Relationship between resources and small firm growth in Bangladesh : the moderating effects of government and private organizations support

Firm growth has received profound attention due to its significant contributions towards the economy. Nonetheless, growth in the context of small firms is suffering from the absence of any unified theory or model. Based on the theory of Resource Based View (RBV), which argues that firms’ resources have direct and indirect effects on firms’ performance and growth, the study examined the relationship between resources such as finance, financial literacy of owner-managers, market orientation strategy, managerial capability, and small firm financial and non-financial growth in the context of Bangladesh. The study also considered the moderating role of government and private organizations support. A quantitative research approach was employed and a structured questionnaire was used as the research instrument. A survey design was adopted and the unit of analysis was small firms operating in Bangladesh and the owner-managers of the small firms were the respondents. The study employed non- probabilistic sampling technique, with a sample size of 407 small firms. The Partial Least Squares to Structural Equation Modelling (PLS-SEM) approach was applied for analysing the data. The findings of the study show that finance, financial literacy and market orientation are the strong predictors of small firm financial and non-financial growth in Bangladesh. Managerial capability is shown to have a positive significant relationship only with non-financial growth. The study also indicates that government support is not useful while private organizations play only a minor role in assisting small firm growth in Bangladesh. The novelty of this study is in pioneering the integration of tangible and intangible resources in a single domain with the moderating effect of government and private organizations support in explaining small firm growth. Based on the empirical evidences, practitioners and policy makers should pay more attention to the financial access, literacy development and marketing success of small firms in Bangladesh.