The Role of Financial Literacy in Resource Acquisition and Financial Performance; Moderating Role of Government Support

Adequate resources are considered as success factors for high level of competitiveness and long term survival. However, SMEs have not enough resources which hinder their operational activities and profitability. Acquiring valuable resources has become a challenging question for owners and managers of SMEs. This research is an attempt to examine either the direct influence of financial literacy on financial performance or resource acquisition plays a mediating role. Additionally, this research tests the moderating role of government support between financial literacy and resource acquisition. To test the model, data were collected through a structured questionnaire from the emerging market of Pakistani small and medium size enterprises (SMEs) market. Hypotheses are tested through structural equation modeling (SEM) using Analysis of a Moment Structures (AMOS). The results indicate that financial literacy significantly influences resource acquisition and financial performance. Resource acquisition plays a partial mediating role between financial literacy and resource acquisition. This research recommends SMEs to gainfully employed financially educated managers for batter used and to acquire expedient resources. Moreover, this research suggests the government and controlling authority of SMEs support the firms as in accessing valuable resources that can help in high profitability. In turn, these SMEs can contribute to the development of the economy in different aspect. Further implications are discussed.