Determinants of competitiveness in textile industry of Pakistan

Abstract

This study investigated the determinants of competitiveness in textile industry of Pakistan. Both financial (leverage, liquidity, investment, productive asset and firm size) and nonfinancial factors (exporting and market share) were collectively studied from 2002 to 2012 for 84 textile firms. Balanced panel data used for analysis. Hausman test confirmed fixed effect panel data regression model as appropriate research technique. Results proven that leverage, productive asset and firm size had negative significant relationship with competitiveness of firm while market share had positive significant relationship. Extraordinary use of debt financing, inefficient asset management and improper usage of productive asset were the point of main concern for further improvement of firm competitiveness. For capturing large market share firm desired to achieve economies of scale and economies of scope. Exporting and liquidity had positive but insignificant relationship while investment had negative insignificant relationship with competitiveness.