives on the growth of small and medium scale enterprises in Kwara state. International Journal of Multidisciplinary Research and Growth Evaluation, 2(3), 11-19.

Obasan, K. A., Shobayo, P.B. and Amaghionyeodiwe, A. L. (2016). Ownership structure and the performance of small and medium enterprises in Nigeria. International Journal of Research in Social Sciences, 6(9), 474-492.

Ogundana, O., Okere, W., Ayomoto, O., Adesanmi, D., Ibidunni, S., & Ogunleye, O. (2017). ICT and accounting system of SMEs in Nigeria. Management Science Letters, 7(1), 1-8.

Ortiz-Avram, D., Domnanovich, J., Kronenberg, C. and Scholz, M. (2018). Exploring the integration of corporate social responsibility into the strategies of small-and medium-sized enterprises: A systematic literature review. Journal of Cleaner Production, 201, 254-271.

Peillon, S., Dubruc, N. and Mansour, M. (2018). Service and customer orientation of corporate culture in a French manufacturing SME. Procedia CIRP, 73, 91-95.

Philip, M. (2010). Factors affecting business success of small & medium enterprises (SMEs). Asia Pacific Journal of Research in Business Management, 1(2), 1-15.

Pilar, P. G., Marta, A. P., & Antonio, A. (2018). Profit efficiency and its determinants in small and medium-sized enterprises in Spain. BRQ Business Research Quarterly, 21(4), 238-250.

Qalati, S.A., Yuan, L.W., Khan, M.A.S. and Anwar, F. (2021). A mediated model on the adoption of social media and SMEs’ performance in developing countries. Technology in Society, 64, p. 101513.

Qazi, T. F. Niazi, A. A. K. Basit, A. Rehman, A. and Nazir, A. (2019). The Jostle of Workplace Pressures on Credit Managers: Interpretive Structural Modeling to Underpin the Severity. Bulletin of Business and Economics, 8(3), 155-163.

Quartey, P., Turkson, E., Abor, J. Y., & Iddrisu, A. M. (2017). Financing the growth of SMEs in Africa: What are the constraints to SME financing within ECOWAS?. Review of Development Finance, 7(1), 18-28.

Rajalo, S. and Vadi, M. (2021). Collaboration potential between low-capacity SMEs and academic researchers determined by symmetry of motivation. Technovation, 107, 102304.

Rana, N. P., Barnard, D. J., Baabdullah, A. M., Rees, D. and Roderick, S. (2019). Exploring barriers of m-commerce adoption in SMEs in the UK: Developing a framework using ISM. International Journal of Information Management, 44, 141-153.

Roomi, M. A., Harrison, P. and Beaumont‐Kerridge, J. (2009). Women‐owned small and medium enterprises in England: Analysis of factors influencing the growth process. Journal of Small Business and Enterprise Development.

Rossi, M. (2014). Capital structure of small and medium enterprises: The Italian case. International Journal of Globalisation and Small Business, 6(2), 130-144.

Sarvari, H., Chan, D.W., Alaeos, A.K.F., Olawumi, T.O. and Aldaud, A.A.A. (2021). Critical success factors for managing construction small and medium-sized enterprises in developing countries of Middle East: Evidence from Iranian construction enterprises. Journal of Building Engineering, 43, 103152.

Shaukat, M. Z., Niazi, A. A. K., Qazi, T. F., & Basit, A. (2021a). Analyzing the Underlying Structure of Online Teaching during the COVID-19 Pandemic Period: An Empirical Investigation of Issues of Students. Frontiers in Psychology, 12.

Shaukat, M. Z., Scholz, M., Fiaz Qazi, D., Khan Niazi, A. A., Basit, A., & Mahmood, A. (2021b). Analyzing the Stressors for Frontline Soldiers Fighting against COVID-19 Pandemic. Frontiers in Psychology, 4904.

Shaukat, M. Z., Scholz, M., Qazi, T. F., Niazi, A. A. K., Basit, A. and Mahmood, A. (2021). Analyzing the Stressors for Frontline Soldiers Fighting Against Coronavirus Disease 2019 Pandemic. Frontiers in Psychology, 12, 751882.

Sije, A. and Oloko, M. (2013). Penetration pricing strategy and performance of small and medium enterprises in Kenya. European Journal of Business and Social Sciences, 2(9), 114-123.

Strasser, A. and Vaux, D.L. (2018). Viewing BCL2 and cell death control from an evolutionary perspective. Cell Death & Differentiation, 25(1), 13-20.

Sushil, A. (2017). Modified ISM/TISM process with simultaneous transitivity checks for reduced direct pair comparisons. Global Journal of Flexible Systems Management, 18(4), 331-351.

Thamsatitdej, P., Boon-itt, S., Samaranayake, P., Wannakarn, M. and Laosirihongthong, T. (2017). Eco-design practices towards sustainable supply chain management: interpretive structural modelling (ISM) approach. International Journal of Sustainable Engineering, 10(6), 326-337.

Toke, L. K. and Kalpande, S. D. (2020). Total quality management in small and medium enterprises: An overview in Indian context. Quality Management Journal, 27(3), 159-175.

Turkyilmaz, A., Dikhanbayeva, D., Suleiman, Z., Shaikholla, S. and Shehab, E. (2021). Industry 4.0: Challenges and opportunities for Kazakhstan SMEs. Procedia CIRP, 96, 213-218.

Valmohammadi, C. and Dashti, S. (2016). Using interpretive structural modeling and fuzzy analytical process to identify and prioritize the interactive barriers of e-commerce implementation. Information & Management, 53(2), 157-168.

Van Huong, V. and Cuong, L. K. (2019). Does government support promote SME tax payments? New evidence from Vietnam. Finance Research Letters, 31.

Viswanathan, R. and Telukdarie, A. (2021). A systems dynamics approach to SME digitalization. Procedia Computer Science, 180, 816-824.

Warfield, J. N. (1974). Developing interconnection matrices in structural modeling. IEEE Transactions on Systems, Man, and Cybernetics, 1, 81-87.







How to Cite

Farid, H. ., Qazi, T. F. ., Basit, A. ., & Niazi, A. A. K. . (2023). Expounding the Environment of Small and Medium Enterprises (SMEs): A Qualitative Study Conducted in Pakistan. Bulletin of Business and Economics (BBE), 12(4), 321-334. https://doi.org/10.61506/

Similar Articles

1-10 of 252

You may also start an advanced similarity search for this article.

Most read articles by the same author(s)