Effect of entrepreneurial orientation and strategic orientations on financial and nonfinancial performance of small and medium enterprises in Saudi Arabia

Abstract

In today's competitive environment, small and medium enterprises (SMEs) need to be competitive and adopt innovative and strategic approaches to improve their performance. SMEs have been recognized as the main driver of competitiveness, fueling job opportunities and supporting economic development and growth, particularly in developing countries. The purpose of this paper is to investigate the joint effect of entrepreneurial orientation (EO), market orientation (MO), and technology orientation (TO) on financial and nonfinancial performance of SME in Saudi Arabia. In this study, the author has employed a quantitative research method. The study collected data from 206 owners/mangers of SMEs in KSA. The study has used partial least squares structural equation modeling (PLS-SEM) to analyze the research data. The results in this study show that five out of six hypotheses were accepted, indicating that EO, MO, and TO have a positive and significant effect on financial performance, as well as MO and TO have a positive and significant effect on nonfinancial performance. However, EO was found to have an insignificant effect on nonfinancial performance. The results suggest that SMEs need to evaluate their performance in terms of financial and nonfinancial indicators and understand how these measures relate to each other, which will aid in assess achievements and formulate SMEs strategies. This is the first study that adequately examines the joint effect of EO, MO, TO on financial and nonfinancial performance in developing economics, particularly in Saudi SMEs sector.