PESTEL Framework Analysis: Challenges, Government Support and Performance in Agricultural SMEs

Challenges to agricultural sector stem from political, economic, social, technological and environmental (PESTEL) factors. Governments’ continual support to overcome natural and market challenges raises questions about its effectiveness and sustainability. Whether all challenges or supports are equally potent and to what extent they hinder or promote the performance of small and medium enterprises (SMEs) require investigation. This research considered responses of 599 SME owners obtained through convenient sampling and analysed through Chi-square, t -test and regression. The SMEs were from Odisha, India, a region with less agricultural productivity. Findings suggest that perceptions about natural disasters, poor work culture, politics, administrative support, unavailability of finance and general or tax subsidies do not significantly distinguish firm performance. Government policy, availing government support and the lack of agro-processing facilities are perceived challenges, while mentoring and assistance in marketing are important supports. Not all perceived challenges impede performance; higher perceived challenges lead to better performance. This study indicates that policy as a challenge negatively influences firm performance. Results of this study are relevant in the light of welfare dependency theory, self-determination theory and goal-setting theory.