Obstacles to Growth for Small and Medium Enterprises. An Analysis of the SAARC Countries Pakistan, Bangladesh and India

Table of Contents

Chapter 1 Introduction
Motive of Research
Problem Statement
Objectives of the research
Scientific and Academic Objectives
Personal Objectives
Societal Objectives
Methodology of the research
Variables
Data Availability
Utilization of research results
Research Design / Scheme of the Chapters

Chapter 2 Literature Review
2.1 Access to Finance
2.2 Corruption and Taxation
2.3 Lack of skills, technical education and adoption of modern technology
2.4 Healthy and good business environment
2.5 Power Shortages
2.6 Lack of resources, inadequate market knowledge and competition in the market
2.7 Lack of Skilled Labor Force and Administrative Skills
2.8 Education
2.9 Setup for small firms
2.10 Low Investment in R&D
2.11 Governing or Supervisory Restraints
2.12 Poor Record Keeping and Pricing difficulties
2.13 Work- Family Balance
2.14 Human capital indicators and growth of small enterprises
2.15 Obstacles and impact on the plans, objectives and actions of the directors running small businesses
2.16 Aptitudes of female entrepreneurs and its impact on the growth process of firms
2.17 Data Analysis Techniques
2.17.1 QUANTITAIVE METHODS
2.17.2 QUALITATIVE METHODS
2.17.3 Mixed Method Approach

Chapter 3 Statistics about the Obstacles faced by Firms in Pakistan, Bangladesh and India
Overview about the obstacles
Pakistan (2007)
India (2006)
Bangladesh (2007)

Chapter 4 Growth of Firms and Correlation Analysis
Findings
Pakistan
Bangladesh
India

Conclusion

References

Acknowledgement

In the name of Allah, the Most Gracious and the Most Merciful

Alhamdulillah, all praises to Allah for the strengths and His blessing in completing this thesis. Special appreciation goes to my supervisor, Sir Uzair Ahson, for his supervision and constant support and cooperation. His invaluable help of constructive comments and suggestions throughout the thesis work have contributed to the success of this research. Moreover this thesis couldn’t be done without the full support and cooperation of Sir Uzair Ahson.

I would like to express my appreciation to the Sir Hamid Dar, for their support, suggestions, guidance and help towards my postgraduate affairs.

My deepest gratitude goes to my beloved parents; Mr. Muhammad Mazhar Ali and Mrs. Shaista Mazhar, my grandmother; Mrs. Irshad Ikram, and my husband; Mr. Mohsin Rafiq for their endless love, prayers and encouragement. To those who indirectly contributed in this research, your kindness means a lot to me. Thank you very much.

Sundas Ali

Abstract

Although there exists a wide consensus that small and medium sized enterprises play a vibrant and significant role for the growth and development of a country. Despite of the importance of the SME sector this sector is facing various obstacles which in turn can affect the growth of this sector. This research will analyze the obstacles faced by small and medium sized enterprises in Pakistan, Bangladesh and India. This research by using the data from World Bank Enterprise Survey and with the help of graphical analysis will determine the magnitude of the obstacles and provide the statistics about the obstacles faced by small and medium enterprises in Pakistan, Bangladesh and India. Moreover growth of firms will be studied by applying Pearson’s correlation analysis.

Chapter 1 Introduction

Small and Medium enterprises (SMEs) are considered to be vital and also the backbone of South- Asian economies as small and medium enterprises (SMEs) has the ability to create opportunities during the phase of financial, global and other challenging crisis. Different researchers are of the view point that in the future growth and development of developing economies in South- Asian region is majorly dependent on the SME sector. (Moktan, 2007; Agarwal, 2006; Bala Subrahmanya, 2005). SMEs are important for the developing economies as they provide assistance and aid from the vicious circle of poverty. (Hussain, Si & Wang, 2010; Amaratunge, 2003; Mintoo, 2004).

Small and Medium enterprises are considered to be very important for all the countries, but these are of more significance and importance particularly for the developing countries. As it is the age and era of globalization and environment has become more competitive. For the developing countries to cope up with globalization and to compete and survive in this age of competition, healthy and flourishing sector of SMEs is very much important and is required for the growth and development. For a developing country or economy small and medium enterprises are of great importance as they can create growth process. Small and medium enterprises are considered to be very much significant in developing countries as these are the initial and vital source for the entrepreneurs; with the help of which entrepreneurs can provide unique and wide range of concepts, plans, and skills and as a result will contribute towards the growth and development of a country or an economy. SMEs are also responsible for creating employment in a country. According to the Economic Survey of Pakistan 2008-09, small and medium sized enterprises in the manufacturing sector in Pakistan retained the growth at 7.5%, despite the global and financial crisis. (Economic Survey of Pakistan 2008-09). In Pakistan SMEs comprises of more than 95% of total firms and 80% of job creation or employment outside agriculture is through small and medium enterprises. (SMEDA 2007). In Pakistan the contribution of small and medium enterprises in gross domestic product is 30%.

In Bangladesh small and medium sized enterprises have received much attention and importance. In Bangladesh small and medium sized enterprises account for 99% of all industrial units and create 85% of industrial employment. (Zaman and Islam. 2011). According to the Economic Survey of Pakistan 2008-09, in Bangladesh the contribution of small and medium sized enterprises in industrial gross domestic product is 50%.

Small and medium sized enterprises in India have also contributed a lot to the economy. Small and medium sized enterprises in India account for 50% of total exports, 45% of industrial employment, 40% of domestic production, 35-40% towards the gross domestic product (GDP) and comprise 90% of industrial firms. (Zaidi. 2013)

Despite of the importance of small and medium enterprises in Pakistan, Bangladesh and India, this sector is facing numerous obstacles which hinder the growth and development process of this sector.

Previous researches have indicated that SMEs in Bangladesh are facing financing constraints. (Zaman and Islam. 2011). According to a research conducted by World Bank financial constraint is the biggest problem which small firms are facing. As banks feel reluctant to give funds to the small firms which has a negative impact on the growth of small enterprises. (Levy, 1993).

Bari, Ali and Haque (2005) indentified that lack of access to finance, government regulations, tax system and lack of business facilities are the major constraints which are experienced by small and medium enterprises in Pakistan.

Availability of finance, access to the market, lack of infrastructure, lack of knowledge and increased competition are the obstacles which micro and small enterprises are facing in India. (Zaidi, 2013).

Motives of Research

In this research obstacles faced by small and medium enterprises in Pakistan, Bangladesh and India will be analyzed. It is very important and significant to know about the obstacles or barriers faced by small and medium sized enterprises and whether or not these obstacles are impacting the growth of SMEs in Pakistan, Bangladesh and India. Data and statistics utilized in this research have been taken from World Bank Enterprise Survey. Obstacles studied in this research involve access to finance, access to land, business licensing and permits, corruption, crime, theft and disorder, customs and trade regulations, electricity, inadequately educated workforce, labor regulations, political instability, tax administration, tax rates and transportation.

Problem Statement

Does access to finance, access to land, business licensing and permits, corruption, courts, crime, theft and disorder, customs and trade regulations, electricity, inadequately educated workforce, labor regulations, political instability, practices of the informal sector, tax administration, tax rates and transportation are the obstacles to growth for small and medium sized enterprises in Pakistan, Bangladesh and India and are these obstacles impacting the growth of SMEs in these selected SAARC countries?

Objectives of the research

I. Scientific and Academic Objectives

The main objective of this study is to ascertain the magnitude of access to finance, access to land, business licensing and permits, corruption, courts, crime, theft and disorder, customs and trade regulations, electricity, inadequately educated workforce, labor regulations, political instability, practices of the informal sector, tax administration, tax rates and transportation as obstacles to growth of SMEs in Pakistan, Bangladesh and India.

II. Personal Objectives

1- Strengthen the understanding of growth of SMEs.
2- Knowing the factors responsible for growth of firms.

III. Societal Objectives

Documenting the factors prone to growth of SMEs across SAARC countries and contribution to the set of existing literature.

Methodology of the research

This study is based on secondary data. World Bank Enterprise Survey Data shall be used for this study. The survey provides information on different measures like characteristics of firms, obstacles faced by firms, different performance measures and business environment. Magnitude of obstacles will be determined by using the graphical or descriptive analysis. Growth of firms will be analyzed by applying Pearson’s correlation analysis.

Variables

Following variables are included in this research:

- Growth of a firm
- Access to Finance
- Access to Land
- Business licensing and permits
- Corruption
- Courts
- Crime, theft and disorder
- Customs and trade regulations
- Electricity
- Inadequately educated workforce
- Labor regulations
- Political instability
- Practices of the informal sector
- Tax administration
- Tax rates
- Transportation

In this study researcher will investigate the employment growth of firms and will find out that whether access to finance, access to land, business licensing and permits, corruption, courts, crime, theft and disorder, customs and trade regulations, electricity, inadequately educated workforce, labor regulations, political instability, practices of the informal sector, tax administration, tax rates and transportation are the obstacles to growth for SMEs in Pakistan, Bangladesh and India.

Data Availability

Secondary data will be used in this study. Data will be gathered from World Bank Enterprise Survey. Data will range between years 2006 and 2007. In case of Pakistan data set on World Bank Enterprise Survey is for the year 2007. For Bangladesh data is for the year 2007, and in case of India data availability is for the year 2006.

Utilization of research results

The research results will be utilized and assists in the better understanding of the factors which are considered to be the obstacles and are impacting the growth and advancement of small and medium enterprises in Pakistan, Bangladesh and India. Moreover this research will also help in contributing to the existing literature relevant to the growth and obstacles faced by small and medium firms in SAARC countries.

Research Design / Scheme of the Chapters

First chapter introduces the theoretical background of the research topic along with the objectives and methodology of the research. Second chapter provides the literature review of the past researchers related to the obstacles faced by small and medium enterprises in different countries along with the data analysis techniques and methodologies used to determine the obstacles in the previous studies. Third chapter provides the statistics about the obstacles faced by small and medium enterprises in selected SAARC countries which are Pakistan, Bangladesh and India. Fourth chapter is based on the growth of firms in Pakistan, Bangladesh and India and correlation analysis. And lastly the research work is analyzed by giving conclusion.

Chapter 2 Literature Review

2.1 Access to Finance

Many studies have acknowledged that small and medium enterprises functioning and operating in different countries are facing restraints which ultimately hamper and affect their ability to grow. Different researches and studies have used ‘access to finance or financial access as an obstacle’ and independent variable and found the impact of this variable on the growth rate of small and medium enterprises.

Zaidi (2013) using access to finance as an independent variable in his study found that lack of access towards finance and credit sources negatively impacts SMEs to grow and impact the progression and performance of SMEs in India. Hessels and Parker (2013) by conducting cross- country analysis of European SMEs studied the relationship between obstacles (financial and human capital restraints) and growth of SMEs. This research indicated that growth rate of small and medium enterprises will be impacted by the restraints in a negative way. This research highlighted that if small and medium enterprises will engage themselves in foreign procuring then it will have a positive impact on their growth process. Alongside if small and medium enterprises try to build up connection and association with other firms then it will also have a positive impact on the growth and performance of SMEs. Sherazi et al (2013) by conducting survey of about 107 small and medium enterprises in Pakistan which are positioned in Rawalpindi and Islamabad identified the restraints experienced by them. Having less approach towards the formal sources of finance is the biggest obstacle which small firms are experiencing in Pakistan. Small businesses usually do not maintain proper records of their dealings and of financial history of their business. As a result banks feel reluctant to give loans because of incomplete paper work and record history. Gill and Biger (2012) by conducting exploratory study find out that limited access to credit is the restraint in the advancement and progression of small setups in Canada. Mwobobia (2012) by reviewing different sources in Kenya and with the help of surveys and desktop research studied the major challenges and problems in female owned businesses. Financial access and difficulty in getting credit is one of the major problems faced by females operating their small businesses. Okpara (2011) by adopting survey method identified that limited access to credit is the obstacle in the development of small startups in Nigeria. Fumo and Jabbour (2011) by adopting case study approach analyzed the obstacles which are experienced by micro and small firms in Mozambique and also focused on the recommendations and solutions which officials can take to minimize these obstacles. Financial access is considered to be the main obstacle in this study.

Tambunan (2011) by using previous works and writings and with the help of data from different official sources in Indonesia conducted research on small and medium firms and their growth and advancement process. Researcher investigated the importance of SMEs in Indonesia, their role in the economy, obstacles faced by them; role played by females is the advancement of SME sector and importance of newness in this sector. Access to credit is one of the major obstacle which SMEs are facing in Indonesia. Naidu and Chand (2011) by conducting their research on micro, small and medium enterprises in Fiji and Tonga scrutinize the monetary restraints. Limited access to credit is the major obstacle which hinders the advancement of this sector. Zaman and Islam (2011) conducted their analysis on the relationship between access to finance and growth rate of small and medium enterprises in Bangladesh and found that small and medium enterprises have less access towards the formal sources of finance which ultimately discourage SMEs to grow and prosper.

Maeseneire and Claeys (2011) by developing questionnaire and conducting interviews with SMEs involved in foreign projects in Belgium studied the difficulties and complications that are faced by them having global or worldwide determinations for attaining funds for international projects and ventures. SMEs that are involved in foreign projects usually face lack of internal funds and find it hard to attract the finance from outside sources. High deposit and security and collateral rate and high rate of interest is one of the major problem faced by SMEs that are involved in global projects. These factors negatively affect the performance and progression of SMEs. Financial obstacles both domestically and internationally are considered as the barriers for SMEs. This study is focused on small and medium enterprises which are involved in foreign or global projects. We cannot generalize the findings of this study to all SMEs.

Seker and Correa (2010) investigated the relationship between access to finance and growth of SMEs in Turkey and found that financial access is an obstacle to growth for SMEs in Turkey. Grimsholm and Poblete (2010) studied that less access to finance is one of the external factor which can negatively impact the growth rate of small and medium enterprises in Thailand. Beck et al (2005), Beck and Kunt (2006), and Beck et al (2008), by conducting cross- country analysis investigated the impact of financial restraints on the growth of small and medium enterprises. Findings from cross-country analysis confirmed that small firms are severely impacted by less access towards formal sources of finance. Quader and Abdullah (2008) utilized quantifiable and theoretical methods in order to identify the degree and range of obstacles experienced by small businesses in Bangladesh. Inaccessibility of credit is the biggest challenge faced by small and medium enterprises in Bangladesh. Saleh and Ndubisi (2006) focused on the growth and employment generation by SMEs in Malaysia and found that SMEs are facing problems in getting finance which ultimately affects their ability to grow. Wang (2004) by using secondary data from different official sources in China analyzed that small and medium enterprises are playing a vital role in the growth process of Chinese economy. On the other hand small and medium enterprises in China are facing problems related to finance. Access to foreign capital, drawbacks in the investment and funding method, poor setup for getting access to finance and capital and dearth of assurance method are the restraints which small and medium sized firms are encountering in China. Wagenvoort (2003) by using secondary data in the form of financial records and balance sheets of different firms in Europe studied that whether or not financial restraints are creating hindrance in the advancement of small and medium enterprises in Europe and concluded that small and medium enterprises have limited access towards the formal sources of finance in Europe which negatively impact their growth process. Becchetti and Trovato (2002) conducted their analysis on the availability of finance for SMEs in Italy and effect on the advancement of SMEs in Italy and found that growth of SMEs is highly dependent on the availability of finance. Hashi (2001) after steering enterprise survey for about 50 small and medium enterprises in Albania studied that access to finance impacts the growth rate of SMEs in Albania. Bartlett and Bukvic (2001) by conducting surveys and interviews with 37 firms in Slovenia found that growth of firms was reduced due to financial barriers. Financial barriers include high cost of capital. Pissarides (1999) by using the survey conducted by European Bank for Reconstruction and Development investigated that inadequate and restricted access to finance is an obstacle to growth for small firms in Central and Eastern Europe. Keogh and Evans (1998) by having interviews with 20 new technology based firms in Scotland found that reduced access to finance is considered to be the barrier for growth for the new enterprises in Scotland. Levratto (1996) conducted his research on small enterprises in France and by using data from official sources in France confirmed that firms face problems in order to have access towards the formal sources of finance.

2.2 Corruption and Taxation

Dishonesty and limited access towards finance is the biggest restraint for small businesses in Pakistan (Sherazi et al 2013). Xheneti and Bartlett (2012), Okpara (2011), Fumo and Jabbour (2011), analyzed the role of corruption on the progression of SME sector in Albania. Xheneti and Bartlett (2012) conducted their study on 121 enterprises in Albania and found that corruption has a positive effect on the business advancement in Albania. Okpara (2011) by developing questionnaire and getting responses from 211 businessmen running small setups in Nigeria found that there is a negative correlation between corruption and advancement and performance of small startups. Fumo and Jabbour (2011) analyzed that in Mozambique corruption can hamper the advancement of micro and small firms.

Ojeka (2011) investigated the relationship between progression and development of small and medium enterprises and the level of taxation in Nigeria. Small and medium enterprises are considered to be very important in Nigerian economy. Researcher investigated that the level of taxation plays an important role in the advancement of small and medium enterprises. If level of taxation is high then it will discourage small and medium enterprises to grow. Grimsholm and Poblete (2010) with the help of primary and secondary data conducted their research on the different aspects which are impacting the growth rate of SMEs in Thailand. Their study focused on the external as well as internal factors which are impacting the growth of SMEs. A lot of studies have been conducted which highlight the factors impacting the growth rate of SMEs but this study is focusing both on the internal and external factors which can hamper the growth process of SMEs. Corruption is considered to be the external factor which is impacting the growth of small and medium enterprises in a negative manner. Fisman and Svensson (2007) by using data from “Ugandan Industrial Enterprise Survey” analyzed the relation and impact of corruption and tax rate on the growth rate of firms. The research indicated that corruption and taxation both have a negative impact on the growth rate of SMEs. The findings of this study contribute a lot in the research. This study supports the previous theories regarding the impact of corruption on the growth rate of firms as corruption hampers the growth more than taxation, and justify those theories with the help of its results.

2.3 Lack of skills, technical education and adoption of modern technology

Aftab and Rahim (1988) by conducting survey and interviews with owner- managers of 70 small enterprises in Lahore, Daska, Gujranwala and Faisalabad and by using descriptive analysis identified the obstacles that prevent the informal sector firms or the small enterprises or firms that are operating in informal urban sector to grow. This study focused on small enterprises that were involved in the production of tube wells. Survey was conducted in Lahore, Daska, Gujranwala and Faisalabad in 1982 and 1983. In order to determine the barriers following variables were used in this study; Level of education and previous working experience of the owner- manager of these enterprises; Management style of these enterprises and labor employed in these enterprises; Technical training received and finance required for entering into the production of tube well. This study helps in leading consideration towards the incapability of the enterprises in informal sector which hinders them to formulate methods and modern technology which are necessary for the growth. The obstacles which prevent the future growth of the firms in the informal sector are in the socio- economic background of the owners/ managers which in turn bounds his capacity to engage and fascinate the skills and modern technology of the market which is required to implement the obligatory technological and managerial developments.

Grimsholm and Poblete (2010) conducted their study on small and medium enterprises in Thailand and found that vulnerability in adopting the modern technology and skills is considered to be the internal restraint which can impact the growth of small and medium enterprises. Zaidi (2013) utilized the data from annual report of micro, small and medium enterprises in India and survey by India MART knowledge services in order to find out the impact of technical education on the growth of small firms in India. Lack of technical education negatively impacts the growth of small enterprises in India. Because of little awareness about the modern trends and low education owners of small businesses in Pakistan are lagging behind and facing difficulties in keeping and maintaining business (Sherazi et al 2013). Reluctance in the adoption of modern expertise can contribute to the slow advancement and progression of small business in Kagiso (Mbonyane and Ladzani 2011).Saleh and Ndubisi (2006) studied the role played by small and medium enterprises in Malaysia and identified certain defies like low level of practical knowledge and technical education.

2.4 Healthy and good business environment

Rocha (2012) by using data from World Bank Group, Global Competitiveness Report by World Economic Forum 2009, conducted cross- country analysis. The contribution of this research is that it aids in finding out that how much a healthy and a good business environment will contribute towards the development of SME sector across countries. If costs for initiating a start- up or entering into the business are less then it will boost up the growth of SMEs. Similarly quick access to finance and a healthy business environment can flourish and increase the SME segment in an economy.

2.5 Power Shortages

Sherzai et al (2013), Coad and Tamvada (2011), Fjose et al (2010), studied the role of power shortages in the growth of small and medium enterprises. Power shortages and unsatisfactory and deficient provision by the regime are the restraints which small firms are experiencing in Pakistan (Sherazi et al 2013). Fjose et al (2010) by utilizing and analyzing the survey conducted by World Bank (2010) considered power shortages in Sub- Saharan Africa as one of the major restraints in the advancement of small and medium enterprises.

2.6 Lack of resources, inadequate market knowledge and competition in the market

Coad and Tamvada (2011) observed that in developing countries small enterprises play an important role in the growth and development of an economy. They found that a lot of practical study has been conducted for small firms in the developed countries but little research is done in case of developing countries. Their study focused on the small firms in India. Data for firms was taken from the poll appraisal done by the government of India and then growth and performance of small firms was analyzed. They focused on following variables in their study like extent and time period of small firms in India, are these small firms owned by female or male entrepreneurs, involved in trading across country or not and level of technical know- how in these firms. They found that small firms have a large potential to grow. Firms owned by women are facing low level of growth rates. If small firms involved themselves in trade across countries then it will have a positive impact on their growth process. This research helps in finding out the obstacles which can deteriorate the growth of small enterprises in India. As far as obstacles to growth are concerned then it involves issues faced by enterprises which are owned by women entrepreneurs and enterprises working in countryside areas. Obstacles include availability of resources, lack of administration, lack of machinery, inadequate market knowledge and access to markets and electricity shortfall.

Less developed institutions and competition in the market both domestic and foreign are the main obstacles faced by micro and small enterprises in Mozambique (Fumo and Jabbour 2011).

2.7 Lack of Skilled Labor Force and Administrative Skills

Businesses run by females in Kenya are smaller in size. To manage the workers, recruit the workers and to have them is one of the biggest problem of female owned businesses. Research indicated that females as bosses are sometimes not being regarded by the workers (Mwobobia 2012). Inadequate expertise and working experience and poor and reduced level of administration are the obstacles in the development of small startups in Nigeria (Okpara 2011).

SMEs in Indonesia are facing obstacles like lack of business knowledge and training, lack of trained labor force and face problems in advertising and delivering their products (Tambunan 2011). Zaman and Islam (2011) by using data from official sources in Bangladesh find out the impact of administrative skills, technical education on the growth process of SMEs in Bangladesh. Lack of skills which are required and necessary for publicizing is missing in the case of small and medium firms in Bangladesh. Poor quality of output, lack of skilled labor force and lack of administration are some of the problems encountered by SMEs in Bangladesh and these problems are negatively impacting the growth of SME sector. By conducting research on Swedish SMEs Jedeskog and Persson (2011) observed that lack of skilled labor force is an obstacle for the growth of small firms. Coad and Tamvada (2011) considered lack of administration as an obstacle to growth for small enterprises in India. Unskilled labor is one of the main challenges in the proper working and success of SME sector (Quader and Abdullah 2008). Bernroider (2002) done interviews with 174 companies in Austria and found that lack of skilled workers is a problem for the enterprises in Austria. Keogh and Evans (1998) by conducting interviews with 20 new technology based firms in Scotland concluded that lack of skilled labor force is one of the barriers for the growth of new enterprises.

2.8 Education

Zaidi (2013), Mwobobia (2012), Xheneti and Bartlett (2012), Robson and Obeng (2008) analyzed the role of education in the advancement of small and medium enterprises. Zaidi (2013) observed that lack of education negatively impacts the growth of small firms in India. Low level of education is one of the main problems in female owned business in Kenya (Mwobobia 2012). Robson and Obeng (2008) conducted interviews with 500 entrepreneurs in Ghana and found that low level of education is one of the restraints which firms are facing in Ghana.

2.9 Setup for small firms

Zaidi (2013), Saleh and Ndubisi (2006) studied that inadequate setup for small firms will negatively impact their growth process. Sherazi et al (2013) after conducting their research on small and medium firms in Pakistan found that inadequate setup for small businesses is one of the problem which small setups are facing. Inadequate setup for small businesses can negatively impact the development of small startups in Nigeria (Okpara 2011).

2.10 Low Investment in R&D

Robson and Obeng (2008) and Saleh and Ndubisi (2006) used “investment in research and development” as a variable in their research and studied its impact on the advancement of small and medium enterprises. Robson and Obeng (2008) after conducting interviews with 500 businesspersons in Ghana concluded that low investment in research and development is one of the problems which firms are facing in Ghana. Saleh and Ndubisi (2006) by doing their research on SME development in Malaysia found that low development in R & D is one of the biggest challenges for small enterprises operating in Malaysia.

2.11 Governing or Supervisory Restraints

Peci et al (2012) by conducting interviews with firms in Kosovo studied different factors that can be considered as restraints for the advancement of small and medium enterprises operating domestically and associated in trading abroad. Role of government, lack of professionalism of the officials in their offices and tariff policies are the main factors which are considered as the main challenge and restraints for the advancement of small business sector. Authoritative concerns and competition and market defies are the restraints in the advancement and progression of small setups in Canada (Gill and Biger 2012). Government regulations in the form of bureaucratic setup, political instability, fluctuating policies, rules and parameters related to labor force are the restraints in the working of small businesses in Bangladesh. Government is not supporting for the advancement of this sector (Quader and Abdullah 2008). Difficulties in getting authorizations and high level of antagonism are the problems which female owned businesses are experiencing in Kenya (Mwobobia 2012). SMEs in Indonesia are facing problems regarding official terms and rules and regulatory requirements for starting and operating the business (Tambunan 2011). Slow advancement and progression of small businesses will result in joblessness in South- African communities. Reasons which contribute in slow growth of small setups in Kagiso include: absence of rules and regulations and not following the regulatory obligations (Mbonyane and Ladzani 2011).

2.12 Poor Record Keeping and Pricing difficulties

Absence of systems maintaining financial records of the business, absence of credit provision, low knowledge about how to charge the merchandise, conceding payments, absence of preparation of how to cope up with the business can result in slow progress of small business in Kagiso (Mbonyane and Ladzani 2011).

2.13 Work- Family Balance

Extensive duties in business and to give proper time to family and to maintain a balance between work and family are the obstacles and challenges for the females who are running their businesses in Kenya (Mwobobia 2012). For the female entrepreneurs work- family balance is the restraint which can impact the growth and performance of a business (Tambunan 2011, Roomi et al 2009).

2.14 Human capital indicators and growth of small enterprises

Lafuente and Rabetino (2011) by utilizing data from 635 enterprises in Romania analyzed the relationship between growth of small enterprises and human capital indicators. Indicators or factors studied in this research include; education, working capability/ knowledge, work inspirations, existence and manifestation of household associates and tactical groups. This study aims in finding out that what kind of relation exists between human capital indicators and growth of small enterprises in Romania. The research also focused on the importance and significance of administrative skills and its relation with the advancement and progression of small firms. Results of this research indicated that there exists a positive relation between human capital indicators and growth of small firms.

2.15 Obstacles and impact on the plans, objectives and actions of the directors running small businesses

Obstacles experienced in small businesses have a negative impact on the actions and plans of the directors which will ultimately slow down the advancement and progression of business (Doern, 2011). Brink et al (2003) by developing questionnaire conducted a research in order to find and study about the perceptions of the owners or managers about the obstacles which can impact the performance of small setups in South Africa. According to this research law and order situation, marketing problems, lack of managerial skills, to maintain work- family balance, financial constraints, are the factors which can negatively impact the success and performance of small setups in South Africa. This study is also focused on providing different reforms which can increase the growth and success rate of small setups.

2.16 Aptitudes of female entrepreneurs and its impact on the growth process of firms

Roomi et al (2009) by conducting their analysis in the East of England tried to answer the following research questions: In the firms run and managed by female entrepreneurs what are the main reasons which impact the growth of these firms. This study tried to find out that whether or not discrete and specific aptitudes of female entrepreneurs have an impact on the growth process of firms. Aptitudes involve previous working experience, training and level of education. Findings of this study suggested that limited access to credit is one of the main obstacles to the growth of women- owned enterprises. Similarly lack of skilled workers, inadequate working experience and education, work- family balance, are also considered to be the restraints in the growth process of firms run by women entrepreneurs. Lack of network and interaction skills also inhibits the growth process.

2.17 Data Analysis Techniques

2.17.1 QUANTITAIVE METHODS

Descriptive Analysis

Zaidi (2013), Hessels and Parker (2013), Mbonyane and Ladzani (2011), Tambunan (2011), Jedeskog and Persson (2011), Coad and Tamvada (2011), Zaman and Islam (2011), Fjose et al (2010), Saleh and Ndubisi (2006), Wang (2004), Wagenvoort (2003), Keogh and Evans (1998) and Levratto (1996) by using descriptive statistics identified the obstacles which hamper or effect the growth of small and medium enterprises and impact of these obstacles on the growth of small and medium enterprises. Zaidi (2013) by using data from “Annual report of micro, small, and medium enterprises in India and survey by India MART knowledge services” and then applying descriptive statistics in the form of bar charts, pie charts found that restricted access to finance and markets, lack of technical education, inadequate setup for small firms, high level of competition in markets, and low level of education are the main problems which are impacting the performance and progression of small enterprises in India and negatively impacts SMEs to grow. Hessels and Parker (2013) with the help of “ENSR Enterprise Survey 2003” and then by smearing descriptive statistics found that growth rate of SMEs is impacted by internationalization and obstacles. If SMEs engross themselves in foreign purchasing then it will have a positive impact on the growth rate of SMEs. By conducting interviews with 30 businesspersons running small setups in Kagiso, Mbonyane and Ladzani (2011) analyzed the features by using descriptive analysis which hampers the advancement of small setups in Kagiso. Research indicated that poor developed institutes, absence and little know- how about the regulatory requirements for operating business, low credit base and inability to access credit and absence and dearth of business knowledge are the major reasons which can slow down the progression of small setups in Kagiso. Tambunan (2011) with the help of facts and figures from different official sources in Indonesia and by studying and reviewing the previous works conducted analysis on SMEs and its development. Researcher find out by using descriptive analysis that SMEs are playing an important role in the development of Indonesian economy. However this sector and women working in this sector are facing certain defies which are listed as follows: Access to credit, business knowledge and training, lack of competent labor, advertising and delivering problems, official and regulatory obligations and work- family balance particularly in the case of females. Jedeskog and Persson (2011) by taking data from “The Situation and Conditions of Enterprises 2011” and then using descriptive analysis found that access to capital, lack of skilled labor; laws and regulations are the factors that are impacting the growth rate of Swedish SMEs. Coad and Tamvada (2011) by using poll appraisal done by government of India and then using descriptive analysis studied the extent and time period of small firms in India, are these small firms owned by female or male entrepreneurs, involved in trading across country or not and level of technical know- how in firms in India. Zaman and Islam (2011) by means of descriptive statistics observed the role of financial access, administrative skills, technical education, skilled labor force, and their impact on the growth process of SMEs in Bangladesh and found that access to formal sources of finance is one of the major restraints which hamper the growth of small and medium firms in Bangladesh. Women entrepreneurs are facing this restraint more as compared to men. Likewise, lack of skills which are required and necessary for publicizing is missing in the case of small and medium firms in Bangladesh. Poor quality of output, lack of skilled labor force and lack of administration are some of the problems encountered by SMEs in Bangladesh and these problems are negatively impacting the growth of SME sector. Fjose et al (2010) with the help of descriptive statistics found that limited access to credit and power shortages are the major restraints in the advancement of small and medium enterprises in Sub- Saharan Africa. Saleh and Ndubisi (2006) by applying descriptive statistics investigated the relationship between growth and employment generation by SMEs, technical know- how, infrastructure, financial access, and level of innovation in Malaysia. Low access to finance negatively impacts the growth of firms in Malaysia functioning at a small level. Poor setup for small firms, less innovation, and little know- how is negatively impacting the growth of small firms in Malaysia. Wang (2004) by conducting descriptive analysis in his study conclude that access to foreign capital, drawbacks in the investment and funding method, poor setup for getting access to finance and capital and dearth of assurance method are the restraints which small and medium sized firms are encountering in China. Keogh and Evans (1998) by accompanying in depth interviews and descriptive analysis observed and identified that presence of right persons in the enterprises along with low financial access are the barriers to growth for the new enterprises in Scotland. Levratto (1996) by utilizing the data from different official sources in France determined that firms face problems in order to have access towards finance. In order to improve growth for small firms’ new institutions with specially designed tariff policies for SMEs should be developed, as well as new modes of finance and capital should be introduced for SMEs which will positively impact the progression of small and medium enterprises.

Parametric Model

Hessels and Parker (2013) by using “parametric model” and forming “correlation matrix” investigated the relationship between obstacles, internationalization and growth of SMEs in 18 different countries of Europe. Growth rate of SMEs is impacted by internationalization and obstacles. Growth rate is also affected if enterprises and firms build connotation with other firms. Regarding internationalization if SMEs engage themselves in foreign purchasing then SMEs can maintain competitive advantage and growth rate can be increased.

Multiple Linear Regression Model by using OLS estimation

In a cross- country comparison conducted by Rocha (2012) results indicated that if costs for initiating a start- up or entering into the business are less then it will boost up the growth of SMEs. Similarly quick access to finance and a healthy business environment can flourish and increase the SME segment in an economy.

Spearman Rank Correlation

Ojeka (2011) by using “Spearman Rank Correlation” in his study concluded that there exists a negative correlation between level of taxation and the ability of small firms to grow in Nigeria. If level of taxation is high then it will have a negative impact on the growth of small firms.

Regression Analysis

Xheneti and Bartlett (2012), Lafuente and Rabetino (2011), Maeseneire and Claeys (2011), Seker and Correa (2010), Beck et al (2008), Beck and Kunt (2006), Beck et al (2005), Wagenvoort (2003), Hashi (2001), Bartlett and Bukvic (2001) used “regression analysis” and found the link between growth of small and medium enterprises and restraints faced by them. Xheneti and Bartlett (2012) by developing questionnaire and obtaining results from 121 enterprises analyzed that education has a negative impact on the progression of SMEs in Albania. Age and size of a business is inversely related to the advancement of a business. Expertise is positively related with the progression of SMEs. Corruption has a positive effect on the business advancement in Albania. By conducting regression analysis Lafuente and Rabetino (2011) proved that education, working capability, work inspirations, existence and manifestation of household associates and tactical groups have a positive impact on the advancement of small firms in Romania. Maeseneire and Claeys (2011) by conducting their research on Belgian SMEs identified that high deposit and collateral rate and high rate of interest is one of the major problems faced by SMEs that are engaged in foreign projects. These factors negatively affect the performance and progression of SMEs. Seker and Correa (2010) by using data from World Bank Enterprise Survey conducted between 2008 and 2009 indicated that in Turkey small and medium enterprises grow slowly as compared to firms in other countries of same region. This study indicated that financial access is an obstacle for the growth of SMEs. Beck et al (2008) by using cross- country data and applying regression analysis observed the correlation between access to finance and growth of small firms. Findings suggested that better access to finance and developed financial institutions increase the growth of small firms.

By applying regression analysis and by building a model in which growth is a dependent variable and corruption and taxation are independent variables, Fisman and Svensson (2007) studied the impact of corruption and taxation on the growth rate of firms in Uganda. Results indicate that taxation and corruption has a negative relationship with the growth of a firm. Alongside corruption deteriorates the growth process more as compared to taxation. Beck and Kunt (2006) utilized the data from World Business Environment Survey and conducted cross- country analysis. They investigated the relationship between access to finance and growth of small firms and found that firms having less access towards the formal sources of finance will negatively impact the growth of firms. Beck et al (2005) found the impact of financial, legal and corruption rate on the growth rate of enterprises in 54 countries and observed that small firms are negatively impacted by less access towards formal sources of finance and level of corruption. Wagenvoort (2003) observed and analyzed that small and medium enterprises have limited access towards the formal sources of finance in Europe which negatively impact their growth process. Hashi (2001) from the survey of enterprises in Albania investigated the impact of fiscal, financial and institutional constraints in Albania and impact on growth rate of SMEs and observed by applying regression analysis that less access to finance, absence of well- developed institutes and tax burden hinders the growth rate of SMEs in Albania. Bartlett and Bukvic (2001) by conducting interviews and surveys with 37 firms in Slovenia and applying regression analysis technique identified institutional, internal, external, financial and social barriers in Slovenia and their impact on growth rates of SMEs in Slovenia. Growth rate of firm is negatively correlated with size. Growth of firms was reduced due to financial barriers. Financial barriers include high cost of capital. Growth will also be reduced if there are institutional barriers.

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