The study attempts to cluster the successful Small and Medium Enterprises (SMEs) according to their growth mode and strategies. Cluster analysis is used to derive the taxonomy of successful SMEs. Discriminant analysis is used to ensure accuracy of the clustering process. The discriminant function explained 97.8% of the total variance between clusters. About 11 variables related to characteristics of the firm, entrepreneurs and entrepreneurial dynamics were used as clustering variables. Three clusters were formed which were characterized as stable independent survivors, innovators with continuous growth, and network intensive units. SMEs in the first two clusters were growth-oriented, but the underlying nature of growth was different in each cluster. SMEs in the first cluster were efficiency-oriented, while those of the second cluster were characterized as innovators with continuous growth and SMEs in the third cluster were labeled as stable independent survivors. They had a few network relations and many operated only in the local markets. The results can be of use to SME policymakers and organizations fostering entrepreneurship and SME development because different policy initiatives may be required for different types of firms.

The Small and Medium Enterprises (SMEs) play a vital role in the industrial development of any country. The importance of the SME sector is well-recognized world over for its significant contribution in gratifying various socioeconomic objectives, such as higher growth of employment, output, promotion of exports and fostering entrepreneurship. The small scale sector in India employs around 26 million people and produces over 7,500 industrial items with the product range varying from very simple items produced with traditional technology to hi-tech products. At present, the Small Scale Industry (SSI) sector accounts for over 90% of industrial units in the country, 40% of value addition in the manufacturing output and approximately 35% of India's exports.

This study aims at clustering the successful SMEs according to their growth mode and strategies by applying cluster analysis. The performance of a region is largely based on the performance of SMEs in that area. Identifying the conditions of success in the SME sector is very important for the acting and nascent entrepreneurs, organizations fostering SME development, financiers, public policy makers and other stakeholders of SMEs. Using the results obtained, organizations fostering entrepreneurship and SME development can direct their actions and develop their products, education and advisory services.

Research in SMEs and entrepreneurship grew in leaps and bounds during the last decade. A huge majority of the firms worldwide are SMEs, and they play a significant role in the economy. Consequently, the performance of the SME sector is closely associated with the performance of the nation. Different studies have been carried out to study the SMEs by categorizing them on different basis. Number of studies have applied clustering techniques to categorize enterprises by using different set of variables. Literature first reviews those studies which used cluster analysis and then reviews those which used other techniques to categorize different SMEs.

Management Research Journal, Small and Medium Enterprises, SMEs, Small Scale Industry, SSI, Economic Environments, Mexican Micro firms, Taxonomy, Dendrogram, Electronic Commerce, Entrepreneurship, Cluster Analysis, Entrepreneurial Dynamics, Cognitive Abilities.