The Impact Of Entrepreneurial Characteristics On Sme Performance

2446 words - 10 pages

The Impact of Entrepreneurial Characteristics on
SME Performance

The Small and Medium Enterprises (SME) plays a very important role in the success & development of any economy. According to the SME policy 2007, “SME sector is the backbone of Pakistan’s Economy”. Globally, this sector is the major growing force behind the fastest growing economy of China, in term of contribution to the national GDP, scale of assets, diversification of products and the creation of employment. Similarly, the role of SME is well acknowledged in the other countries such as Japan, Korea, and all other industrialized economies in terms of economic development (Hand Book on Islamic SME Financing Islamic Banking Department, State Bank of Pakistan, 2009).
There are some hidden and apparent obstacles in the path of growth of small and medium enterprises in Pakistan as pointed out in the SME Policy development-2007; the poor national performance on the Human Development Index of the UN has its consequences for SMEs in Pakistan. These include inadequate and generic education and insufficient, poorly focused and under-serving training infrastructure. SME's mostly draw their human resource (including the owners) from either the higher education institutions or the technical training infrastructure, both of which are not attuned to the SME needs nor are they equipped to address them. This situation limits the capacity and ability of SME's to innovate, The SME sector neither possesses the financial strength nor the collective wisdom to climb its way out of this low equilibrium enterprise activity. In addition to these factors, according to the Hand Book on Islamic SME Financing (2007), “political instability, law and order situation, financial constraints, energy crisis, taxation problems, labor issues, lack of coordination and regular information exchange mechanism among institutions are contributing adversely to all the efforts done for the SME’s development”. Shabbir Kashif , President of the Rawalpindi Chamber of Commerce and Industry, (2009, Nov) pointed the approach of the new entrants in the business and as a big cause of their failure, “People come to us with a mindset that they have that such amount of money and they are going to invest in that business. But the point is that prior to Investment they do not think about the future of that Business in next few years, what would be the market demand in future? Instead, they imitate the current trends and current demands of the market, which lead them to the failure”.
In these types of problems and uncertain situations, the entrepreneurs can do allot for the development and success of the SME’s. According to Thompson, L (2004), in today’s world of change and uncertainty we need the talent of entrepreneurs more than ever, we need them to start new businesses, we need them to champion the change agenda in establish corporation and the public sector. Simpsin , M., Tuck, N. & Bellany, S (2004), argued, Entrepreneurs or...

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