SMEs development and failure avoidance in developing countries through public private partnership

Abstract

This study examines the current developments of small and medium enterprises (SMEs) in Pakistan and the effectiveness of public-private partnership for SME development. Some important facts are presented. A comprehensive international literature study was undertaken. A questionnaire was developed for small and medium sized enterprises owners and top managers to access the status of their enterprises and also to examine SMEs developmental strategies adopted by them. Linear regression was employed for analysis of the data. The study found that SMEs are of overwhelming importance to developing countries because they account for more than 90% of all firms outside the agricultural sector. The study also found that main constraints faced by small entrepreneurs are lack of finance, low human resource capabilities, and technological capabilities. Finally, the government has been the most important supporting agency for SMEs in Pakistan. However, evidence of the effectiveness of government and private programs to support SME development is mixed and not so encouraging. After analyzing the current SMEs’ developmental strategies (adopted by both public and private sectors) the study suggested public private partnership (PPP) as future strategy for SMEs’ development in developing countries.   Key words: Small and medium enterprises, public private partnership, developing countries, Pakistan, entrepreneurship.