Obstacles to Development of Entrepreneurship in Pakistan
Keywords:
Entrepreneurship, SMEs, Obstacles, Connivance, Cronyism, Pakistan
Abstract
This paper aims to examine the obstacles to entrepreneurship in Pakistan. The study has adopted a qualitative and quantitative approach through descriptive approach. It conducted in-depth interviews and group discussions with mid and senior-level managements of SMEs and non-SMEs, as well as think tanks and students from relevant disciplines. Chi-square and Mann-Whitney U tests were followed by using Likert Scales for robustness in findings. A questionnaire was sent through e-mail to 150 Small or Medium Size Enterprises, SMEs, and 204 non-SMEs. 83 responses from SMEs and 135 responses from non-SMEs were obtained. The results show that the obstacles to entrepreneurship in Pakistan are multiple. Political instability, a deficient legal system, red tape-filled bureaucracy, and access to funding were registered as the main obstacles to entrepreneurship in Pakistan. The study recommends that the government adopt long-term objectives and strategies for SMEs and take a proactive stance.
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References
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15. Haque, Nadeem Ul. (2007). Entrepreneurship in Pakistan, PIDE Working Papers 2007:29, Pakistan Institute of Development Economics, Islamabad.
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21. Katua, N. T. (2014). The Role of SMEs in Employment Creation and Economic Growth in Selected Countries. International Journal of Education and Research, Vol. 2 No. 12, pp. 461-472.
22. Kaufmann, D., & Kraay, A. (2002). Growth without governance. (Policy Research Working Paper No. 2928). Washington, DC: World Bank.
23. Khan, S. U., & Saqib, O. F. (2011). Political Instability and Inflation in Pakistan. Journal of Asian Economics, in forthcoming issue, doi: 10.1016/j.asieco.2011.08.006.
24. Khawaja, M. I., & Khan, S. (2009). Reforming institutions: Where to Begin? Pakistan Development Review, 48: 241 – 267.
25. Khawaja, S. (2006). Unleashing the growth potential of SMEs in Pakistan through productivity enhancement. Pakistan Development Forum-2006.
26. Kreiner, N. C., & Ram, Y. (2020). National tourism strategies during the Covid-19 pandemic. Annals of tourism research, 103076. Advance online publication. https://doi.org/10.1016/j.annals.2020.103076.
27. Manzoor, F., Wei, L., & Siraj, S. (2021). Small and medium-sized enterprises and economic growth in Pakistan: Heliyon 7 (2021) e06340. Journal homepage: www.cell.com/heliyo.
28. Mauro, P. (1995). Corruption and growth. The Quarterly Journal of Economics, 110(3), 681–712. https://doi.org/10.2307/2946696.
29. Munir, K., & Khan, U. (2011). SME cluster study: Fan industry in Gujrat and Gujranwala. Karachi: State Bank of Pakistan. Retrieved from http://www.sbp.org.pk/departments/ihfd/SubSegment%20Booklets/Fan%20Industry%20Report.pdf
30. Murphy, P. R., Daley, J. M. & Dalenberg, D. R. (1991). Exploring the effects of postcard prenotification on industrial firms’ response to mail surveys. Journal of the Market Research Society, 33(4), 335–341.
31. Najeeb, H. K. (2021). SMEs: An unloved story. International news. Available online at: https://www.thenews.com.pk/print/920363-smes-an-unloved-story (accessed April 5, 2022). [Google Scholar] [Ref list].
32. Naveed, R. T., Rehmani, M., Khokhar, M. N., Shah, S. R. U., Ali. A., Shahzadi, S., & Irshad, H. (2022). Small and medium-sized enterprises failure in providing workers’ rights concerning Sustainable Development Goals-2030 in Pakistan. Front. Psychol., 06 October 2022, Sec. Organizational Psychology Volume 13 – 2022. https://doi.org/10.3389/fpsyg.2022.927707.
33. Qayyum, A., Khawaja, I. M., & Hyder, A. (2008). Growth Diagnostic in Pakistan, European Journal of Scientific Research, 24: 433 – 450.
34. Qureshi, M. N., Ali, K., & Khan, I. R. (2010). Political Instability and Economic Development: Pakistan Time-Series Analysis. International Research Journal of Finance and Economics, 56: 179 – 192.
35. Reynolds, P. D., Hay, M., & Camp, S. M. (1999). Global entrepreneurship monitor. Kansas City, Mo.: Kauffman Center for Entrepreneurial Leadership.
36. Shah, S. A. H. (2018). Framework for SME Sector Development in Pakistan. Planning Commission of Pakistan Ministry of Planning, Development & Reform. Government of Pakistan. https://www.pc.gov.pk/uploads/report/macro.pdf.
37. Sobel, R. S., & Graefe-Anderson, R. L. (2014). The relationship between political connections and the financial performance of industries and firms, Mercatus Center, (Jul. 9, 2014).
38. Soleiman, S. (2016). Cronyism and Entrepreneurship: an international analysis of the influence of cronyism on country level productive and unproductive entrepreneurship. Doctoral Dissertation. Faculty of the Graduate College of Oklahoma State University.
39. Syed, A. A. S. G., Ahmadani, M. M., Shaikh, N., & Shaikh, F. M. (2012). Impact Analysis of SMEs Sector in Economic Development of Pakistan: A Case of Sindh. Journal of Asian Business Strategy, 2(2), 44–53. Retrieved from https://archive.aessweb.com/index.php/5006/article/view/4020.
40. White, L. J. (1974). Industrial Concentration and Economic Power in Pakistan. New Jersey: Princeton University Press.
41. World Bank. (2007). Enterprise surveys: Pakistan country profile 2007. Available at http://www.enterprisesurveys.org/~/media/GIAWB/Enterprise. Surveys/Documents/Profiles/English/Pakistan-2007.pdf.
42. Yang, J. S. (2011). Business environment perceptions in Afghanistan and Pakistan (Enterprise Note No. 27). Retrieved from http://www3.weforum.org/docs/WEF_GlobalCompetitivenessR eport_2012-13.pdf.
43. Zacharakis, A., Shepherd, D. A., & Bygrave, W. D. (2000). Global Entrepreneurship Monitor: National entrepreneurship assessment, United States of America: 2000 153 Executive Report. Kauffman Center for Entrepreneurial Leadership at the Ewing Marion Kauffman Foundation.
44. Zaman, K., Iftikhar, U., Rehmani, M., & Irshad, H. (2022). Embracing biodegradable bags: Effects of ethical self-identity on consumer buying behavior. Soc. Responsibility J. doi: 10.1108/SRJ-03-2021-0099.
2. Afraz, N., Hussain, S. T., & Khan, U. (2014). Barriers to the Growth of Small Firms in Pakistan: A Qualitative Assessment of Selected Light Engineering Industries. The Lahore Journal of Economics19, pp. 135–176.
3. Alam, N. (2023). Moral Hazard Problem in Public Policymakers. European Scientific Journal, ESJ, 19(7), 24. https://doi.org/10.19044/esj.2023.v19n7p24.
4. Alaoui, A. El., Shopovski, J., Kvirkvaia, M., Alam, N., & Ofili, O. U. (2016). Obstacles to Entrepreneurship in Albania, Georgia, Morocco, Nigeria, and Pakistan. European Scientific Journal December 2016 edition vol.12, No.34 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431.
5. Amir, S., Ali, M., & Ahmad, F. (2020). Evolution of SMEs in Pakistan and key challenges that hampers their expansion. International Journal of Social Sciences & Humanities Vol. 5, No. 2, 2020, pp. 23-40 http://ijssh.ielas.org ISSN: 2545-420X.
6. Batrancea, Larissa M., et al. (2022). Sources of SMEs financing and their impact on economic growth across the European Union: Insights from a panel data study spanning sixteen years. Sustainability 14.22: 15318.
7. Baumol, W. J. (1990). Entrepreneurship: Productive, unproductive, and destructive. The Journal of Political Economy, 98(5 Part 1), 893-921.
8. Baumol, W. J. (2004). Entrepreneurial Enterprises, Large Established Firms and Other Components of the Free-Market Growth Machine. Small Business Economics 23, 9–21 (2004). https://doi.org/10.1023/B:SBEJ.0000026057.47641.a6.
9. Dar, M. S., Ahmed, S., & Raziq, A. (2017). Small and medium-size enterprises in Pakistan: Definition and critical issues. Pakistan Business Review, 19(1), 46-70.
10. Developing SME Policy in Pakistan SME Issues Paper - for Deliberation by SME Task Force - Policy Planning & Strategy Department. Turn Potential into Profit Small & Medium Enterprise Development Authority, Ministry of Industries & Production Government of Pakistan http://www.smeda.org.pk. (Retrieved on 05-08-2023).
11. Fligstein, N. (2001). The architecture of markets. Princeton, NJ: Princeton University Press.
12. Guseva, A. (2007). Friends and foes: Informal networks in the Soviet Union. East European Quarterly, 41, 2–9
13. Haber, S. H. (2002). Crony capitalism and economic growth in Latin America: theory and evidence: Hoover Press.
14. Hadi, S. & Supardi, S. (2020). Revitalization strategy for small and medium enterprises after Coronavirus disease pandemic (covid-19) in Yogyakarta. J. Xian Univ. Archit. Technol, 12, pp.4068-4076.
15. Haque, Nadeem Ul. (2007). Entrepreneurship in Pakistan, PIDE Working Papers 2007:29, Pakistan Institute of Development Economics, Islamabad.
16. Hellman, J., Jones, G., & Kaufmann, D. (2003). Seize the state, seize the day: State capture, corruption, and influence in transition. Journal of Comparative Economics, 31, 751–773. doi: 10.1016/j.jce.2003.09.006.
17. Holcombe, R. G. (2013). Crony capitalism. Independent Review, 17(4), 541-559.
18. https://www.undp.org/sustainable-development-goals?. Retrieved on 27-05-2023.
19. Hussain, A. (2008). Power Dynamics, Institutional Instability and Economic Growth: The Case of Pakistan. Manuscript, The Asian Foundation.
20. Hussain, S. T., Khan, U., Malik, K. Z., & Faheem, A. (2012). Constraints faced by industry in Punjab, Pakistan (Working paper). London: International Growth Centre.
21. Katua, N. T. (2014). The Role of SMEs in Employment Creation and Economic Growth in Selected Countries. International Journal of Education and Research, Vol. 2 No. 12, pp. 461-472.
22. Kaufmann, D., & Kraay, A. (2002). Growth without governance. (Policy Research Working Paper No. 2928). Washington, DC: World Bank.
23. Khan, S. U., & Saqib, O. F. (2011). Political Instability and Inflation in Pakistan. Journal of Asian Economics, in forthcoming issue, doi: 10.1016/j.asieco.2011.08.006.
24. Khawaja, M. I., & Khan, S. (2009). Reforming institutions: Where to Begin? Pakistan Development Review, 48: 241 – 267.
25. Khawaja, S. (2006). Unleashing the growth potential of SMEs in Pakistan through productivity enhancement. Pakistan Development Forum-2006.
26. Kreiner, N. C., & Ram, Y. (2020). National tourism strategies during the Covid-19 pandemic. Annals of tourism research, 103076. Advance online publication. https://doi.org/10.1016/j.annals.2020.103076.
27. Manzoor, F., Wei, L., & Siraj, S. (2021). Small and medium-sized enterprises and economic growth in Pakistan: Heliyon 7 (2021) e06340. Journal homepage: www.cell.com/heliyo.
28. Mauro, P. (1995). Corruption and growth. The Quarterly Journal of Economics, 110(3), 681–712. https://doi.org/10.2307/2946696.
29. Munir, K., & Khan, U. (2011). SME cluster study: Fan industry in Gujrat and Gujranwala. Karachi: State Bank of Pakistan. Retrieved from http://www.sbp.org.pk/departments/ihfd/SubSegment%20Booklets/Fan%20Industry%20Report.pdf
30. Murphy, P. R., Daley, J. M. & Dalenberg, D. R. (1991). Exploring the effects of postcard prenotification on industrial firms’ response to mail surveys. Journal of the Market Research Society, 33(4), 335–341.
31. Najeeb, H. K. (2021). SMEs: An unloved story. International news. Available online at: https://www.thenews.com.pk/print/920363-smes-an-unloved-story (accessed April 5, 2022). [Google Scholar] [Ref list].
32. Naveed, R. T., Rehmani, M., Khokhar, M. N., Shah, S. R. U., Ali. A., Shahzadi, S., & Irshad, H. (2022). Small and medium-sized enterprises failure in providing workers’ rights concerning Sustainable Development Goals-2030 in Pakistan. Front. Psychol., 06 October 2022, Sec. Organizational Psychology Volume 13 – 2022. https://doi.org/10.3389/fpsyg.2022.927707.
33. Qayyum, A., Khawaja, I. M., & Hyder, A. (2008). Growth Diagnostic in Pakistan, European Journal of Scientific Research, 24: 433 – 450.
34. Qureshi, M. N., Ali, K., & Khan, I. R. (2010). Political Instability and Economic Development: Pakistan Time-Series Analysis. International Research Journal of Finance and Economics, 56: 179 – 192.
35. Reynolds, P. D., Hay, M., & Camp, S. M. (1999). Global entrepreneurship monitor. Kansas City, Mo.: Kauffman Center for Entrepreneurial Leadership.
36. Shah, S. A. H. (2018). Framework for SME Sector Development in Pakistan. Planning Commission of Pakistan Ministry of Planning, Development & Reform. Government of Pakistan. https://www.pc.gov.pk/uploads/report/macro.pdf.
37. Sobel, R. S., & Graefe-Anderson, R. L. (2014). The relationship between political connections and the financial performance of industries and firms, Mercatus Center, (Jul. 9, 2014).
38. Soleiman, S. (2016). Cronyism and Entrepreneurship: an international analysis of the influence of cronyism on country level productive and unproductive entrepreneurship. Doctoral Dissertation. Faculty of the Graduate College of Oklahoma State University.
39. Syed, A. A. S. G., Ahmadani, M. M., Shaikh, N., & Shaikh, F. M. (2012). Impact Analysis of SMEs Sector in Economic Development of Pakistan: A Case of Sindh. Journal of Asian Business Strategy, 2(2), 44–53. Retrieved from https://archive.aessweb.com/index.php/5006/article/view/4020.
40. White, L. J. (1974). Industrial Concentration and Economic Power in Pakistan. New Jersey: Princeton University Press.
41. World Bank. (2007). Enterprise surveys: Pakistan country profile 2007. Available at http://www.enterprisesurveys.org/~/media/GIAWB/Enterprise. Surveys/Documents/Profiles/English/Pakistan-2007.pdf.
42. Yang, J. S. (2011). Business environment perceptions in Afghanistan and Pakistan (Enterprise Note No. 27). Retrieved from http://www3.weforum.org/docs/WEF_GlobalCompetitivenessR eport_2012-13.pdf.
43. Zacharakis, A., Shepherd, D. A., & Bygrave, W. D. (2000). Global Entrepreneurship Monitor: National entrepreneurship assessment, United States of America: 2000 153 Executive Report. Kauffman Center for Entrepreneurial Leadership at the Ewing Marion Kauffman Foundation.
44. Zaman, K., Iftikhar, U., Rehmani, M., & Irshad, H. (2022). Embracing biodegradable bags: Effects of ethical self-identity on consumer buying behavior. Soc. Responsibility J. doi: 10.1108/SRJ-03-2021-0099.
Published
2024-02-29
How to Cite
Alam, N., Shopovski, J., & El Alaoui, A. (2024). Obstacles to Development of Entrepreneurship in Pakistan. European Scientific Journal, ESJ, 20(4), 52. https://doi.org/10.19044/esj.2024.v20n4p52
Section
ESJ Social Sciences
Copyright (c) 2024 Noor Alam, Jovan Shopovski, Aicha El Alaoui
This work is licensed under a Creative Commons Attribution 4.0 International License.
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