Unlocking the Potential of Micro, Small and Medium Enterprises: An Explorative Study

Development of Micro, Small and Medium Enterprises (or MSMEs) has been a priority of independent India. Initial government policies to promote this sector include encouraging cottage industries through the Khadi and Village Industries Commission Act of 1956. Thereafter, successive Governments launched several (disaggregated) policy initiatives for promoting agro-based industries and small-scale industries. However, groundlevel impact remained limited. The sector is second only to agriculture in terms of contribution to the Gross Domestic Product. MSMEs today contribute around 45% of India’s industrial production and provide employment to over 59 million households. Further, the sector is an innovation hotbed for developing indigenous technologies for driving the country’s growth. Analysts expect that the sector will power India’s economic engine. Given the scale and prevalence, the notion of MSMEs driving

India’s growth seems plausible. However, currently, secondary data extrapolations, not primary studies, drive such speculative possibilities. There is an absence of studies assessing the ground-level hurdles.

Indian MSMEs represent a paradox. Most MSMEs fail to scale up. Such businesses, arguably, represent the majority. Yet, there are instances of some businesses defying this trend and establishing a global presence. There are two specific aspects of the research: (1) to understand the nature of challenges created by the business environment; and (2) to understand how some businesses overcome the environmental challenges by using firmspecific resources. This study focusses on manufacturing-based MSMEs operating in industrial clusters around the Delhi National Capital Region (NCR). The central premise of the investigation framework is that firm-specific resources, environmental factors, and contingency response predict firm (MSME) performance. The primary contribution of this project lies in

improving understanding of the theoretical foundations of MSMEs in the NCR. This study is also expected to contribute to the improvement of the information base for decisions on managing and promoting MSMEs, especially in the NCR. This can serve as a valuable weapon in the armory of the entrepreneurs as well as Government and non-governmental organizations.