Moderating Effects of Finance and Competition on Knowledge Management, Market Orientation, Human Capital, and SME Operations

Abstract

Small and medium-sized enterprises (SMEs) are central to economic growth in emerging markets, yet their operational success depends on strategic resource management and environmental adaptability. This study examines the effects of access to finance and competitive environment on SME performance in Pakistan, alongside the roles of human capital, knowledge management, and market orientation as key operational capabilities. Data were collected from 520 SMEs using a mail survey, and hypotheses were tested with Partial Least Squares Structural Equation Modelling (PLS-SEM). Results show that human capital, knowledge management, and market orientation significantly enhance SME performance, confirming their importance as drivers of operational effectiveness. Approach to finance and competitive environment provide partial mediating effects, though not all relationships were supported, highlighting the complex dynamics of SME operations. The findings contribute to operations management literature by integrating strategic resources and environmental conditions into SME performance models. Practical implications suggest that managers and policymakers should strengthen knowledge-based resources and financial access to improve competitiveness and sustainability. Limitations and directions for future research are also outlined.