A 4P Framework for Strengthening MSMEs in India

Abstract

Micro, Small and Medium Enterprises (MSMEs) are central to the Indian economy, contributing substantially to employment, exports, and innovation. Despite sustained policy support and digital-transformation programmes, Indian MSMEs continue to face
persistent performance constraints. Prior research has examined these challenges largely in isolation, leaving a need for an integrated framework that explains how multiple organisational capabilities jointly shape MSME performance.
This study addresses that gap by proposing and empirically examining the 4P Framework, an 4P Maturity (higher-order formative construct) model comprising People Maturity, Process Maturity, Product Capability, and Psychological Capability. Drawing
on the Resource-Based View, Dynamic Capabilities Theory, Social Exchange Theory, and Upper Echelons Theory, the four dimensions are conceptualised as formative components of a higher-order construct, 4P Maturity, which is hypothesised to influence MSME performance.
A quantitative-dominant convergent mixed-methods design, grounded in pragmatism, was adopted. In the quantitative strand, a structured survey of 336 Indian MSME ownermanagers across manufacturing, services, and trading was analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The qualitative strand comprised embedded case studies of three MSMEs, supported by the PULSE 4P™ Business Health Index as a diagnostic instrument.
The results provide preliminary empirical support for the integrated framework. Process Maturity (β = 0.218, p < .001), Psychological Capability (β = 0.216, p < .001), and People Maturity (β = 0.196, p = .001) contributed significantly to 4P Maturity, whereas the contribution of Product Capability was positive but not statistically significant at the 5% level (β = 0.116, p = .066). 4P Maturity was positively associated with MSME Performance (β = 0.617, p < .001), explaining 38.1% of its variance. Qualitative findings indicated that capability development in MSMEs is highly interdependent, with Psychological Capability functioning as a meta-capability.
The findings should be interpreted with caution: the measurement model exhibited below-threshold AVE values and discriminant-validity concerns, and the achieved sample fell below the size estimated for the weakest structural path. Within these limits,
the study contributes an integrated, capability-based account of MSME performance, operationalises Psychological Capability as a measurable organisational construct, and offers the PULSE 4P™ diagnostic as a structured capability-assessment approach for
owner-managers, consultants, and policymakers.
Keywords: MSMEs, 4P Framework, People Maturity, Process Maturity, Product Capability, Psychological Capability, 4P Maturity, MSME Performance, PLS-SEM, India.