ENTREPRENEURIAL ORIENTATION AND SME PERFORMANCE: A SEQUENTIAL MEDIATION ANALYSIS OF MARKET AND LEARNING ORIENTATION

This study examines the direct influence of innovation capability, entrepreneurial orientation, and competitive advantage on the performance of small and medium sized enterprises (SMEs) in the traditional handicraft industry of Lombok, Indonesia. Employing the Resource Based View (RBV) and entrepreneurship theory, the research investigates how firm-level capabilities and strategic orientations contribute to organizational performance. Data were obtained from 96 SMEs through questionnaires and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings show that innovation capability and entrepreneurial orientation do not have a significant direct effect on SME performance, whereas competitive advantage has a strong positive effect. These results suggest that although innovation and entrepreneurial spirit are essential for long-term sustainability, their benefits materialize primarily through the creation of competitive advantage. This paper contributes to SME literature by confirming the pivotal role of competitive advantage in achieving superior performance in resource constrained contexts.

Because small and medium-sized enterprises (SMEs) are pivotal to the health and vibrancy of economies, it is crucial for researchers to understand the factors that significantly underlie SME performance. Two of the most widely identified antecedents to SME performance are innovation and networking. However, despite widespread attention, the theoretical and empirical status of the relationships between innovation, networks and SME performance remain uncertain. Some researchers note that claims regarding a direct positive relationship between innovation and networks with performance fail to adequately account for the variables that mediate this relationship. In contrast, while much research has been undertaken into the performance benefits of innovation and networks, the exponential increase in the number of publications heralding the performance benefits of business model design and business model innovation received very scant empirical support, almost non-existent for SMEs. Business model design is seen as a powerful mechanism for unlocking and enhancing the value of business processes, including innovation. Empirical evidence presented in this thesis tangibly supports this assertion and thus creates a more solid foundation for future development of the business model view of the firm. The purpose of this thesis, comprising four studies, is to theorise and research the nature of the relationship between innovation breadth, networks and business model design with SME performance. The central research question of this thesis asks: How do innovation breadth, networks and business model design relate to SME performance? Study One systematically reviews a large sample of SME growth and performance literature to identify and interpret emergent concepts, themes, trends and gaps. Study One backgrounds the three empirical studies that that follow to argue, using Resource-Based Theory, that the resources required for developing competitive advantage are both physical and intangible; of the two, intangible resources have the greatest strategic potential. In other words, the thesis finds that SMEs lacking physical resources could develop more sustainable competitive advantage by relying more heavily on leveraging path dependent, socially complex, and causally ambiguous intangible resources. Social capital and technological competence, associated with networks and innovation, represent highly desired intangible resources. Business model design organises these resources to create value for the customer. Therefore, innovation across the elements of the business model when designing or reconfiguring the SME’s business model acts as dynamic capabilities that enhance SME performance. The systematic literature review is followed by three empirical studies that use longitudinal and cross-sectional datasets of Australian SMEs. Study Two introduces the concept of innovation breadth, as the number of distinct types of innovation that firms use, or their innovation diversity, and examines the linearity and temporality of its relationship with SME performance. This examination both confirms it to be positive and provides evidence of the diminishing and negative returns of innovation breadth. Such diminishing and negative returns are directly related to increased innovation breadth and the time lag between innovation implementation and performance measurement. Studies Three and Four examine the mediation effect of innovation breadth on the relationship between networks and SME performance (Study Three) as well as the mediation effect of business model design themes on the relationship between innovation breadth and SME performance (Study Four). The combined findings from the last three studies provide sound support that maintaining strong heterogeneous network ties will improve SME performance, but only when the social capital embedded in such network relationships supports innovation breadth. In addition, persistent implementation of moderate levels of innovation breadth would optimise SME performance, but the performance benefits of such innovations would only be unlocked if it is implemented within a coherent business model, designed around the novelty or transaction efficiency themes as primary value drivers. Collectively, the four empirical studies contribute to the SME innovation field by more precisely explaining the relationships between innovation breadth, networks, business model design and SME performance. This thesis therefore highlights and confirms the importance of intangible assets for SME performance and also accounts for the intermediate processes that translate these resources into SME performance by showing that innovation breadth and business model design act as dynamic capabilities. SMEs are advised to focus on building network relations that foster innovation breadth, to focus their innovation activities during any given year by limiting innovation diversity and to focus the design of their business models around either the novelty or efficiency value themes. Such knowledge offers guidance for SME managers who believe that all networking and innovation investments will improve their SME performance. Given the potential costs and risks of networking, innovation and business model design activities to SMEs, practitioners and policymakers are informed about the potential dangers of overextending limited resources and capabilities. A better understanding of how wide SMEs should cast their innovation net, how to construct optimal network structures, and how to design business models along dominant value themes may therefore greatly benefit theory, policy and practice.

The small and medium-sized enterprise (SME) sector is the backbone of the economies of most large countries, driving employment and economic growth. Competitive intelligence (CI) is a major concern for academics and practitioners, as it affects company strategy. In the current uncertain global climate, CI is crucial, as it fosters the development of new ideas and innovations. Given that more established companies typically hold this association, the overarching goal of this study was to explore how smaller companies' entrepreneurial drive interacts with their use of CI to boost performance, thereby adding to the existing body of knowledge. We obtained information from 504 small business owners or managers, and tested the suggested heuristic model via descriptive statistics and partial least squares structural equation modelling (PLS-SEM). The results indicated that entrepreneurial orientation (EO) plays a significant role in mediating the impact of CI on SMEs' performance. We confirmed that CI has a direct effect on SMEs' performance, as does the nexus between CI and EO. However, EO mediates this connection. On the basis of the results of this research, SME managers should maintain a thriving entrepreneurial mindset while developing novel strategic approaches to increase innovation and productivity. Furthermore, we provide valuable recommendations for future research, and we urge policymakers to launch entrepreneurship programmes to help SMEs develop an entrepreneurial drive and a conceptual model that positions EO as a strong indicator of CI and SME performance.

Aim/Purpose: This paper aimed to examine the impact of learning orientation on organizational performance of small and medium enterprises (SMEs) via the mediating role of total quality management (TQM) practices and the moderating role of innovation culture. Background: SMEs’ organizational performance in developing countries, particularly in Kuwait, remains below expectation due to increasing competition and inadequate managerial practices that negatively impact their performance. Although several studies had revealed a significant effect of learning orientation on SMEs’ performance, the direct impact of learning orientation on their performance is still unclear. Thus, the link between learning orientation and organizational performance remains inconclusive and requires further examination. Methodology: This study adopted a quantitative approach based on a cross-sectional survey and descriptive design to gather the data in a specific period. The data were collected by distributing a survey questionnaire to the owners and Chief Executive Officers (CEOs) of Kuwaiti SMEs using online and on-hand instruments with 384 useable data obtained. Furthermore, the partial least square-structural equation modeling (PLS-SEM) analysis was performed to test the hypotheses. Contribution: This study bridged the significant gap in the role of learning orientation on SMEs’ performance in developing countries, specifically Kuwait. In this sense, a conceptual model was introduced, comprising a learning orientation, TQM practices, innovation culture, and organizational performance. In addition, this study confirmed the significant influence of TQM practices and innovation culture as intermediate variables in strengthening the relationship between learning orientation and organizational performance, which has not yet been verified in Kuwait. Findings: The results in this study revealed that learning orientation had a significant impact on organizational performance of SMEs in Kuwait. It could be observed that TQM practices play an important role in mediating the relationship between learning orientation and performance of SMEs, as well as that innovation culture plays an important moderating role in the same relation. Recommendations for Practitioners: This study provided a framework for the decision-makers of SMEs on the significant impact of the antecedents that enhanced the level of organizational performance. Hence, owners/CEOs of SMEs should improve their awareness and knowledge of the importance of learning orientation, TQM practices, and innovation culture since it could significantly influence their performance to achieve success and sustainability when adopted and managed systematically. The CEOs should also consider building an innovation culture in the internal environment, which enables them to transform new knowledge and ideas into innovative methods and practices. Recommendation for Researchers: The results in this study highlighted the mediating effect of TQM practices on the relationship between learning orientation (the independent variable) and organizational performance (the dependent variable) of SMEs and the moderating effect of innovation culture in the same nexus. These relationships were not extensively addressed in SMEs and thus required further validation. Impact on Society: This study also influenced the management strategies and practices adopted by entrepreneurs and policymakers working in SMEs in developing countries, which is reflected in their development and the national economy. Future Research: Future studies should apply the conceptual framework of this study and assess it further in other sectors, including large firms in developing and developed countries, to generalize the results. Additionally, other mechanisms should be introduced as significant antecedents of SMEs’ performance, such as market orientation, technological orientation, and entrepreneurial orientation, which could function with learning orientation to influence organizational performance effectively.

Small and medium-sized firms (SMEs) are important in enhancing the economy, driving innovation, and enhancing competitiveness. Consequently, they play a substantial role in enhancing the overall operational efficacy of enterprises. The primary objective of this study was to investigate the impact of market orientation and entrepreneurial orientation on small and medium-sized enterprises (SMEs) operating in the Pakistani manufacturing sector. Additionally, the study sought to determine the mediating effect of innovation in the link between these orientations and SME performance. Data was collected from 381 small and medium-sized enterprises (SMEs) operating in Pakistan using a self-administered questionnaire. Out of the total surveys collected, 360 met the criteria for conducting a detailed analysis. The study utilized a structured equation modelling technique by SMART PLS 4 to evaluate the influence of Market Orientation (MO), Entrepreneurial Orientation (EO), and Innovation (INO) on the performance of Small and Medium Enterprises (SMEs). The findings of the study demonstrated a notable association between Market Orientation (MO), Entrepreneurial Orientation (EO), and Firm Performance (FP), wherein innovation played a crucial intermediary function within this framework. The aforementioned findings highlight the significant significance of market orientation (MO), entrepreneurial orientation (EO), and innovation orientation (INO) in the attainment of success for small and medium-sized enterprises (SMEs). This study serves as a significant reference for both scholars and practitioners who are interested in gaining a deeper understanding of the effects of market orientation (MO), entrepreneurial orientation (EO), and innovation orientation (INO) on the performance of small and medium-sized enterprises (SMEs). Therefore, this study makes a valuable contribution to the existing body of knowledge in the field, enhancing our comprehension of the topic.

The increase of social media (SM) has led to continuous deviations in how day-to-day entrepreneurial activities can be carried out. Additionally, studies devoted to SM entrepreneurship and SM are relatively limited and fragmented in their focus. However there is growing interest from scholars, practitioners and academia for upcoming studies and exploration within small and medium-sized enterprises (SMEs) context. This research explores the impact of entrepreneurial orientation (EO) on SM adoption and SME performance in developing countries. We employed the resource-based view (RBV) as the foundation for developing the conceptual framework The present study employed a closed-ended questionnaire to collect data from SMEs located in Pakistan. Partial-least-squares-structural equation-modeling (PLS-SEM) was utilized for the analysis of 423 responses. The results proved a direct positive link between EO–SMEs performance, EO–SM adoption, SM adoption–SMEs performance, innovation capabilities (IC), and SME performance. Partial mediation was found between EO and SME performance, and the significant moderation effect of IC was found between SM adoption and SME performance. This paper has implications for practitioners and researchers regarding SM adoption in the SMEs. It builds an empirical, multi-dimensional hypothesized model, including mediating and moderating roles affecting the relationships.

The increase of social media (SM) has led to continuous deviations in how day-to-day entrepreneurial activities can be carried out. Additionally, studies devoted to SM entrepreneurship and SM are relatively limited and fragmented in their focus. However there is growing interest from scholars, practitioners and academia for upcoming studies and exploration within small and medium-sized enterprises (SMEs) context. This research explores the impact of entrepreneurial orientation (EO) on SM adoption and SME performance in developing countries. We employed the resource-based view (RBV) as the foundation for developing the conceptual framework The present study employed a closed-ended questionnaire to collect data from SMEs located in Pakistan. Partial-least-squares-structural equation-modeling (PLS-SEM) was utilized for the analysis of 423 responses. The results proved a direct positive link between EO-SMEs performance, EO-SM adoption, SM adoption-SMEs performance, innovation capabilities (IC), and SME performance. Partial mediation was found between EO and SME performance, and the significant moderation effect of IC was found between SM adoption and SME performance. This paper has implications for practitioners and researchers regarding SM adoption in the SMEs. It builds an empirical, multi-dimensional hypothesized model, including mediating and moderating roles affecting the relationships.

ABSTRACTThis paper investigates the effects of a creating shared value (CSV) orientation as well as market and entrepreneurial orientation on small business performance. Small and medium-sized enterprises (SMEs) lack knowledge-based resources, because of limited business history, experience, and budgets. The effects of entrepreneurial orientation and CSV are examined from a resource-based view. Empirical evidence of the moderating effect of CSV and learning orientation on firm performance is lacking, especially in SMEs in South Korea. We collected 300 samples from SMEs, and analysed the data using quantile regression, which explores the effects of covariates at various quantile levels of a conditional distribution. This differs from previous studies on SMEs, which dealt with the conditional mean (ordinary least squares). The results confirm the significant and positive effects of CSV orientation on firm performance and that entrepreneurial orientation and the moderating effects of learning and CSV orientation are more effective for firms in the mid to upper quantiles in terms of performance. We also examined whether the effects of entrepreneurial and CSV orientation differ for firms with low and high performance using quantile regression. The results indicate that strategic orientations need to be different in low and high-performing businesses. The results address the heterogeneity of SME performance in strategic orientation analyses.

PurposeThis paper aims to investigate the effects of entrepreneurial orientation (EO) on the performance of small and medium-sized enterprises (SMEs) with mediating role of differentiation strategy in Pakistan.Design/methodology/approachA theoretical framework has been developed to base the hypotheses, as also to determine the exact approach in this study. To establish the influence of EO on the performance of SME, a five-point Likert scale questionnaire has been used to collect data from middle and senior managers who operate in SMEs in the manufacturing sectors. The sample illustrates 166 incumbents, comprising 68.07 per cent from middle management and 31.93 per cent from senior management operating in manufacturing sector of SMEs, by means of a stratified random sampling technique. The collected data were analyzed using SPSS and Amos graphics software. Hypotheses were tested by using structural equation modeling (SEM) technique.FindingsEO, as a whole, presents a significant positive effect on the performance of SMEs. Moreover, differentiation strategy partially mediated the relationship between EO and performance of SMEs. Two dimensions of EO, proactiveness and risk-taking propensity, strongly increased firm performance while innovativeness, competitive aggressiveness, autonomy and competitive energy did not cause any significant change. The findings differ from the current view of western enterprises that innovativeness (INO) played a major role by increasing performance of SMEs. The results transpired that innovativeness (INO) tends to reduce performance of SMEs, but the p-value did not reach a high significance value.Research limitations/implicationsThe main limitation of this empirical study is comparatively a small size of the sample. The analysis of power suggests that a larger sample could have provided more reliable and extensive results. Regardless of that, the analysis of reliability, using the Cronbach's alpha, exhibited the consistency of outcomes in providing an accurate portrait of the EO influences on the performance of SME.Practical implicationsThe study verifies that two dimensions of EO have considerable effects on the performance of SMEs, while the others have not, whereas, the EO, as whole, has significant positive effect on performance of SMEs. These findings should be helpful for researchers looking for appropriate performance measures, and for entrepreneurs aiming at getting support for their decisions and evaluating their performance.Originality/valueThe current study appears to be first of its kind focusing on the link between EOs, as whole, and its dimensions, to performance of SMEs and differentiation strategies within the specific context of Pakistan.

Purpose: The purpose of this paper is to empirically test the relationships between entrepreneurial orientation (EO), total quality management (TQM), and small and medium-sized enterprises (SMEs) performance. It specifically examines whether innovation practices (IPs) mediate the EO, TQM, and SME performance relationships.Design/methodology/approach: A self-administered questionnaire was utilised to collect data from owners/managers of SMEs in Malaysia. The validity and reliability of the instrument were evaluated. Structural equation model utilised to analyse the relationships using PLS 3.3.9.Findings: Statistical outcomes displaying a significant direct effect of EO and IPs on SMEs’ performance, while TQM displayed an insignificant effect on SMEs’ performance. For mediation effect analysis, the indirect effect of EO and TQM on SMEs’ performance through IPs was significant.Research limitations/implications: A sample of manufacturing SMEs was investigated using a quantitative cross-sectional research design. Future research could use qualitative techniques or a longitudinal research design for further information analysis.Practical implications: The research findings provide insights into the owners/managers of SMEs in today’s dynamic manufacturing environment, with a focus on EO and TQM as driving factors to enhance their performance.Originality/value: The research extends the literature on EO and TQM with a comprehensive understanding from the standpoint of Malaysian SMEs.

PurposeThis research examines the interrelationships between market orientation (MO) and entrepreneurial orientation (EO) in the small- and medium-sized enterprise (SME) sector. Due to the conflicting results associated with each orientation's influence on firm performance, some researchers advanced that scholars should resort to concurrent observation of the constructs. To the researchers, concurrent deployment of the constructs by businesses is likely to result in an enhanced performance. However, what is lacking in their proposition is how the deployment of these resources should be, thereby leading to a knowledge gap in the literature. The aforementioned gap is what this paper seeks to address.Design/methodology/approachThe study employed deductive research approach, and data were collected from 366 SMEs' owners or owner-managers of SMEs in two metropoles in Ghana. For this study, the hand delivery and collection of questionnaire technique was deployed. The reason is that most respondents may be reluctant to respond to the questionnaires through the post or Internet. Partial least square-structural equation modelling (PLS-SEM) was employed for the data analysis due to its importance in allowing the testing of relationships among constructs. Furthermore, seven-point Likert scale was used to generate responses from the respondents.FindingsThe result indicates that MO and EO have a positive and significant influence on each other. However, the influence of EO on MO is greater. Therefore, when owners of SMEs are embracing the two constructs in their businesses, EO should precede MO. The finding is a novelty of this study. Through this result, the owners of SMEs would have knowledge of embracing EO before MO during the employment of the two constructs in their firms. The study further revealed that not all the components of MO have positive and significant influence on EO, and the reverse is true. Without this study, the owners of SMEs would have placed equal attention on each construct and their components. The study also indicates that deployment of MO in its composite form rather than components is the best way for improving EO.Practical implicationsThe more SMEs engage in MO activities, the likelihood of an increase in their entrepreneurial spirit and the opposite is true. However, engaging in more EO activities would result in higher MO than the reverse.Originality/valueThe findings add to the empirical literature by revealing the interrelationships between MO and EO, which serve as a guide to owners of SMEs and practitioners in their concurrent deployment of the two constructs. The findings would also open replication doors for future researchers in different settings.

PurposeThis paper addresses the mediating effect of structural infrastructure capability on the relationship between entrepreneurial orientation (EO) and SMEs performance in emerging economies, focusing on Nigeria. It addresses the need to ensure that small and medium-sized enterprises (SMEs) are able to overcome the inherent challenges in their external environment actively and, thus, contribute to economic growth through internal management variables.Design/methodology/approachThe study adopted a survey design, utilising a sample of 377 SMEs covering the six geopolitical zones in Nigeria. A questionnaire was used for data collection, and data analysis was conducted using partial least squares structural equation modelling (PLS-SEM) with the aid of SmartPLSv3.FindingsThe study found that innovativeness and proactiveness, as dimensions of EO, have a significant effect on SMEs' performance. Risking-taking, however, showed no significant effect on performance. The study found that structural infrastructure capability significantly mediates the EO–performance relationship.Practical implicationsThe paper provides practical implications for society, as managers and SMEs' support agencies in emerging markets can be encouraged to focus more on internal management activities to support knowledge sharing within the organisation, given its relevance to improving performance, rather than focusing only on EO.Originality/valueThe study further strengthens and validates the resource-based view (RBV) theory and contributes to expanding knowledge on the relevance of internal management variables (knowledge sharing) in managing small and medium-scale enterprises. The study further advances theories regarding knowledge management's role, as a function of internal management system in the EO–performance relationship, thus helping to close the research gap related to these relationships from an emerging-economy perspective.

Aim/Purpose: This study aimed to investigate the impact of innovation management and learning orientation as the mechanisms playing the role of an intermediate relationship between entrepreneurial leadership and organisational performance of small and medium enterprises (SMEs) in Kuwait. Background: SMEs are currently among the principal economic instruments in most industrialised and developing countries. The contribution of SMEs can be viewed from various perspectives primarily related to the crucial role they play in developing entrepreneurial activities, employment generation, and improving innovativeness. Developing countries, including Kuwait and other countries, in the Gulf Cooperation Council (GCC), have recognised the key role played by SMEs as a strong pillar of growth. Consequently, many governments have formulated policies and programmes to facilitate the growth and success of SMEs. Unfortunately, the organisational performance of SMEs in developing countries, particularly in Kuwait, remains below expectations. The lagged growth could be due to a lack of good managerial practices and increasing competition that negatively impact their performance. Numerous researchers discovered the positive effect of entrepreneurial leadership on SMEs’ performance. However, a lack of clarity remains regarding the direct impact of entrepreneurial leadership on SMEs’ performance, especially in developing countries. Therefore, the nexus between entrepreneurial leadership and organisational performance is still indecisive and requires further studies. Methodology: This study adopted a quantitative approach based on a cross-sectional survey and descriptive design to gather data within a specific period. The data were collected by distributing a survey questionnaire to Kuwaiti SMEs’ owners and Chief Executive Officers (CEOs) via online and on-hand instruments. A total of 384 useable questionnaires were obtained. Moreover, the partial least square-structural equation modelling (PLS-SEM) analysis was performed to test the hypotheses. Contribution: The current study contributed to the existing literature by developing a moderated mediation model integrating entrepreneurial leadership, innovation management, and learning orientation. The study also investigated their effect on the organisational performance of SMEs. The study findings also bridged the existing significant literature gap regarding the role of these variables on SMEs’ performance in developing countries, particularly in Kuwait, due to the dearth of studies linking these variables in this context. Furthermore, this study empirically confirmed the significant effect of innovation management and learning orientation as intermediate variables in strengthening the relationship between entrepreneurial leadership and organisational performance in the settings of Kuwait SMEs, which has not been verified previously. Findings: The study findings showed the beneficial and significant impact of entrepreneurial leadership and innovation management on SME’s organisational performance. The relationship between entrepreneurial leadership and SMEs’ organisational performance is fundamentally mediated by innovation management and moderated by learning orientation. Recommendations for Practitioners: The present study provides valuable insights and information regarding the factors considered by the government, policymakers, SMEs’ stakeholders, and other authorities in the effort to increase the organisational performance level and facilitate the growth of SMEs in Kuwait. SMEs’ owners or CEOs should improve their awareness and knowledge of the importance of entrepreneurial leadership, innovation management, and learning orientation. These variables will have beneficial effects on the performance and assets to achieve success and sustainability if adopted and managed systematically. This study also recommends that SMEs’ entrepreneurs and top management should facilitate supportive culture by creating and maintaining an organisational climate and structure that encourages learning behaviour and innovation mindset among individuals. The initiative will motivate them towards acquiring, sharing, and utilising knowledge and increasing their ability to manage innovation systemically in all production processes to adapt to new technologies, practices, methods, and different circumstances. Recommendation for Researchers: The study findings highlighted the mediating effect of innovation management on the relationship between entrepreneurial leadership (the independent variable) and SMEs’ organisational performance (the dependent variable) and the moderating effect of learning orientation in the same nexus. These relationships were not extensively addressed in SMEs of developing countries and require further validation. Impact on Society: This study aims to influence the management strategies and practices adopted by entrepreneurs and policymakers who work in SMEs in developing countries. The effect will be reflected in the development of their firms and the national economy in general. Future Research: Future research should investigate the conceptual research framework against the backdrop of other developing economies and in other business settings to generalise the results. Future investigation should seek to establish the effect of entrepreneurial leadership style on other mechanisms, such as knowledge management processes, which could function with entrepreneurial leadership to improve SMEs’ performance efficiently. In addition, future studies may include middle and lower-level managers and employees, leading to more positive outcomes.

Although several studies have analyzed how entrepreneurial capability and cultural diversity affect SME performance, this study aims to demonstrate the effect of a range of entrepreneurial capabilities and cultural diversity on small and medium-sized enterprises (SME) performance. The study involved the analysis of 200 questionnaire-based SME owner-manager surveys within Kumasi metropolis, Ghana, influenced by the Partial Least Squares Structural Equation Modeling (PLS-SEM) technique. The study found that there is a significant positive correlation between cultural diversity and entrepreneurial capability, cultural diversity and SME performance, entrepreneurial capabilities and SME performance. These findings contribute to an empirical study comparing entrepreneurial capability and cultural diversity on Ghanaian SME performance. Further recommendations are made for SME managers, policy makers and future researchers.

Although several studies have analyzed how entrepreneurial capability and cultural diversity affect SME performance, this study aims to demonstrate the effect of a range of entrepreneurial capabilities and cultural diversity on small and medium-sized enterprises (SME) performance. The study involved the analysis of 200 questionnaire-based SME owner-manager surveys within Kumasi metropolis, Ghana, influenced by the Partial Least Squares Structural Equation Modeling (PLS-SEM) technique. The study found that there is a significant positive correlation between cultural diversity and entrepreneurial capability, cultural diversity and SME performance, entrepreneurial capabilities and SME performance. These findings contribute to an empirical study comparing entrepreneurial capability and cultural diversity on Ghanaian SME performance. Further recommendations are made for SME managers, policy makers and future researchers.