Comparative Analysis of Profitability of Exporting and Non-Exporting SMEs of Khyber Pakhtunkhwa Pakistan

Abstract

The main objective of this study is to examine and make a comparison between the exporting and non-exporting Small Medium Enterprises (SMEs) and its impact on profitability. To achieve the research objective, the data was collected from 100 exporting and 100 non-exporting SMEs. Return on assets, return on equity and gross margin were used as proxies for calculating profitability of SMEs. Methodology used in the concerned study is composed of descriptive statistics, t tests and regression analysis to examine the impact of dependent variable on independent variables. In addition to the concerned study a qualitative approach was also employed in the study. Qualitative approach of the study was regarding the different hurdles faced by SMEs while making their self towards export oriented. In this regard a structured interviewed was conducted with the top management/ owner of 20 SMEs. Results of the present study revealed that exporting SMEs are significantly more profitable than non-exporting establishments based on every measure of d. The study found that export enhanced the financial performance of the SMEs due to favorable market access and growth prospects even where there are a number of hurdles present. The analysis presented in the study suggests a series of policy measures for SME exports and elimination of the existing barriers.