Evaluating performance of SMEs using structure equation modeling

Abstract

Entrepreneurial skills enable people to develop new business ideas or improve existing ones. Entrepreneurship transcends firm ownership, private profit production, and the commercial exploitation of new markets, goods, or processes. The literature review demonstrates how competencies are linked with entrepreneur performance. The primary goal of this study was to evaluate the role of entrepreneurs’ competency in mediating the relationship between bank funding and Small and Medium Enterprisers (SMEs’) performance. A survey was conducted among 398 SMEs owner-managers were chosen at random. The direct and mediated effects of entrepreneurs’ competency were not significant in the Factor Analysis and Structural Equation Model. However, bank financing improves SMEs’ performance. A strong mediation influence of behavioral Finance on the connection between bank loans and SMEs performance was also found. The model’s competitive mediation pattern for bank loans and behavioral finance was non-mediation for bank loans and entrepreneurs’ skill.