The Impact of Management Capabilities on SMEs Financial Performance; the Moderating Role of Financial Access

Abstract

Small and Medium Enterprises (SMEs) face various challenges and barriers in developed and developing economies. Due to lack of resources, they often fail to survive for the long term. Prior studies have discussed different factors that can enhance the success and performance of SMEs. However, the role of top management capabilities is rarely discussed in emerging economies. This research fills the gap by examining the role of top management capabilities in the financial performance of SMEs with a moderating role of financial access. For this study, data were collected through a structured questionnaire from 150 SMEs operating in Rawalpindi and Islamabad. To test the hypotheses and model, regression analyses were performed in SPSS. The results indicate that top management capabilities and financial access have a significant positive influence on the financial performance of SMEs. However, financial access a moderator does not significantly contribute to SMEs performance in the emerging market. We recommend SMEs to give enough attention to top management capabilities and various sources of finance to gain high profit and stay for a long time in the dynamic markets. Further implications are discussed.