This study aims to develop and validate a strategic model tailored to the unique challenges and contexts faced by micro, small, and medium-sized enterprises (MSMEs) in Ecuador, enhancing their operational efficiency and access to financing. Employing a quantitative approach, the research utilized a non-experimental, cross-sectional design to gather data from a sample of 358 companies. The study revealed that MSMEs are significantly hindered by limited access to financing, lack of managerial skills, and technological gaps. Despite these challenges, MSMEs demonstrated considerable adaptability and resilience, underscoring their critical role in the local economy. The strategic model proposed leverages Porter’s Diamond Model to identify and address the specific competitive and operational challenges encountered by these enterprises. Key findings include the necessity for enhanced financial literacy, simplified regulatory frameworks, and the integration of digital technologies to improve competitiveness. The proposed model focuses on strategic training, fostering innovation, and creating a more supportive financing environment. The implications of this study are profound, suggesting that policymakers and practitioners should streamline regulatory processes, enhance financial and technological support frameworks, and provide tailored training programs. These strategies are intended to bolster the sustainability and growth of MSMEs, contributing to broader economic development. This research contributes to the academic literature by providing empirical evidence on the challenges faced by MSMEs in developing economies and proposing a contextually adapted strategic model to mitigate these challenges, thereby enhancing their economic impact and sustainability.

Adomako, S., Frimpong, K., Danso, A., et al. (2020). Home country institutional impediments and international expansion of developing country SMEs. International Business Review, 29(5), 101716. https://doi.org/10.1016/j.ibusrev.2020.101716

Ardic, O. P., Mylenko, N., & Saltane, V. (2012). Access to Finance by Small and Medium Enterprises: a Cross‐Country Analysis with A New Data Set. Pacific Economic Review, 17(4), 491–513. Portico. https://doi.org/10.1111/j.1468-0106.2012.00596.x

Akkad, B. A., & Mouselli, S. (2023). Syrian SMEs in Times of COVID-19 Pandemic: Challenges, Adaptation, and Policy Measures. Journal of Risk and Financial Management, 16(3), 142. https://doi.org/10.3390/jrfm16030142

Astudillo D., S. (2018). Innovation in manufacturing MSMEs: a comparative study between Ecuador and Argentina (Spanish). Available online: https://repositoriodigital.uns.edu.ar/handle/123456789/4129 (accessed on 3 April 2024).

Afzal, M., Lawrey, R., & Gope, J. (2019). Understanding national innovation system (NIS) using porter’s diamond model (PDM) of competitiveness in ASEAN-05. Competitiveness Review: An International Business Journal, 29(4), 336–355. https://doi.org/10.1108/cr-12-2017-0088

Banco Central de Ecuador. (2023a). The Ecuadorian economy recorded a year-on-year growth of 3.3% in the second quarter of 2023 (Spanish). Banco Central de Ecuador.

Banco Central de Ecuador. (2023b). Ecuador’s economy reported 0.4% year-over-year growth in the third quarter of 2023 (Spanish). Banco Central de Ecuador.

Banco Mundial. (2023a). GDP growth (% p.a.)—Ecuador (Spanish). Available online: https://datos.bancomundial.org/indicator/NY.GDP.MKTP.KD.ZG?end=2022&locations=EC&start=1961&view=chart (accessed on 3 April 2024).

Banco Mundial. (2023b). The World Bank in Ecuador. Ecuador: an overview (Spanish). Available online: https://www.bancomundial.org/es/country/ecuador/overview (accessed on 3 April 2024).

Bernal Y. J. L., López B. J. A., Mora C. W. T., et al. (2023). Economic and social factors associated with the creation and evolution of MSMEs in Ecuador (Spanish). LATAM Revista Latinoamericana de Ciencias Sociales y Humanidades, 4(1), 4327–4341. https://doi.org/10.56712/latam.v4i1.569

Błach, J., Wieczorek-Kosmala, M., & Trzęsiok, J. (2020). Innovation in SMEs and Financing Mix. Journal of Risk and Financial Management, 13(9), 206. https://doi.org/10.3390/jrfm13090206

Bonini, S., & Capizzi, V. (2019). The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities. Venture Capital, 21(2–3), 137–175. https://doi.org/10.1080/13691066.2019.1608697

Bouchra, N. H., & Hassan, R. S. (2023). Application of Porter’s diamond model: A case study of tourism cluster in UAE. In: Industry clusters and innovation in the Arab World. Emerald Publishing Limited. pp. 129–156.

Buer, S. V., Strandhagen, J. O., & Chan, F. T. S. (2018). The link between industry 4.0 and lean manufacturing: Mapping current research and establishing a research agenda. International Journal of Production Research, 56(8), 2924–2940. https://doi.org/10.1080/00207543.2018.1442945

Busom, I., & Vélez-Ospina, A. (2017). Innovation, public support, and productivity in Colombia. A cross-industry comparison. World Development, 99, 75–94. https://doi.org/10.1016/j.worlddev.2017.07.005

Calabrese, R., Girardone, C., & Sclip, A. (2021). Financial fragmentation and SMEs’ access to finance. Small Business Economics, 57(4), 2041–2065. https://doi.org/10.1007/s11187-020-00393-1

Calabrò, A., Frank, H., Minichilli, A., & Suess-Reyes, J. (2021). Business families in times of crises: The backbone of family firm resilience and continuity. Journal of Family Business Strategy, 12(2), 100442. https://doi.org/10.1016/j.jfbs.2021.100442

Carvalho, N., Chaim, O., Cazarini, E., & Gerolamo, M. (2018). Manufacturing in the fourth industrial revolution: A positive prospect in sustainable manufacturing. Procedia Manufacturing, 21, 671–678. https://doi.org/10.1016/j.promfg.2018.02.170

Castillo, V., Maffioli, A., Rojo, S., & Stucchi, R. (2014). The effect of innovation policy on SMEs’ employment and wages in Argentina. Small Business Economics, 42, 387–406. https://doi.org/10.1007/s11187-013-9485-9

Censo Ecuador. (2023). The Challenge of Counting Ecuador (Spanish). Censo Ecuador.

CEPAL. (2023). Economic Survey of Latin America and the Caribbean (Spanish). Ecuador.

Chauhan, C., Singh, A., & Luthra, S. (2021). Barriers to industry 4.0 adoption and its performance implications: An empirical investigation of emerging economy. Journal of Cleaner Production, 285, 124809. https://doi.org/10.1016/j.jclepro.2020.124809

Coopers & Lybrand. (1998). Strategies for Small Business Growth. Coopers & Lybrand.

Cornell, A., Knutsen, C. H., & Teorell, J. (2020). Bureaucracy and growth. Comparative Political Studies, 53(14), 2246–2282. https://doi.org/10.1177/0010414020912262

Costa, J., & Matias, J. C. (2020). Open innovation 4.0 as an enhancer of sustainable innovation ecosystems. Sustainability, 12(19), 8112. https://doi.org/10.3390/su12198112

Costa, A. D., Zen, A. C., & Spindler, E. D. S. (2022). Family succession, professionalization and internationalization: A study of Brazilian family businesses. Journal of Family Business Management, 12(4), 1065–1080. https://doi.org/10.1108/jfbm-05-2021-0044

Creswell, J. W. (2014). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. SAGE Publications.

Davcik, N. S., Cardinali, S., Sharma, P., & Cedrola, E. (2021). Exploring the role of international R&D activities in the impact of technological and marketing capabilities on SMEs’ performance. Journal of Business Research, 128, 650–660. https://doi.org/10.1016/j.jbusres.2020.04.042

De Chiara, A. (2016). Implementing sustainability strategies in networks and clusters-principles, tools and new research outcomes. Springer International Publishing. pp. 1–167.

De Kok, J., & Uhlaner, L. M. (2001). Organization context and human resource management in the small firm. Small business economics, 17, 273–291

Dini, M., & Stumpo, G. (2019). MSMEs in Latin America: a fragile performance and new challenges for development policies. Synthesis (Spanish). Santiago, Comisión Económica para América Latina y el Caribe (CEPAL.

Distinguin, I., Rugemintwari, C., & Tacneng, R. (2016). Can informal firms hurt registered SMEs’ access to credit? World Development, 84, 18–40. https://doi.org/10.1016/j.worlddev.2016.04.006

Erdogan, I., Rondi, E., & De Massis, A. (2020). Managing the tradition and innovation paradox in family firms: A family imprinting perspective. Entrepreneurship theory and practice, 44(1), 20–54. https://doi.org/10.1177/1042258719839712

Graña-Alvarez, R., Lopez-Valeiras, E., Gonzalez-Loureiro, M., & Coronado, F. (2024). Financial literacy in SMEs: A systematic literature review and a framework for further inquiry. Journal of Small Business Management, 62(1), 331–380. https://doi.org/10.1080/00472778.2022.2051176

Hoque, K., & Bacon, N. (2006). The antecedents of training activity in British small and medium-sized enterprises. Work, employment and society, 20(3), 531–552. https://doi.org/10.1177/0950017006067000

Ibyzhаnova, A., Rustenova, E., Sultanova, Z., et al. (2023). Evaluation of the effectiveness of government support for technology entrepreneurship. Eastern-European Journal of Enterprise Technologies, 5(13(125)), 36–46. https://doi.org/10.15587/1729-4061.2023.286390

Lam, W. R., & Liu, Y. (2020a). Tackling Small and Medium-Sized Enterprises (SMEs) Financing in China. Annals of Economics and Finance; Beijing Tomo, 21(1): 209–239.

Lam, W., & Liu, X. (2020b). Financial management practices and their impact on SME growth: An empirical study from Hong Kong. Journal of Small Business Management, 58(1), 124–144.

Lichy, J., & McLeay, F. (2020). Managing innovation in MSMEs: A strategic decision model. Journal of Business Research, 120, 353–365.

Martin, L. (2005). Internet adoption and use in small firms: internal processes, organisational culture and the roles of the owner-manager and key staff. New Technology, Work and Employment, 20(3), 190–204. https://doi.org/10.1111/j.1468-005x.2005.00153.x

Menezes, K. A., Bhaskaran, S., & Deswal, A. (2019). Effects of national culture on leadership succession planning in small-to-medium scale family enterprises. International Journal of Entrepreneurship and Small Business, 38(1/2), 210. https://doi.org/10.1504/ijesb.2019.102516

Minbaeva, D., Pedersen, T., Björkman, I., & Fey, C. F. (2002, August). MNC knowledge transfer, subsidiary absorptive capacity and HRM. Academy of Management Proceedings, 2002(1), F1–F6. https://doi.org/10.5465/apbpp.2002.7516869

Oduro, S. (2019). Examining open innovation practices in low-tech SMEs: Insights from an emerging market. Journal of Science and Technology Policy Management, 10(3), 509–532. https://doi.org/10.1108/jstpm-03-2019-0036

Ponce, G. I. A., Indacochea, A. A. Á., Moran, A. L. S., et al. (2024). Enhancing competitiveness in cocoa associations: An integral project management approach based on Porter’s Diamond Model. Journal of Infrastructure, Policy and Development, 8(2). https://doi.org/10.24294/jipd.v8i2.2872

Porter, M. E. (1990). The Competitive Advantage of Nations. Harvard Business Review.

Rincón-Guio, C., Quintero, J. T., Losada, J. C. S., et al. (2022). Articulation strategy for the strengthening of the management of social entrepreneurship projects, south region of Colombia experience. Academic Journal of Interdisciplinary Studies, 11(6), 19. https://doi.org/10.36941/ajis-2022-0145

Rincon-Guio, C., Cantillo, J., Sarache, W. (2024). Advancing Resilience in Manufacturing Strategy: A Systematic Literature Review and Future Research Directions. In: Innovations in Industrial Engineering III. icieng 2024. Lecture Notes in Mechanical Engineering. Springer, Cham. https://doi.org/10.1007/978-3-031-61582-5_10

Rincon-Guio, C., & Sarache, W. (2024). Mapping the Multifaceted Landscape of Resilience in Manufacturing Strategy: A Systematic Literature Review and Future Research Avenues. Journal of Industrial Integration and Management, 1–37. https://doi.org/10.1142/s2424862224500064

Rocha-Bello, K. J., Arévalo-Chaparro, N. V., & Cocunubo-Huérfano, L. C. (2018). SMEs in emerging economies: Entrepreneurship in Chile as a determining factor in the economic development of the last decade (Spanish). Punto De Vista, 9(14). https://doi.org/10.15765/pdv.v9i14.1176

Salkind, N. J. (2010). Encyclopedia of Research Design. SAGE Publications.

Seo, J. Y. (2016). Pro-cyclicality of small and medium enterprise (SME) loans according to financing type based on purpose: Evidence from Korean banks. Asian Academy of Management Journal of Accounting and Finance, 12(2), 23–36. https://doi.org/10.21315/aamjaf2016.12.2.2

Signoretti, A. (2020). Overcoming the barriers to the implementation of more efficient productive strategies in small enterprises. Employee Relations: The International Journal, 42(1), 149–165. https://doi.org/10.1108/er-11-2018-0298

Stefanovic, N., & Barjaktarovic, L. (2019). Financing small and medium-sized enterprises and enhancing quality: Private equity insights. Quality Festival, 769–774. https://doi.org/10.24874/pes01.02.080

Thibeault, A., Ryder, M., Tomomewo, O., & Mann, M. (2023). A review of competitive advantage theory applied to the global rare earth industry transition. Resources Policy, 85, 103795. https://doi.org/10.1016/j.resourpol.2023.103795

Tortorella, G. L., Marodin, G. A., Fogliatto, F. S., & Miorando, R. (2015). Learning organisation and human resources management practices: An exploratory research in medium-sized enterprises undergoing a lean implementation. International Journal of Production Research, 53(13), 3989–4000. https://doi.org/10.1080/00207543.2014.980462

Toufaily, E., Zalan, T., & Dhaou, S. B. (2021). A framework of blockchain technology adoption: An investigation of challenges and expected value. Information & Management, 58(3), 103444. https://doi.org/10.1016/j.im.2021.103444

Ultreras-Rodríguez, A., Bueno-Fernández, M. M., Chávez-Hernández, A., et al. (2024). IFRS implementation challenges in Southern Colombia’s agricultural sector. Journal of Infrastructure, Policy and Development, 8(2). https://doi.org/10.24294/jipd.v8i2.2873

Valenzuela, K. L., García, Y. H., Abreu, R. C., & Jiménez, L. M. (2024). Analysis of management skills, a key element for the strengthening of MSMEs in the municipality of Balancán, Tabasco (Spanish). 593 Digital Publisher CEIT, 9(1), 831–840. https://doi.org/10.33386/593dp.2024.1.2151

Villa, A. (2024). Exploring European SMEs in the cleantech sector: a survey-based analysis through European Green Deal pillars [PhD thesis]. Politecnico di Torino.

Vlados, C. (2019). Porter’s diamond approaches and the competitiveness web. International Journal of Business Administration, 10(5), 33–52. https://doi.org/10.5430/ijba.v10n5p33

Wang, H., Xiang, X., & Han, L. (2023). Financial development, legal systems and SME finance: Cross-country evidence, International Review of Economics & Finance, 88, 981–1002. https://doi.org/10.1016/j.iref.2023.07.021