Determinants of productivity in the ready-made garments SMEs of Lahore, Pakistan

Abstract

The study has been undertaken to investigate the determinants of productivity in the readymade garments SMEs of Lahore. It's a survey whereby 55 SMEs of Lahore were contacted by employing Stratified Random Sampling technique. For data analysis, various quantile regression techniques along with its diagnostic analyses have been used to identify the association and its significance between the organizational variables and firm productivity. Firms' productivity has been measured through output per labor of each SME. The significant determinants of productivity are found out to be ambition and motivation, age of the enterprise, installation of generator facility, bank facility, and working capital management. Implications of law of diminishing marginal returns were also examined; increase in number of machines leads to augment productivity up to a certain level and then starts a diminishing return. The findings of this study have good implications for the policy makers and the entrepreneurs alike.