摘要：The small and medium-sized enterprises (SMEs) play an important role on the growth of the economies
of developing countries. In Pakistan, SMEs hold about 90 percent of the total businesses
including the textile industry. The performance of SMEs in the textile industry is influenced by
several factors including the internal capabilities of the firms. Hence the primary objective of the
study is to examine the relationship between the internal capabilities namely Innovation Capability,
Absorptive Capacity and SMEs Performance among textile firms in Pakistan. The study is
conducted using quantitative research. There are 377 questionnaires distributed among textiles
SMEs of Pakistan and they were analyzed using some statistical tests. The results reveal that innovation
capability and absorptive capacity influenced the performance of SMEs, positively.
