Social Network (SN), Inter-firm Cooperation (IFC), HRM Practices,
Entrepreneurial Orientation (EO), and Market Orientation (MO) are commonly
characterized as separate performance antecedents. Due to competition in a
dynamic environment, these factors have been the focus of attention in many
strategic management studies. However, integrated models between these
variables and their application to emerging economies are understudied. The study
aims to investigate the determinants of SMEs and elucidate the role of these
determinants in the performance of small and medium enterprises in Pakistan.
Moreover, the underlining study investigates the mediating effect of innovation
between inter-firm cooperation, social network, HRM practices, entrepreneurial
orientation, market orientation and SMEs performance. Using Social Network
Theory (SNT) and Resource-Based View (RBV), a conceptual model is formulated
to test the hypothesis using the Structural Equation Model (SEM). This research is
based on a survey of 344 small business owners and managers in Pakistan's
manufacturing industry. After establishing the instrument's reliability, structural
equation modeling was carried out using SPSS version 22 and AMOS 22.
The study's findings are as follows. First, it was noticed that inter-firm
collaboration, social networks, HRM practices, entrepreneurial orientation, and
market orientation had a significantly positive (+) impact on SMEs’ performance
and innovation. It was especially discovered that the effect of HRM practices and
marketing orientation on SME performance was higher than that of inter-firm
cooperation, entrepreneurial orientation and social networks, respectively. The
results demonstrated the significance of inter-firm collaboration, social networks,
HRM practices, entrepreneurial orientation, market orientation, and innovation as
strategic orientations for the success of SMEs in Pakistan. Second, it was
discovered that the link between social networks, entrepreneurial orientation, and
the performance of SMEs is completely mediated by innovation. However, it was
discovered that innovation partially mediated the relationship between market
orientation, HRM practices, inter-firm cooperation, market orientation, and
performance. The mediating impact of innovation contributes to the resourcebased
view (RBV) and gives owners and managers helpful insights into policy
creation and execution to improve SMEs' performance in Pakistan. Based on the
findings of this structural equation modeling (SEM), the research concludes that
these variables are the key drivers of SMEs’ performance and should be used to
improve the performance and innovation capability in the emerging economy of
Pakistan's SMEs. The new theoretical knowledge output will benefit the industry,
practitioners, and the research community. It also advances methodologically in
how these variables influence the performance of SMEs in Pakistan. The results of
this study have the following implications. To boost SMEs' performance,
governments in emerging economies must establish and implement support
programs that strengthen their inter-firm cooperation, HRM practices,
entrepreneurial orientation, social ties, and market orientation. Second, SMEs
require an innovation plan to take advantage of their firm resources to improve
performance.