Determinants of small business Performance in Punjab Pakistan: A Pilot Study

Muzaffar Hussain Shah, Abdul Rahim bin Othman, Mohd Najib bin Mansor


The main purpose of this study is to examine and explore quantitatively a small sample of data on the factors of small business performance in Punjab, Pakistan. The current research employed a self-administrative questionnaire approach to collect 29 usable questionnaires from small firms in Punjab, Pakistan, stratified random sampling method was used to collection data. In the current study the proposed model consists of five elements that are used as a determinants of small firm performance in Punjab, Pakistan. However, expert’s opinion and comments were requested to ascertain the language and structure of the instrument to evaluate the measurement model and the assessment of the model quality, internal consistency reliability, convergent validity and discriminant validity of the instruments. Based on the feedback of experts, final changes were made and also data of small sample was analyzed using Smart-PLS. Results of the pilot test confirmed that there is no issue of reliability and validity of the instruments adapted in the pilot study.


Small business, Firm performance, Pilot test, Pakistan

Full Text:



Afraz, N., Hussain, S. T., & Khan, U. (2014). Barriers to Growth of Small Firms in Pakistan: A Qualitative Assessment of Selected Light Engineering Industries. The Lahore Journal of Economics, 19, 135–176.

Afza, T., Osman, M. H. B. M., & Rashid, M. A. (2010). Enterprising behavior of enterprise-less rural women entrepreneurs of Khyber Pukhtan Khawa of Pakistan. European Journal of Social Sciences, 18(1), 109-119.

Ahmad, Z., Abdullah, N. M. H., & Roslan, S. (2012). Capital structure effect on firm’s performance: Focusing on consumers and industrials sectors on Malaysian firms. International Review of Business Research Papers, 8(5), 137–155.

Alguezaui, S., & Filieri, R. (2010). Investigating the role of social capital in innovation: sparse versus dense network. Journal of knowledge management,14(6), 891-909.

Anderson, A. R., Harbi, S. E., & Amamou, M. (2012). Innovation culture and the economic performance of Tunisian ICT firms. International Journal of Entrepreneurship and Innovation Management, 16(3), 191-208.

Atalay, M., Anafarta, N., & Sarvan, F. (2013). The relationship between innovation and firm performance: An empirical evidence from Turkish automotive supplier industry. Procedia-Social and Behavioral Sciences, 75, 226-235.

Augustine, B., Bhasi, M., & Madhu, G. (2012). Linking SME performance with the use of forecasting planning and control: Empirical findings from Indian firms. European Journal of Scientific Research, 73(1), 86–105.

Avci, U., Madanoglu, M., & Okumus, F. (2011). Strategic orientation and performance of tourism firms: Evidence from a developing country. Tourism Management, 32(1), 147-157.

Baderman, B. A. (2009). The female entrepreneur: An exploration of mentoring and perceived general self-efficacy (Doctoral dissertation, Capella University).

Black, S. E., & Porter, L. J. (1996). Identification of the critical factors of TQM. Decision Sciences, 27(1), 1-21.

Cavana, R. Y., Dalahaye, B., & Sekaran, U. (2001). Applied Research: Qualitative and quantitative methods. Australia: John Wiley and Sons.

Chen, A., Doherty, N., & Vinnicombe, S. (2012). The perceived value of networking through an EMBA: a study of Taiwanese women. Career Development International, 17(7), 646-662.

Cooper, D. R., & Schindler, P. S. (2003). Business research methods (8th ed.). Boston: MA: McGrraw Hill.

Coy, S. P., Shipley, M. F., Omer, K., & Khan, R. N. (2007). Factors contributory to success: A study of Pakistan's small business owners. Journal of Developmental Entrepreneurship, 2(2), 181-198.

Damanpour, F. (2010). An integration of research findings of effects of firm size and market competition on product and process innovations. British Journal of Management, 21(4), 996-1010.

Daud, S., & Yusoff, W. (2010). Knowledge management and firm performance in SMEs: the role of social capital as a mediating variable. Asian Academy of Management Journal, 15(2), 135-155.

Demirbag, M., Koh, S. C. L., Tatoglu, E., & Zaim, S. (2006). TQM and market orientation’s impact on SMEs’ performance. Industrial Management & Data System, 106(8), 1206-1228.

Didonet, S., Simmons, G., Díaz-Villavicencio, G., & Palmer, M. (2012). The relationship between small business market orientation and environmental uncertainty. Marketing Intelligence & Planning, 30(7), 757-779.

Didonet, S., Simmons, G., Díaz-Villavicencio, G., & Palmer, M. (2012). The relationship between small business market orientation and environmental uncertainty. Marketing Intelligence & Planning, 30(7), 757-779.

Doole, I., & Lowe, R. (2012). International marketing strategy. Cengage Learning.

Dougherty, T. W., Turban, D. B., & Haggard, D. L. (2007). Naturally occurring mentoring relationships involving workplace employees. The Blackwell handbook of mentoring: A multiple perspective approach, 139-158.

Ettlie, J. E., & Reza, E. M. (1992). Organizational integration and process innovation. Academy of Management Journal, 35(4), 795-827.

Eugenia, I. N. (2010). Quality improvement in a Global competitive market place success story from Nigeria. International Journal of Business and Management, 5(1), 211-218.

Flynn, B., Schroeder, R., & Sakakibara, S. (1994). Aframework for quality management research and an associated measurement instrument. Journal of Operations Management, 11, 339-366.

Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with unobservable variables and measurement error. Journal of Marketing Research 18, 39-50.

Galia, F., & Legros, D. (2004). Complementarities between obstacles to innovation: evidence from France. Research policy, 33(8), 1185-1199.

Gallego, J., Rubalcaba, L., & Hipp, C. (2013). Organizational innovation in small European firms: A multidimensional approach. International Small Business Journal, 31(5), 563-579.

Gallego-Álvarez, I., Manuel Prado-Lorenzo, J., & García-Sánchez, I. M. (2011). Corporate social responsibility and innovation: a resource-based theory. Management Decision, 49(10), 1709-1727.

Garvey, B., & Garrett-Harris, R. (2008). The Benefits of Mentoring: A literature review for East Mentor’s Forum. Sheffield: Sheffield Hallam University.

Gaur, A. S., Mukherjee, D., Gaur, S. S., & Schmid, F. (2011). Environmental and Firm Level Influences on Inter‐Organizational Trust and SME Performance. Journal of Management Studies, 48(8), 1752-1781.

Geladi, P., & Kowalski, B. (1986). Partial least-squares regression: A tutorial. Analytica Chimica Acta, 185, 1-17.

Habaradas, R. B. (2008). SME development and technology upgrading in Malaysia: lessons for the Philippines. Journal of International Business Research, 7(1), 89- 116.

Hair, J., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Uppersaddle River, New Jersey: Pearson Education International.

Hair, J., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Uppersaddle River, New Jersey: Pearson Education International.

Hankin, J. N. (1996). The gains working women have made: We are still measuring the difference. Vital Speeches of the Day, 63(4), 113.

Hill, R. C., & Levenhagen, M. (1995). Metaphors and mental models: Sensemaking and sensegiving in innovative and entrepreneurial activities. Journal of Management, 21(6), 1057-1074.

Hung, K. P., & Chou, C. (2013). The impact of open innovation on firm performance: The moderating effects of internal R&D and environmental turbulence. Technovation, 33(10), 368-380.

Husain, I. (2005). SME Financing Issues and Strategies. In Welcome Address at the

conference on SME Financing Issues and Strategies held in Lahore.

Iqbal, M., Zaman, Q., Atif, M., & Akhtar, N. (2013). Determination of Main Causes of Unemployment among the Educated People: An Odds Ratio Analysis. PUTAJ Humanities and Social Sciences, 20.

Islam, M. A., Khan, M. A., Obaidullah, A. Z. M., & Alam, M. S. (2011). Effect of entrepreneur and firm characteristics on the business success of small and medium enterprises (SMEs) in Bangladesh. International Journal of Business and Management, 6(3), 289-299.

Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation, organizational learning, and performance. Journal of business research, 64(4), 408-417.

Kahle-Piasecki, L. (2011). Making a mentoring relationship work: what is required for organizational success. Journal of Applied Business and Economics, 12(1), 46-56.

Kanazawa, S., & Savage, J. (2009). Why nobody seems to know what exactly social capital is. Journal of Social, Evolutionary, and Cultural Psychology, 3(2), 118.

Kennan, W. R., & Hazleton, V. (2006). Internal public relations, social capital, and the role of effective organizational communication. Public relations theory II, 311-338.

Khalique, M., Isa, A. H. M., & Shaari, J. A. N. (2011). Challenges for Pakistani SMEs in a knowledge-based economy. Indus Journal of Management & Social

Sciences, 5(2), 74-80.

Khawaja, S. (2006). Unleashing the potential of the SME sector with a focus on productivity improvements. In Pakistan Development Forum. Retrieved on 10- 12-2011.

Kotelnikov, V. (2016, January 01). SMEs in Asia and the Pacific - small- and medium-sized enterprises in the Asia-Pacific region, definitions, role, social entrepreneurship. Retrieved July 02, 2016, from

Kreiser, P. M., Marino, L. D., Kuratko, D. F., & Weaver, K. M. (2013). Disaggregating entrepreneurial orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME performance. Small Business Economics, 40(2), 273-291.

Kurnia, S., Alzougool, B. Ali, M., & Alhashmi, S. (2009). Adoption of Electronic Commerce Technology by SMEs in Malaysia. Proceeding of the 42nd Hawaii International Conference on System Sciences. Waikoloa, Big Island, Hawaii.

Lan, Q., & Wu, S. (2010). An empirical study of entrepreneurial orientation and degree of internationalization of small and medium-sized Chinese manufacturing enterprises. Journal of Chinese Entrepreneurship, 2(1), 53-75.

Le, N. T., & Nguyen, T. V. (2009). The Impact of Networking on Bank Financing: The Case of Small and Medium‐Sized Enterprises in Vietnam. Entrepreneurship Theory and Practice, 33(4), 867-887.

LEED Unit (2006) ‘Mentoring for Business in Wales: Learning from Good Practice.’ Cardiff: Cardiff Business School for Welsh Assembly Government.

Leitao, J., & Franco, M. (2008). Individual entrepreneurship capacity and performance of SMEs (No. 8179). Munich Personal RePEc Archive Individual (pp. 1–13). Portugal. Retrieved from

Leonidou, L. C., & Samiee, S. (2012). Born global or simply rapidly internationalizing? Review, critique, and future prospects. M. Gabrielsson and VHM Kirpalani, eds, 16-35.

Liedholm, C., Mead, D. (1987). Small scale industries in developing countries:

Empirical evidence and policy implications. International Development Paper No. 9. US Department of Agricultural Economics, Michigan State University, East Lansing, MI, USA

Lo, M. C., Ramayah, T., & Kui, L. C. (2013). Mentoring and job satisfaction in Malaysia: a test on small medium enterprises in Malaysia. Tarptautinis psichologijos žurnalas: Biopsichosocialinis požiūris, (13), 69-90.

Mohammad, A. N., Idris, W. M. S., & Moh'd AL-Ferokh, F. A. (2014). An Empirical Study of the Moderator Effect of Entrepreneurial Orientation on the Relationship between Environmental Turbulence and Innovation Performance in Five-star Hotels in Jordan. International Journal of Business Administration, 5(2), p111.

Mohd, K. H. (2005). Small and Medium-Sized enterprises in Malaysia-Role in Issues. Sintok: UUM Press

Moullin, M. (2007). Performance measurement definitions: Linking performance measurement and organisational excellence. International Journal of Health Care Quality Assurance, 20(3), 181–183.

Muchau, R. N. (2013). The effect of mentorship program on business performance amongst Micro, Small and Medium Enterprises (MSME) in Nairobi County (Doctoral dissertation, University of Nairobi).

Mustafa, I., & Khan, F. M. (2005). Small and medium enterprises in Pakistan. South

Asian Journal, 9(3), 1-16.

Naranjo-Valencia, J. C., Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation or imitation? The role of organizational culture. Management Decision, 49(1), 55-72.

Naudé, P., Zaefarian, G., Tavani, Z. N., Neghabi, S., & Zaefarian, R. (2014). The influence of network effects on SME performance. Industrial Marketing Management, 43(4), 630-641.

Ndubisi, N. O., & Iftikhar, K. (2012). Relationship between entrepreneurship, innovation and performance: Comparing small and medium-size enterprises. Journal of Research in Marketing & Entrepreneurship, 14(2), 214- 236.

Neely, A., Gregory, M., & Platts, K. (1995). Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, 15(4), 80–116.

Neuman, W. L. (1997). Social research methods. Qualitative and quantitative approaches (3rd ed.). MA: Allyn & Bacon.

Ngamkroeckjoti, C., Speece, M., & Dimmitt, N. J. (2005). Environmental scanning in Thai food SMEs: the impact of technology strategy and technology turbulence. British Food Journal, 107(5), 285-305.

Noe, R. A. (1988). An investigation of the determinants of successful assigned mentoring relationships. Personnel psychology, 41(3), 457-479.

Núñez-Cacho Utrilla, P., & Grande Torraleja, F. Á. (2013). The importance of mentoring and coaching for family businesses. Journal of Management & Organization, 19(04), 386-404.

Nunnally, J. C. (1978). Psychmetric Theory (2nd ed.). New York: McGraw Hill.

Onwuegbuzie, A. J., & Daniel, L. G. (2003). Typology of analytical and interpretational errors in quantitative and qualitative educational research. Current Issues in Education, 6(2), 1-29.

Oparanma, A. O., Hamilton, D. I., & Jaja, S. A. (2009). Strategies for managing hospitality in a turbulent environment: Nigerian experience. International Journal of Management & Innovation, 1(1)

Parnell, J. A., O'Regan, N., & Ghobadian, A. (2006). Measuring performance in competitive strategy research. International Journal of Management and Decision Making, 7(4), 408-417.

Parra-Requena, G., José Ruiz-Ortega, M., & Manuel García-Villaverde, P. (2011). Towards pioneering through capabilities in dense and cohesive social networks. Journal of Business & Industrial Marketing, 27(1), 41-56.

Peel, D. (2008). What factors affect coaching and mentoring in Small and Medium Sized Enterprises. International Journal of Evidence Based Coaching and Mentoring, 6(2), 1-18.

Peterson, R. A., & Kim, Y. (2013). On the relationship between coefficient alpha and composite reliability. Journal of Applied Psychology, 98, 194-198. doi: 10.1037/a0030767.

Pett, T. L., & Wolff, J. A. (2011). Examining SME performance: the role of innovation, R&D and internationalisation. International Journal of Entrepreneurial Venturing, 3(3), 301-314.

Portes, A. (2000). Social capital: Its origins and applications in modern sociology. LESSER, Eric L. Knowledge and Social Capital. Boston: Butterworth-Heinemann, 43-67.

Pratono, A. H., & Mahmood, R. (2014). Social Capital and Firm Performance: Moderating Effect of Environmental Turbulence. Asian Social Science, 10(19), p59.

Pratono, A. H., & Mahmood, R. (2014). The Moderating Effect of Environmental Turbulence in the Relationship between Entrepreneurial Management and Firm Performance.

Pratono, A. H., Wee, T. C., Syahchari, D. H., Nugraha, A. T., Mat, N. K. N., & Fitri, H. (2013). The Direct Effect of Entrepreneurial Orientation and Innovation Success on Firm Performance. American Journal of Economics, 3(1), 1-6.

Punjab Bureau of Statistics (2011-12).

Rehfeld, K. M., Rennings, K., & Ziegler, A. (2007). Integrated product policy and environmental product innovations: An empirical analysis. Ecological Economics, 61(1), 91-100.

Ringle, C. M., Wende, S., & Will, A. (2005). SmartPLS 2.0. Retrieved May 23, 2012 from

Robson, C. (2002). Real world research (Vol. 2). Oxford: Blackwell publishers.

Rody, R. C., & Stearns, T. M. (2013). Impact of Entrepreneurial Style and Managerial Characteristics on SME Performance in Macao SAR, China. Journal of Multidisciplinary Research, 5(1), 27-44.

Rosenbusch, N., Brinckmann, J., & Bausch, A. (2011). Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs.Journal of Business Venturing, 26(4), 441-457.

Rouziès, D., & Hulland, J. (2014). Does marketing and sales integration always pay off? Evidence from a social capital perspective. Journal of the Academy of Marketing Science, 42(5), 511-527.

Schmitz, H. (1995). Collective efficiency: Growth path for small‐scale industry. The Journal of Development Studies, 31(4), 529-566.

Sekaran, U. & Bougie, R. (2010). Research methods for business. A sill building approach (5th ed.) John Willey: UK.

Sekaran, U. (2003). Research methods for business: A skill building approach (4th ed.). New York: John Wiley & Sons, Inc

Slotte‐Kock, S., & Coviello, N. (2010). Entrepreneurship research on network processes: A review and ways forward. Entrepreneurship Theory and Practice,34(1), 31-57.

Slotte‐Kock, S., & Coviello, N. (2010). Entrepreneurship research on network processes: A review and ways forward. Entrepreneurship Theory and Practice,34(1), 31-57.

SMEDA policy. (2007).

SMEDAN. (2012). Survey report on Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. Abuja: Small and Medium Enterprises Development Agency of Nigeria.

Sok, P., O’Cass, A., & Sok, K. M. (2013). Achieving superior SME performance: Overarching role of marketing, innovation, and learning capabilities. Australasian Marketing Journal (AMJ), 21(3), 161-167.

Soomro, R. H., & Aziz, F. (2015). Determinig the size of thresholds of Small and Medium Enterprises definition. International Journal of Management, IT and Engineering, 5(1), 63-71.

Stam, W., Arzlanian, S., & Elfring, T. (2014). Social capital of entrepreneurs and small firm performance: A meta-analysis of contextual and methodological moderators. Journal of Business Venturing, 29(1), 152-173.

Subhan, Q. A., Mehmood, M. R., & Sattar, A. (2013, January). Innovation in Small and Medium Enterprises (SME’s) and its impact on Economic Development in Pakistan. In Paper was presented in 6th International Business and Social Sciences Research Conference, 3-4.

Terziovski, M. (2010). Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: a resource‐based view. Strategic Management Journal, 31(8), 892-902.

Tsai, K. H., & Yang, S. Y. (2014). The contingent value of firm innovativeness for business performance under environmental turbulence. International Entrepreneurship and Management Journal, 10(2), 343-366.

Wang, C. H., Chen, K. Y., & Chen, S. C. (2012). Total quality management, market orientation and hotel performance: The moderating effects of external environmental factors. International Journal of Hospitality Management, 31(1), 119-129.

Wang, M. C., & Fang, S. C. (2012). The moderating effect of environmental uncertainty on the relationship between network structures and the innovative performance of a new venture. Journal of Business & Industrial Marketing, 27(4), 311-323.

Wang, Z., & Wang, N. (2012). Knowledge sharing, innovation and firm performance. Expert systems with applications, 39(10), 8899-8908.

Watson, J. (2007). Modeling the relationship between networking and firm performance. Journal of Business Venturing, 22(6), 852-874.

Weinzimmer, L., Robin, J., & Michel, E. (2012). The measurement of strategic orientation and its efficacy in predicting financial performance. Journal of Business Strategies, 29(2), 81–98.

Wold, H. (1974). Causal flows with latent variables: Partings of the ways in the light of NIPALS modelling. European Economic Review, 5(1), 67-86. doi:

Wold, H. (1985). Partial least squares. In S. Kotz & N. L. Johnson (Eds.), Encyclopedia of Statistical Sciences (Vol. 6, pp. 581–591). New York: Wiley.

World Bank. (2013). The little data book on private sector development. World Bank.

Xavier, S. R., Kelley, D., Kew, J., Herrington, M., & Vorderwülbecke, A. (2013). Global Entrepreneurship Monitor GEM 2012 Global report (pp. 1–87). Massachusetts.

Zhang, J., & Duan, Y. (2010). The impact of different types of market orientation on product innovation performance: evidence from Chinese manufacturers. Management Decision, 48(6), 849-867.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.