Research Methods for Business

Research on
The role of SMEs in Pakistan
Table of Content
S # Contents Page #
01 Research Proposal
02 Observation & Broad Problem Area 01
03 Preliminary ata Collection 03
0! Problem efinition 0"
0# Theoretical $rame %or& evelopment
Relationship Of Dependent And Independent 0'
Relation Ship Of Intervening Variable With
The Dependent And Independent Variables
11
Relation Ship Of Moderating Variable With
The Dependent And Independent Variables
12
Variables Model 13
0( )ypotheses 1!
0* +lements Of Research esi,n 1#
0"
Relationship Of -ndependent .ariables And -ts +lements
1(
0' ata Collection /ethod 1"
10 0amplin, 1'
11 -ntervie1in, 23estions 20
12 Concl3sion 2#
13 Recommendations 2(
1! Articles
1
Research Methods for Business
1# Appendi4es
1( Biblio,raphy
2
A
All praise to Almight A!!A"# the most mer$if%l
and $ompassionate# &ho enabled %s to $omplete this
Pro'e$t(
We e)press o%r gratit%de to o%r *ind $o%rse
$oordinator Mr( +aisal A,eem Mali*# &ho *ept o%r
moral high b his s%ggestions and appre$iation( "e
&as available to %s &henever and for &hatever &e
$ons%lted him( Witho%t his pre$io%s g%idan$e and
help &e $o%ld never be able to $omplete this tas*(
We than*f%l to all intervie&ers &ho $ooperate &ith
%s and provide best possible information(
And at last b%t not the least# &e &o%ld li*e to
a$*no&ledge the s%pport of o%r famil members( We
&o%ld li*e to admit that &e o&e all o%r
a$hievements to o%r tr%l# sin$ere and most loving
famil members &ho mean the most to %s# and &hose
praers are so%r$e of determination for %s(
CKHNOWLEDGEMENT
Research Methods for Business
Research Proposal
/ana,ement 23estion
Management &o%ld li*e to investigate#
-What is the role of SM.s in Pa*istan/0
Reasons of selectin, research desi,n5
We have made this tpe of resear$h proposal be$a%se it s%its
a lot to o%r problem( SM.s $an onl be determined thro%gh
onl this tpe of resear$h proposal( We have resear$h
1%estions for &hi$h &e &ill dire$tl intera$t &ith loal
$%stomers and able to identif $ompetitor position in
mar*et( Data $olle$tion helps %s in determining SM.s2 image(
We &ill appl statisti$al tools for a$1%iring desired
res%lts( Professional report &ill be prepared( "pothesis
tells %s either o%r resear$h fr%itf%l# $ompletion its
ob'e$tives or it fails(
)ypothesis
Access to finance for 0/+s capacity development and
enchasin, their contrib3tion in economy6
3
Research Methods for Business
Research Proposal for 0/+s
Research P3rpose
The p%rpose of the st%d is to anal,e SM.s
$ontrib%tion in o%r .$onom( Spe$iall
resear$h ob'e$tives are to#
To have thoro%gh analsis of &or*ing of SM.s
in Pa*istan
"o& SM.s are attra$tive/
Role of SM.s in emploment generation
What is the role of finan$e in development
of SM.s/
Research esi,n
The s%rve &ill be $ond%$ted b intervie&# to
a total of 34 536 different small 7 medi%m
enterprise o&ners in Wah Cantt(
Se$ondar data is available on Web# maga,ines#
'o%rnals and &e $an have telephoni$ s%rve
also(
The 1%estions $overs &ide range of iss%es
in$l%ding
Image of the SM.s &ill $learl be peep after
the resear$h
Research
23estions
In this se$tion &e have intervie& 1%estions
&hi$h &ill s%pport o%r resear$h(
8%estions $an be open ended or $lose ended(
0ample 0election
34 5 36 o&ners &ill sele$t from Wah Cantt(
This tpe of te$hni1%e is ver m%$h s%$$essf%l
in s%$h tpe of s%rves(
4
Research Methods for Business
ata Collection Data &ill be $olle$ted to eval%ate intervie&s(
Pro7ect Report
A &ritten report &ill be s%bmitted and an oral
presentation of the findings $an be made in
le$t%re hall(
Pro7ect Cost &
0ched3le
Pro'e$t &ill be $ompleted &ith in a period of
9 &ee*s from the time of s%bmission of
proposal( Pro'e$t S%bmission date is :an%ar
46# ;44<( The $ost of the pro'e$t estimated to
be Rs( =444# in$l%ding the fare of b%ses and
other a$tivities generated d%e to this
pro'e$t(
5
Research Methods for Business
6
R
TO 89+R0TA9 T)AT
W"O AR. T". SM.s/
W"AT AR. T".IR >AS.S O+ D.+I?ATIO?/
W"AT IS T".IR CO?TRI>@TIO? I? T". .CO?OMA BROWT"/
W"AT !.V.! O+ .MP!OAM.?T T".A AR. PROVIDI?B/
W"AT AR. T".IR PRO>!.MS/
W"AT IS T".IR MA:OR PRO>!.M/
W"AT AR. T". CA@S.S O+ MA:OR PRO>!.M/
"OW W. CA? .!.MI?AT. T"AT PRO>!.M/
esearch Objectives
Research Methods for Business
1: OB0+R.AT-O9 & BROA PROB;+/ AR+A
7
O
Pa*istanCs e$onom is an e$onom of SM.( Poli$ies in
the past have given a general perspe$tive# dire$tion
and defining broad parameters of a$tivit &ithin the
ma$roe$onomi$ frame&or*# b%t efforts have fo$%sed on
the large enterprises# negle$ting SM. &hi$h are at the
heart of o%r e$onom(
O%r SM. s%ffer from a variet of &ea*nesses &hi$h have
$onstrained their abilit to ad'%st to the e$onomi$
liberali,ation meas%res introd%$ed and to ta*e f%ll
advantage of rapidl e)panding mar*ets of the &orld(
>%t SM. importan$e and $ontrib%tion in the e$onomi$
a$tivit s%ggests that there is a signifi$ant potential
to enhan$e their gro&th thro%gh appropriate reg%lations
and promotion(
While SM. are being mentioned in some of o%r so$io5
e$onomi$ strategies and poli$ do$%ments# meas%res are
not s%ffi$ientl spe$ified and prioriti,ed for %s to be
able to spea* of an $oherent SM. poli$ or approa$h(
The SM. Se$tor Development Program see*s to improve
this sit%ation b inviting all $on$erned sta*eholders
to draft Pa*istanCs f%t%re SM. poli$(
verview of SME Sector in Pakistan
Research Methods for Business
The present phase of the ind%striali,ation in &hi$h the
large n%mber of ind%stries is gro&ing and the are
$ontrib%ting in the $o%ntries development more as $ompared
to the $o%ntries based on the agri$%lt%ral e$onom be$a%se
the last $ent%r is the $ent%r the $o%ntries &hose e$onom
is based on the ind%stries leave far behind in the ra$e of
the development as $ompared to the agri$%lt%ral based
e$onomies(
There is no single e)ample of an single agri$%lt%ral
e$onom &hi$h is in the list of developed $o%ntries( .ven
&ith the help of ind%striali,ation the developed $o%ntries
are tring to r%le also in the agri$%lt%ral se$tor( >e$a%se
of the e)pertise in the prod%$tion of the agri$%lt%ral
e1%ipment &hi$h is ma*ing them s%perior in the agri$%lt%ral
se$tor prod%$tion(
As Pa*istan is also agri$%lt%re based e$onom &here more
than <4D pop%lation is engaged &ith the prod%$tion of
agri$%lt%ral prod%$ts and agri$%lt%ral se$tor is
$ontrib%ting onl 3ED o ;4D in the e$onom and if &e divide
the ind%strial se$tor in different s%b parts then
agri$%lt%re is the ;
nd
largest se$tor in the e$onom
$ontrib%tion and the 3
st
largest in emploment( As for o%r
$on$ern is onl &ith the $ontrib%tion in the e$onom( This
poor performan$e of the agri$%lt%ral se$tor $an not boost
the Pa*istani e$onom so if &e ta*e the ind%strial se$tor
&hi$h is lifting %p the Pa*istani e$onom it is
$on$entrating %pon the different s%b se$tors li*e Te)tile#
leather# .le$tri$al# S%rgi$al e1%ipment se$tor# sports and
lot of different se$tors( In the $lassifi$ation of the
ind%strial se$tor &e $an not regret the role of Small and
Medi%m .nterprises FSM.sG in the e$onom be$a%se the SM.s
are prevailing in ever se$tor of the e$onom(
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Research Methods for Business
The development of small and medi%m si,e enterprises in
Pa*istan means elevation of the povert in Pa*istan be$a%se
promotion of the SM.s in$reases the n%mber of 'ob( SM.s in
the Pa*istan are providing the 78% jobs to those persons &ho
are not emploed &ith the agri$%lt%ral se$tor( The SM.s are
$ontrib%ting the 30% to the GDP of the Pa*istan and it2s
aro%nd the Rs.140 billion( This $ontrib%tion of the SM.s in
the e$onom development is onl &ith o%t the development of
the SM.s poli$ and still the SM.s dont have the status of
the S!s se"to#.
So if &e &ant to boost the Pa*istani e$onom then it is
important to en$o%rage the SM.s and also eliminate the
h%rdles from the gro&th of the SM.s( Those h%rdles ma be
finan$ial# *no&ledge based# $ooperation# and te$hnolog et$(
There are t&o nat%re of problems first $%rrentl
e)isting and se$ond sit%ation re1%iring improvement( In
o%r $ase it is the problem e)isting in the present
s$enario(
Problem $%rrentl in the SM.s se$tor is# the have la$*
of finan$e that2s &h the don2t gro& and as &ell
e)port
There is need to solve the problem# be$a%se if this
problem &o%ld be solved so there are other related
problem &o%ld be solved
2: PR+;-/-9AR< ATA CO;;+CT-O9
9
Research Methods for Business
-ntrod3ction
The development of small and medi%m si,e enterprises in
Pa*istan means elevation of the povert in Pa*istan be$a%se
promotion of the SM.s in$reases the n%mber of 'ob( SM.s in
the Pa*istan are providing the H9D 'obs to those persons &ho
are not emploed &ith the agri$%lt%ral se$tor( The SM.s are
$ontrib%ting the =4D to the BDP of the Pa*istan and it2s
aro%nd the Rs(3E4 billion (The government of Pa*istan is
developing the SM.s poli$ies &hi$h is li*el to be $ompleted
b the :%ne ;446(
Bac& =ro3nd of 0/+s in Pa&istan
Pa*istan has the ver ri$h fertile land and be$a%se of the
fertile land it is an agri$%lt%ral $o%ntr( It means not
that there is no ind%str in Pa*istan# it have different
small# medi%m and large ind%stries( >e$a%se of the fe%dal
and be%ro$rati$ r%le sstems the agri$%lt%ral se$tor
re$eives great attention of the government in the past( The
ind%strial se$tor &as $ompletel ignored even till no& there
in no poli$ for the SM.s( At that time &e don2t have the
e)a$t fig%re of the SM.s and it estimated that at that time
more than ;;4#444 SM.s are &or*ing in Pa*istan(
efinition
The definition of the SM.s varies from $o%ntr to $o%ntr#
and also from the period of one government to another
government# b%t in different pla$es the are defined against
different $riteria2s li*e n%mber of emploees# total
investment# sales# and prod%$tion( In Pa*istan SM.s are
defined against t&o $riteria2s 3G no of emploees and ;G
investment( A small ind%str is that in &hi$h 10$3%
10
Research Methods for Business
emploees are engaged or it have the investment from Rs.&$
&0 'illion( And a medi%ms ind%str is that &hi$h have the
3($)) emploees are engaged or investment from Rs.&0$40
'illion.

0/+s contrib3tion in the economy
SM.s plas vital role in the development of an $o%ntr and
their $ontrib%tion $an be defined in t&o terms( +irst in the
shape of so"iall* Fb generating the 'obsG and the
e"ono'i"all* Fb generating the reven%eG(
In Pa*istan SM.s are defined in t&o terms first in the
hu'an "a+ital shape and in the invest'ent( A small ind%str
is that in &hi$h 345=6 emploees are engaged or it have the
investment from Rs(;5;4 million( And a medi%ms ind%str is
that &hi$h have the =<5II emploees are engaged or
investment from Rs(;45E4 million(
Where the agri$%lt%re and the other se$tor are plaing the
vital role in the development of the $o%ntr# &e $an not
regret the role of SM.s( After the agri$%lt%re it is the
se$ond largest 'ob providing se$tor in the Pa*istan(
SM.s in the Pa*istan are providing the H9D 'obs to those
persons &ho are not emploed &ith the agri$%lt%ral se$tor(
The SM.s are $ontrib%ting the =4D to the BDP of the Pa*istan
and it2s aro%nd the Rs(3E4 billion (The government of
Pa*istan is developing the SM.s poli$ies &hi$h is li*el to
be $ompleted b the :%ne ;446(
SM.s a$$o%nt for bet&een 66 per $ent and 94 per $ent of
total emploment in Western .%rope# :apan and @SA( Their
$ontrib%tion in o%tp%t in :apan is <6 per $ent# Berman E9
per $ent and @SA E6 per $ent( A$$ording to the e$onomi$
s%rve of 3II95II# SM.s &ith a mere ;4 per $ent investment
11
Research Methods for Business
and reso%r$e to less than 34 per $ent of the total formal
$redit generated 94 per $ent of the $o%ntrCs total
emploment(
Vario%s tpes of loans available are small loans for
b%siness and ind%str# small loans for ind%strialists#
lending for small and medi%m ind%stries( If strategi$
planning for development of SM.s is made s%$$essf%lJ middle
$lass entreprene%rs ma pla an effe$tive role in the
e$onomi$ re$over of Pa*istan(
In Pa*istan ad%lt litera$ rate is E9 per $ent and ma'orit
of entreprene%rs operating small b%sinesses and ind%str are
not ed%$ated and as s%$h the hesitate in approa$hing small
and medi%m enterprises development a%thorit and ban*s for
loans( "igh interest rate is the main h%rdle fa$ing SM.s(
Credit ma be offered to s%$h enterprises at s%bsidi,ed
rates# the st%d said( The resear$h report proposes the
setting %p of a Csmall b%siness and $ottage ind%stries >an*C
&ith an a%thori,ed and paid5%p $apital of Rs(One billion to
boost the development of e)isting and developing ne& small
and medi%m enterprises(
The role of Small and Mi$ro .nterprises in 'ob $reation is
&ell *no&n and even in developed $o%ntries over <4D
emploment is in this se$tor( Therefore# in order to develop
this se$tor e)pansion of infrastr%$t%re fa$ilities#
dereg%lation and liberali,ation of e$onom# fis$al and
finan$ial in$entives are to be provided and promotional
a$tivities s%$h as s*ill development# ind%strial estates#
$ommon fa$ilities and mar*eting arrangements have to be
made( The Mi$ro and Small Ind%str is $onsidered as the
Kba$* boneK in the e$onomi$ development of a $o%ntr( It
plas a pivotal role in $ontrib%tion to&ards BDP and 'ob
$reation(
12
Research Methods for Business
SM.s s%$h as their need for less $apital investment per
&or*er than is re1%ired b large enterprises( The ab%ndan$e
of labor and the shortages of $apital and foreign e)$hange
&hi$h are $hara$teristi$s of developing $o%ntries are
$ompatible &ith the SM.s labor5intensive $hara$ter( In
addition# SM.s mobili,e lo$al h%man and material reso%r$es
and %tili,e lo$al ra& materials more effe$tivel than large
enterprises# and address more of the $ons%mption needs of
slo& in$ome people( Their s$ale of prod%$tion is more
appropriate to r%ral areas and small to&nships in developing
$o%ntries(
SM.s improve for&ard and ba$*gro%nd lin*ages among so$ial
and e$onomi$ a$tivities of the e$onom( The promote and
enhan$e foreign e)$hange earnings# and offer &ider
opport%nities to entreprene%rs and to lo& in$ome and
minorit gro%ps( The are fle)ible in prod%$tion# have the
potential as a training gro%nd for managerial s*ills# and
provide ri$h personal relations( Their o&nerships b the
residents of a $omm%nit res%lts in $omm%nit based e$onomi$
de$isions# greater stabilit of emploment and better
$omm%nit development( In the modern da str%$t%ral
ad'%stment# SM.s $onstit%tes a Klabor spongeK(
)o1 ,overnment can improve their performance
!egal and Poli$ +rame&or*
A$$ess to finan$e
Te$hni$al s%pport
Mar*eting s%pport
>ringing the resear$h instit%tions $loser to the SM.s
!in*age &ith the international net&or*
13
Research Methods for Business
Compliances
SM.s present a strong $ase for governmentLdonor in$entives
and s%pport( > $ontrast# large firms# espe$iall in the
te)tile se$tor# are alread &ell into the standards regime
and a&are of the $onse1%en$es of the M+A phase5o%t( The
e)porting firms $ompl %ne1%ivo$all &ith prod%$t standards
be$a%se non5$omplian$e &o%ld mean a dis$ontin%ation of
orders( Pro$ess standards are more of a gra area( An
e)ample of this is ISO 3E#443 $ertifi$ation( Some firms have
se$%red s%$h $ertifi$ation# even tho%gh the do not appear
to be f%ll $ompliant(
;iterat3re s3rvey
We have $ond%$ted literat%re s%rve to narro& do&n o%r
problem# &e have follo&ed follo&ing points
Identif relevant so%r$es F &e have adopted full-text
databaseG
.)tra$t the relevant information from that arti$les
Writing the literat%re revie&
5555555555555555555555555555555
We $on$ise the above data &hi$h is ta*en from the site
named( &&&(smeda(org(p*
14
Research Methods for Business
3: PROB;+/ +$-9AT-O9
,""ess to finan"e fo# S!s "a+a"it* develo+'ent and
en"hasin- thei# "ont#ibution in e"ono'*.
On the basis of different intervie&s and varied literat%re
&e have $ome to *no& that the /01,12! is the ma'or h%rdle in
the gro&th of the SM.s( The $redit &ill enable the SM.s to
a$1%ire the ne& te$hnolog# improve 1%alit of their
prod%$ts( The &ill re5position them thro%gh the ne&
finan$ing fa$ilities that &ill help earn more profit( As
SM.s after Agri$%lt%re# &ere intensive emploment se$tor# so
it &o%ld help mitigate the %nemploment problem and high
profitabilit &ill ma*e them pa more ta)es( All this
e)er$ise &o%ld benefit dire$tl and indire$tl to the health
of the e$onom#0 If the in$ome of the SM.s goes %p# the
gro&th rate and emploment ratio# vis5M5vis e$onom &ill
also be a$$elerated0(
15
Research Methods for Business
!: T)+OR+T-CA; $RA/+ %OR> +.+;OP/+9T
Relationship of ependent and -ndependent
The de+endent va#iable is ,""ess to finan"e &hi$h is the
variable of the primar interest in &hi$h varian$e is
attempted to be e)plained b different inde+endent
va#iables and those are
"igh interest rate over the $redit
!ess n%mber of finan$ial instit%tes
@na$$eptable terms and $onditions of the finan$ial
instit%tes
!a*e of entreprene%rs *no&ledge
The less the interest rates over the $redit the higher the
investment in the enterprises &hi$h leads to the generation
of the emploment in the $o%ntr and also in$rease the
government reven%e in the shape of ta)es(
There are also the less n%mber of $redit providing
instit%tes if &e ta*e the list of ban*s &or*ing in Pa*istan
then &e have lot of ban*s b%t these ban*s are &or*ing onl
in the large $ities li*e Nara$hi# !ahore# +aisalabad#
"derabad# Pesha&ar# 8%etta et$(# and in the tehsil ta)ila
and Wah Cantt there are onl fe& ban*s those are providing
the $redit to the SM.s li*e >an* Alfalah# PICIC $ommer$ial
ban*# "abib ban*(
Some ban*s re1%ire the ver stri$t terms and $onditions for
the entreprene%rs li*e the mortgage of e1%al val%e of
propert# a h%ge list of do$%ments re1%ired and attested
from different a%thorities and also the g%arant of
different persons &ho belong to the ver high $lass( So if
16
Research Methods for Business
an individ%al &ho is &or*ing on the small level and have the
b%ndle of s*ill b%t don2t have h%ge $apital ho& he $an
s%rvive in the mar*et &here there are large giants are
&or*ing and a small or medi%m entreprene%r bring the
se$%rit of different %pper $lass persons(
Some entreprene%rs &ho are r%nning the b%siness in an form
some time the don2t have the *no&ledge ho& to ta*e the loan
or ho& to meet the ban*s $riteria# and some entreprene%rs
also afraid on ta*ing the loan from the ban*s the have
their on '%stifi$ations li*e after the ban*s finan$ing the
ban*s interfere in their b%sinesses and the don2t &ant the
interferen$e of the ban*s or an other in there affairs(
17
Research Methods for Business
Relation 0hip of -ntervenin, .ariable 1ith the
ependent and -ndependent .ariables
18
Access to finance
Access to finance
High interest
rate over the
credit
High interest
rate over the
credit
Less number
of financial
institutes
Less number
of financial
institutes
erms and
conditions of
the financial
institutes
erms and
conditions of
the financial
institutes
!ntre"reneur#s
$no%ledge
!ntre"reneur#s
$no%ledge
Research Methods for Business
It is interesting to *no& that there la*e of $onfiden$e of
the o&ners of small and medi%m enterprises over the
finan$ial instit%tions( If the finan$ial instit%tes b%ild
their $onfiden$e over the entreprene%rs then $an ta*e ris*
of high rate of interest# even if the instit%te is far from
the enterprise# if the terms and $onditions are little bit
stri$t# and even the entreprene%rs have the less ed%$ation
and the ban*ing str%$t%re *no&ledge( All the above mentions
elements $an be eliminate b the good $orporate $%lt%re in
the ban*ing str%$t%re(
Relation 0hip of /oderatin, .ariable 1ith the ependent
and -ndependent .ariables
It is interesting to *no& that if the government and the
finan$ial instit%tions &ant that small and medi%m se$tor gro&
then it is important to b%ild %p the image of the finan$ial
19
Access to finance
Access to finance
High interest
rate over the
credit
High interest
rate over the
credit
Less number
of financial
institutes
Less number
of financial
institutes
erms and
conditions of
the financial
institutes
erms and
conditions of
the financial
institutes
!ntre"reneur#s
$no%ledge
!ntre"reneur#s
$no%ledge
L
a
c
k

o
f

C
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n
f
i
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e
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c
e
L
a
c
k

o
f

C
o
n
f
i
d
e
n
c
e
Intervening Variable
Research Methods for Business
instit%tes in the mind of the entreprene%rs( And this image $an
be in$reased b $reating the a&areness b %sing the different
modes of $omm%ni$ation li*e TV program dis$%ssions# print media
a&areness# seminars in &hi$h entreprene%rs# representatives of
the finan$ial instit%tes# 'o%rnalists and st%dent sho%ld be
invited(
.AR-AB;+0 /O+;
20
Access to finance
Access to finance
High interest
rate over the
credit
High interest
rate over the
credit
Less number
of financial
institutes
Less number
of financial
institutes
erms and
conditions of
the financial
institutes
erms and
conditions of
the financial
institutes
!ntre"reneur#s
$no%ledge
!ntre"reneur#s
$no%ledge
&
r
e
a
t
i
n
g

'
%
a
r
e
n
e
s
s
&
r
e
a
t
i
n
g

'
%
a
r
e
n
e
s
s
Moderating Variable
Research Methods for Business
5555555555555555555555555555555555555555555555555555555
All the above diagram is design a$$ording to the boo* of
resear$h b%t data implemented b o%r o&n efforts and
thin*ing(
#: )<POT)+0+0
21
Access to finance
Access to finance
High interest
rate over the
credit
High interest
rate over the
credit
Less number
of financial
institutes
Less number
of financial
institutes
erms and
conditions of
the financial
institutes
erms and
conditions of
the financial
institutes
!ntre"reneur#s
$no%ledge
!ntre"reneur#s
$no%ledge
&
r
e
a
t
i
n
g

'
%
a
r
e
n
e
s
s
&
r
e
a
t
i
n
g

'
%
a
r
e
n
e
s
s
Moderating Variable
L
a
c
k

o
f

C
o
n
f
i
d
e
n
c
e
L
a
c
k

o
f

C
o
n
f
i
d
e
n
c
e
Intervening Variable
Research Methods for Business
If the eno%gh finan$ial reso%r$es to SM.s then the $an
gro&(
If the SM.s are given the ade1%ate reso%r$es# their
prod%$tivit $an be improved(Fif then statementG
The greater the a$$ess to finan$e# higher the SM.s
prod%$tivit(Fdire$tional hpothesesG

(: +;+/+9T0 O$ R+0+ARC) +0-=9
22
Research Methods for Business
3( ependent variable
A$$ess to finan$e
;( -ndependent variables
"igh interest rate over the $redit
Bovernment as* the finan$ial
instit%tions to provide the $redit to SM.s
&ith lo& interest rates
Bovernment ma*e some other arrangements
!ess n%mber of finan$ial instit%tes
Bovernment as*s ban*s to start more bran$hes
Bovernment iss%e more li$enses to open ne&
finan$ial instit%tions
@na$$eptable terms and $onditions of the finan$ial
instit%tes
Ma*e less stri$t terms and $onditions for SM.s
!a*e of entreprene%rs *no&ledge
Bovernment ma*e some some spe$ial arrangements
regarding the mar*et *no&ledge
Bovernment ma*es some arrangements regarding
SM.s s*ills improvement(
R!3,4051S60P 5/ 01D!P!1D!14 7,R0,83!S ,1D 04S !3!!14S
Criteria
23
Research Methods for Business

Relationship
24
Dimension
Dimension
Element # 0
Element # 0
Element # 0!
Element # 0!
High interest rate over the credit
High interest rate over the credit
Credit "ith lo" mark u#
Credit "ith lo" mark u#
$ome other ste#s b% the government
$ome other ste#s b% the government
&umber of 'inancial Institutions
&umber of 'inancial Institutions
'inancial Institutions start more branches
'inancial Institutions start more branches
(overnment Issue &e" Licenses
(overnment Issue &e" Licenses
!ntre"reneur#s (no%ledge
!ntre"reneur#s (no%ledge
Market kno"ledge
Market kno"ledge
$kill develo#ment
$kill develo#ment
erms and &onditions of the )inancial *nstitutes
erms and &onditions of the )inancial *nstitutes
Make $MEs friendl% #olicies
Make $MEs friendl% #olicies
Research Methods for Business
R+;AT-O90)-P O$ -9+P+9+9T .AR-AB;+0 A9 -T0 +;+/+9T0
25
$MEs ) 'inance
*igh interest rate
over the credit
Credit "ith lo" mark
u#
$ome other ste#s b%
the govt
&umber of financial
institutions
Entre#reneur+s
kno"ledge
,erms and Conditions of the
'inancial Institutes
'inancial institutions start more
branches
(overnment Issue ne"
licenses
Market kno"ledge $kill develo#ment
Make $MEs friendl% #olicies
Research Methods for Business
ATA CO;;+CT-O9 /+T)O
We have $olle$ted both primar and se$ondar data for o%r
resear$h( Se$ondar data $olle$ted for refining 7 narro&
do&ning o%r problem and primar data $olle$ted for o%r
resear$h problem to *no& &hether finan$e is a h%rdle in
gro&th of SM.s(
-ntervie1in,
We have adopted intervie&ing mode for o%r resear$h be$a%se
&e believe b intervie&ing &e $an better able to %nfold the
problem rather 1%estionnaire( O%r intervie&s &ere
str%$t%red( We have list of 1%estions on &hi$h &e have
meas%red man SM.s and find the res%lt same( In intervie& a
person $an ans&er more openl and e)plain the problems#
&hi$h have happened in o%r resear$h(
SM.s o&ners give %s detailed ans&ers abo%t problem and
a$$epted that finan$e is the ma'or problem# SM.s are not
flo%rishing in Pa*istan(
The 23estionin, Techni?3e
The 1%estioning te$hni1%es adopted are
/unnelin- F&e start dis$%ssion &ith %nstr%$t%red
1%estion then &e $ame to str%$t%red 1%estionsG
/a"e to fa"e and tele+honi" inte#vie9s Ffa$e to fa$e
intervie&s &ere more fr%itf%l for %s as $ompared to
telephoni$ intervie&s be$a%se in fa$e to fa$e &e $an
better able to identif the problem b 1%estioning and
gest%re 7 post%resG
4a:in- 1otes Fnotes &ere ta*en over the intervie&s# to
remember the main and s%b points of the intervie&G
26
Research Methods for Business
0A/P;-9=
In o%r $ase &e sele$ted the sample area of Wah Cantt for o%r
resear$h &e have adopted#
Area 0amplin,
In probabilit sampling# area sampling &as the best $ase in
o%r $ase( It a $l%ster sample in a spe$ifi$ area( Advantage
of it &as it is $ost5effe$tive# define broad area of
problem(
ATA A9A;<0-0 PROC+00
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;.
Pattern design ta*en from resear$h boo* F@mma S(G
27
Data -nal%sis
Data -nal%sis
(etting data
read% for anal%sis
!diting data
&ategori+ing data
,riting literature
revie%
(etting data
read% for anal%sis
!diting data
&ategori+ing data
,riting literature
revie%
(oodness
of data
-eliabilit.
validit.
(oodness
of data
-eliabilit.
validit.
*%#otheses
testing
*%#otheses
testing
Discussion
Discussion
Research
.uestion
-ns"ered/
Research
.uestion
-ns"ered/
Inter#retation
of results
Inter#retation
of results
Research Methods for Business
-9T+R.-+%-9= 28+0T-O90
23estion @ 1
-s the $inancial reso3rces are bac&bone of 0/+sA
In ma'orit of the intervie&s the professionals said that
&ith o%t the ade1%ate finan$ial reso%r$es no ind%str $o%ld
gro&( Credit is $onstrained for SM.s# being limited to
$ertain forms of se$%red $redit# along &ith famil and
informal $redit( +ormal $redit $omes on ver diffi$%lt terms
for SM.s# sin$e the %se of se$%rit in $redit agreements is
highl ineffi$ient# and non5real estate se$%rit is largel
in effe$tive( +or SM.s# neither %nse$%red $ommer$ial $redit
or debent%res e1%it $apital in the form of p%bli$l5 traded
shares and private pla$ements# nor ?BO mi$ro5$redit is a
viable option( >an*s and non5ban* finan$ial instit%tions
F?>+IsG s%$h as finan$e and leasing $ompanies re1%ire real
estate se$%rit for loans Fland and b%ildingsG the
e)$eptions being ver large firms# firms &ith longstanding
$lient relations &ith the ban*s# or firms benefiting from
either politi$al favor or a $lose relationship &ith a ban*
dire$tor( SM.s almost %niversall start their operations
%sing o&n f%nds or famil finan$e( Tpi$all# these firms
fa$e a signifi$ant operating $apital $onstraint in the earl
ears of operation# and often be$ome -si$*0 or lose their
investment( .)pansion $redit is also severel $onstrained(
The also said that as the finan$ial reso%r$es have the
primar importan$e for establishing a b%siness b%t &ith o%t
some reso%r$es li*e mar*et *no&ledge# intelle$t%al propert#
and ind%str *no&ledge no& small ind%str $an gro&(
23estion @ 2
28
Research Methods for Business
)o1 ,overnment ma&es the easy access to the finance for
the 0/+sA
SM. se$tor has a h%ge potential estimated at Rs( 3(64
trillion b%t onl ;45;6 per$ent of it has been tapped for
providing finan$es( So far 39#444 enterprises have been
tapped for providing loans thro%gh programmed and str%$t%red
lending based on the ne& g%idelines iss%ed b the State >an*
of Pa*istan(
The ma'or $hange for finan$ing the SM. b%siness has shifted
from the $ollateral to $ash flo& as the previo%s basis had
res%lted in infe$ted portfolio of Rs( =64 billion( So the
entire old $on$ept has no& $hanged to program lending
te$hnolog introd%$ed thro%gh SM. pr%dential reg%lations(
>an*s are ta*ing initiatives to shift emphasis from p%rel
$ollateral based lending to $ash flo& based &hile loaning
&ill be instit%tionali,ed(
The ne& strateg for SM. loans as per definition of the S>P#
stresses for n%mber of emploees# total assets(
All interviewees ware agreed that at that time only the
banks are the source to provide the loan especially the
local bank and SMEs specialized banks like SME bank.
hushaly bank! microfinance bank specialized in providing
the loan the small entrepreneurs and government should
encourage these banks to open more branches in other cities
and these banks should fast their lending system from
collateral based lending to cash flow based lending.
29
Research Methods for Business
23estion @ 3
0/+ have lac& of access to financial mar&etsA
Altho%gh Pa*istan has established signifi$ant mar*et
infrastr%$t%re for finan$ial servi$es# the e)isting
instit%tions do not provide eas finan$ing a$$ess for SM.#
Most SM. poorl do$%ment and dis$lose their b%siness
a$tivities# and are %nable to provide the $ollateral
re1%ired for asset based lending and investments( The
rel%$tan$e to lend to poorl do$%mented enterprise is
%nderstandable espe$iall in the $onte)t of the prevailing
poor $redit $%lt%re(
Also many SME! especially family owned businesses! find it
difficult to grow beyond a certain point constrained by a
lack of financial and management resources and reluctance
to build partnerships to generate innovation! and to invest
in networks to improve market intelligence.
The sol%tion of this problem sho%ld be ta$*led on t&o
levels( +irstO +inan$ial instit%tions need to develop
standardi,ed servi$es# fo$%sing on the $ash5flo& earning
$apa$it of their $lients( These prod%$ts sho%ld be
s%pported b $redit enhan$ements s%$h as g%arantees and
$ollateral( Se$ondO SM. m%st develop simple b%t so%nd and
&ell do$%mented plans for their operations to $larif and
monitor their dire$tion# and to improve a$$ess to finan$ial
servi$es( This leads me to the forth iss%e(
.)$ept the ban*ers all the persons said that there is less
n%mber of ban*s those are providing the loan to small
b%sinesses( In their vie&s that less n%mber of ban*s means
that there is ver length list of the finan$ial
instit%tions &or*ing in Pa*istan b%t onl a limited n%mber
of ban*s are providing the loan to the small b%sinesses(
30
Research Methods for Business
23estion @ !
o yo3 thin& that present 1ay of enco3ra,in, the small
b3sinesses is ,oodA
If &e $onsider the agenda of the Pervai, M%sharaf
Bovernment# &hi$h is based on the si)# pillars the third
pillar of the present government of Pa*istan is the SM.
se$tor development# &hi$h sho&s the $ommitment of the
government &ith the e$onom development( SM.S are a distin$t
pillar of the e$onom that needs to be given d%e attention(
It re1%ires spe$ifi$ poli$ and reg%lator spa$e to t%rn SM.
into an effe$tive tool for driving the e$onom and
in$reasingl $ontrib%te to e$onomi$ gro&th and emploment(
"he #overnment of $akistan has developed a number of
strategies for socio-economic development.
P Povert Red%$tion Strateg Paper FPRSPG
P Mi$ro +inan$e Se$tor Development Program
P SM. Se$tor Development Program
P .d%$ation Se$tor Reforms ;443546
P Reform of finan$ial se$tor
P Reforms in Ta) Administration
Presentl the government is en$o%raging the ban*s to
provide the loan to SM.s li*e "abib ban*# national ban*#
et$(# and one ?BO &hi$h is agha *han fo%ndation is
established a ban* &hi$h is mi$rofinan$e ban*( So it is also
important for the government to en$o%rage the other ?BOs
start to some thing for the betterment and gro&th of the
small b%sinesses &hi$h is the a$t%al problem of o%r $o%ntr
be$a%se this is the onl and eas &a for the povert
elevation be$a%se the SM.s provides the 'ob for the 'ob less
persons(
23estion @ #
31
Research Methods for Business
o yo3 thin& that ban&s role is ,ood in the 0/+s
,ro1thA
>an*s do not pla a signifi$ant role in finan$ing small
entreprene%rs onl 3ED of small entreprene%rs reported an
ban* borro&ing( Most Small .ntreprene%rs are rel%$tant to
even $onta$t ban*s: Among those &ho ever $onta$ted a ban*#
said the fa$ed serio%s problems# &hi$h &ere the follo&ing
>riber
Completion of Papers
Se$%rit B%arantees
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;.
Ans&er of the 1%estions ta*en from different fa$%lt members
and emploees of the $ompanies FDetail In bibliographG
CO9C;80-O9
32
Research Methods for Business
We $on$l%ded that development of SM.s in Pa*istan thro%gh
government ban*# Islami$ ban*s and private se$tor ban*s
there is a need for the SM.s development in the areas of
SM.s training# s*ills development# ma$hiner installation
in the form of government grants( >ased on the definition
of the SM.s in Pa*istan the priorit se$tor ma also
determine for providing finan$ial s%pport and priorit
se$tor for SM.s sho%ld be the follo&ing
Agro based and agro related ind%stries li*e food
pro$essing# po%ltr# dair# n%rser# horti$%lt%re and
flo&er $%lt%re et$(
"and looms# po&er looms &eaving ind%str# different
tpe of hand $rafts# leather and leather goods#
s%rgi$al e1%ipment ind%str# ele$tri$al ind%str(
In $ase of lending from the finan$ial instit%tions
follo&ing sho%ld be $onsider
In $ase of Islami$ ban*s finan$ing the
appropriate Islami$ mode of finan$es to be
determined FM%shara*a# M%daraba et$(G
The determining of the appropriate rare of
profit and servi$es $harges i(e( $ost of lending
and borro&ing from the $ommer$ial ban*s# Islami$
ban*s# and %ltimate benefi$iar entreprene%rs(

R+CO/+9AT-O90
33
Research Methods for Business
1: $or Ban&s
Most finan$ial instit%tions have not p%t in pla$e for the
effe$tive assessment for the $redit of SM.s# f%rther more
inade1%ate transparen$ of their finan$ial stat%s and
management# SM.s often are %nable to provide finan$ial
instit%tions &ith s%ffi$ient information a$$ess the b%siness
performan$e( So in this s$enario the SM.s sho%ld follo&
A: ;endin, 0trate,y
The ban*s those are providing the finan$ing fa$ilities to
the SM.s sho%ld provide the short #medi%m and long term loan
fa$ilit in$l%ding the leasing# leanding and ris* sharing
and other all possible s$hemes:
B: ;endin, /odes
3G The minim%m loan providing period sho%ld be E56 ears
;G The gra$e period sho%ld be 43 ear
=G In $ase of an loss re$over sho%ld be in
installments
EG !ending sho%ld be on $ompetitive basis(
2: $or =overnment
F.stablishment of +%nding S$hemesG
The *e re$ommendations for the government are that to
establish the f%nds for enhan$ing the $ompetitiveness of
SM.s in Pa*istan(
A: +?3ipment -nstallation lendin, $3ndin, 0cheme
Bovernment start a g%arantee e1%ipment installation f%nding
s$heme from &hi$h government $reate a g%arantee f%nd for
34
Research Methods for Business
SM.s and SM.s se$%re a lending $han$e from the finan$ial
instit%tions on behalf of the government to ta*e at least
64D loan &ith the government(
B: 0/+s evelopment $3nd
Bovernment develops the SM.s development f%nd to s%bsidi,e
the pro'e$ts $arried b so$ial and &elfare organi,ations#
resear$h instit%tions to enhan$e the SM.s $ompositeness(
C: 0/+s trainin, $3nd
Bovernment $reate a f%nd for the SM.s training for
developing the s*ills of the SM.s li*e the salar management
of the emploees# material management# 1%alit management
et$(
5555555555555555555555555555555
We &rote the above re$ommendations &ith the help of o%r
"(O(D Mr(M%shta1
Biblio,raphy
Boo&s
Resear$h methods for b%siness
># @ma Se*aran
35
Research Methods for Business
1e9s+a+e#s
The Dail DAW?
The ?.WS
The ?ation
The Pa*istan Observer
%or&shopsB 0eminars & +4hibitions
SM.s 7 Snergism Conferen$e at Marriot Islamabad
DAWS .)hibition -All Abo%t !ife Stle0

0nte#net
&&&(smeda(org(p*
&&&(adb(org
&&&(dailtimes($om(p*
&&&(pdg(org(p*
&&&(pa*istanlin*($om
&&&(&orldban*(org
&&&(sdpi(org
&&&(pa*trib%te($om
&&&(smeban*(org
&&&(pa*boi(gov(p*
&&&(%n(org(p*
&&&(nation($om(p*
&&&($omsats(org(p*
&&&;(%ta(ed%
&&&(pa*observer(net
&&&(smef%nd(tid(gov(h*
&&&(islamiban*bd($om
&&&(ilo(org
&&&(pa*istane$onomist($om
&&&(n%st(ed%(p*
RESONS FOR THE RESEARCH DESIGN:
There are number of variables which effect the development of SMEs in several
ways. These are;
I. Government Polices and Reulation
II. SME!"#s role
III. Technoloical advancement
I$. Investment
36
Research Methods for Business
$. "ccess to %inance
$I. &ih Interest rate over the credit
$II. 'ess number of %inancial Institutes
$III. (nacceptable terms and conditions of the %inancial Institution
I). 'a*e of Entrepreneurs *nowlede
Government Polices and Regulation:
SMEs development depends upon the role of overnment+ because in Pa*istan the
bureaucratic environment is over here and the policies which are made by overnment
are not supportive for SMEs development.
Tecnological advancement:
Technoloy plays very important role in the development of SMEs+ because in
lare businesses the technoloy is not introduced very rapidly because of ris* factor+ but
if we will see Small ,usiness it is introduced very rapidly so it plays very important role
as it increase the productivity+ decreases the cost+ increases the efficiency. So+
overnment should try to ma*e some institution for the development trainin of
employees about technoloy.
Access to Finance:
"nother bi factor which influences the performance of SMEs in Pa*istan is the
problem of %inances. The reason is interest rate is very hih. So for he facilitation of
finance overnment have to ta*e some steps for the development of SMEs. Some of them
are in the form of SMEs ban*+ SME!" which is providin different types of finance
form the Small and Medium Enterprises.
Hig Interest rate over te credit:
Government as* the %inancial Institutions to provide the credit to SMEs with low
interest rates.
Government ma*e some other arranements
!ess num"er o# Financial Institutes:
Government as*s ban*s to start more branches
Government issues more licenses to open new %inancial Institutions
37
Research Methods for Business
$nacce%ta"le terms & conditions o# Financial Institution:
Ma*e less strict terms and conditions for SMEs.
!a'e o# Entre%reneurs 'no(ledge:
Government ma*e some special arranements reardin the mar*et *nowlede
Government ma*es some arranements reardin SMEs s*ills improvement
38