Improving the performance/competency of small and medium enterprises through intellectual capital

The role played by intellectual capital (IC) is crucial in the context of small and medium enterprises (SMEs). Nonetheless, IC literature focusing on SMEs settings is limited and fragmented. This study provides a structured literature review (SLR) of existing evidence related to the effect of IC on SMEs performance. Findings show that strategic outcomes – such as innovation, knowledge management, and core competencies – and corporate performance of SMEs are impacted by IC. Further research could analyze the impact of IC on other determinants of SMEs’ performance such as learning organization, conversation management, and invisible assets.

Most SMEs in Nigeria die within their first five years of existence, a smaller percentage goes into extinction between the sixth and tenth year while only about five to ten percent survive, thrive and grow to maturity, the death of the businesses was largely caused by inadequate intellectual capital and technological orientation. The objective of the study is to examine the relationship between intellectual capital and SMEs performance with the moderating role of technological orientation. The study obtained data through a survey questionnaire. The researcher employed Statistical Package for the Social Sciences (SPSS) version 18 for preliminary analyses. For main analysis, the study employed partial least squares (PLS) path modelling. The findings of the study revealed that intellectual Capital has significant effect on Small and Medium Enterprises (SMEs) performance, technological orientation significantly moderate the relationship between intellectual capital and Small and Medium Enterprises (SMEs) performance. The study recommended that Owner/managers of SMEs should possess technical, interpersonal, and conceptual skills to effectively plan, lead, organize and control the enterprise effectively leading to increased performance. The study concluded that intellectual capital has significant effect on SMEs performance and technological orientation significantly moderates the relationship between intellectual capital and SMEs performance.

The entrepreneurial ecosystem is a relatively new perspective within the field of entrepreneurship but is now one of the most discussed topics in that field. It emphasizes the role of broader framework conditions that promote or constrain entrepreneurial activity in any region. The supportive institutional framework (reduced number of government regulations, ease in compliance of taxation system and control over corruption) and physical conditions (ease in access to finance, developed infrastructure, stability in political environment, the availability of an educated workforce and reduced competition with informal sector) create an entrepreneurial ecosystem where entry, survival and growth of firms will be at the highest rate. These elements of the institutional framework and physical conditions are interactive in nature, therefore, policymakers around the world are trying to achieve a balance between these components of the entrepreneurial ecosystem. There is a paucity of research on the entrepreneurial ecosystems of developing countries, therefore, the findings of this thesis will not only be an addition to the literature but will also be useful for policymakers in these countries. In this study, pooled cross-sectional data for Pakistan and 41 low-middle income countries (LMICs) covering the period 2006-13 have been used to identify different entrepreneurial ecosystems and explain their impact on the performance of small and medium enterprises (SMEs). The performance of SMEs has been measured through the annual change in sales growth, employment growth and labour productivity growth. The findings based on the analysis of the entrepreneurial ecosystems for the group of LMICs show that all of the identified components can have a negative effect on the performance of the SMEs. However, ranking of components on the basis of magnitude and statistical significance of effect shows that corruption has the most negative effect on firm performance, which warranted further examination. Therefore, we compare the firm performance of the most corrupt and least corrupt LMICs through the use of propensity score matching (PSM) methods. The results of matching methods show that firm performance in the most corrupt countries is at least 10% lower than firms in the least corrupt countries. Thus, LMICs need to take steps to improve their control over corruption in order to achieve better performance of their SMEs. However, only the individual components of the entrepreneurial ecosystems could be assessed for LMICs because of the heterogeneity of the institutional frameworks and physical conditions of these countries. Therefore, the entrepreneurial ecosystem of Pakistan has also been analysed to determine its existence and composition, and its effects on the performance of SMEs. The entrepreneurial ecosystem of Pakistan is examined using firm level survey data provided by the World Bank Enterprise Survey (WBES) for the years 2007 and 2013. A cluster analysis and canonical discriminant analysis (CDA) is undertaken to identify the composition of the entrepreneurial ecosystem existing in Pakistan. This bottom-up approach, recommended in the literature, has been used to measure the interactive effects of components of the entrepreneurial ecosystem of Pakistan. None of the studies in the literature has measured and empirically tested the entrepreneurial ecosystem of Pakistan using this approach. The findings indicate that the entrepreneurial ecosystem of Pakistan is a combination of elements of the institutional framework and physical conditions. Except for government regulations and political stability, all other components contribute negatively to the entrepreneurial ecosystem of Pakistan. Thus, the aggregate effect of the entrepreneurial ecosystem is negative on the performance of SMEs. Moreover, an index was calculated using the interactive weighted effect of the components of the entrepreneurial ecosystem of Pakistan. The regression estimates based on the index values affirmed the negative effect of the entrepreneurial ecosystem of Pakistan as a system. Our findings for Pakistan can be used as a guideline for policymakers in other developing countries with similar institutional frameworks and physical conditions. However, it can be inferred that there is no shortcut to create a supportive entrepreneurial ecosystem. The gradual improvements, with government acting as facilitator, are required to make the entrepreneurial ecosystems in LMICs conducive for entry, survival and growth of businesses. The specific recommendations for both policymakers and entrepreneurs are given at the end of the thesis.

PurposeThe purpose of this study is to determine and compare the performance of small and medium enterprises (SME) and manufacturing company stock portfolios in the Indonesian, Chinese and Indian capital markets by the Sharpe Index and the significance of differences in average performance in the capital market.Design/methodology/approachThis is comparative research that compared the performances of SME and manufacturing company stock portfolios in Indonesian, Chinese and Indian capital markets. The hypothesis examination of comparative test used one-way ANOVA technique on the performance of SME and manufacturing company stock portfolios in Indonesian, Chinese and Indian capital markets. One-way ANOVA test was used in the analysis to test the average difference of performance indices of SME and manufacturing company stock portfolios is in Indonesian, Chinese and Indian capital markets.FindingsThe performance of SME and manufacturing company stock portfolios in Indonesian capital market was not better than the performances of IHSG and LQ45 Index, the performance of SME and manufacturing company stock portfolios in Chinese capital market (SZSE) was better than the performance of Shenzhen Composite Index and the performance of Shenzhen A-Share Stock Price Index. The comparison of the performances of SME and manufacturing company stock portfolios in Indonesian, Chinese and Indian capital markets showed that the performance of SME and manufacturing company stock portfolios in Chinese capital market was the best and the performance of SME and manufacturing company stock portfolios in Indonesian capital market was the lowest.Practical implicationsThe implication of this study was that SME and manufacturing company stock portfolios had relatively better performances in China and India, so investors should consider investing in SME and manufacturing company stocks. The performance of SME and manufacturing company stock portfolios in Indonesia was not able to exceed market and LQ45 portfolios, so the authority in Indonesia financial market should consider developing a special market for SME and manufacturing company to support the development of SME and manufacturing company in Indonesia and solve the problem of lack of funding source for SME and manufacturing company.Originality/valueThe originality of the present study is in the measurement of the performance of SME and manufacturing company stock portfolio by risk-adjusted return which returns per risk unit measured by Sharpe Index as a more beneficial measurement in measuring stock portfolio performance than average return. Comparative study of the stock portfolio performances of small medium enterprises and manufacturing company In Indonesian, Chinese and Indian stock markets, and object studies conducted in Indonesia, China and India.

This study aims to examine the influence of Intellectual Capital (IC) and Corporate Social Responsibility (CSR) on the performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia, with a focus on the mediating role of innovation. This study employed a quantitative research design, with data collected from MSME owners and managers across multiple provinces in Indonesia. Structural Equation Modeling (SEM) was applied to test the relationships among IC, CSR, innovation, and performance. The results indicated that both IC and CSR have a significant indirect effect on MSME performance through innovation, confirming full mediation. Among the IC dimensions, relational and technological capital have the strongest influence on innovation. CSR also enhances innovation through initiatives related to social welfare, environmental sustainability, and operational efficiency. These findings demonstrate that innovation acts as a strategic bridge linking knowledge assets and social responsibility to business success. The findings suggested that MSME leaders prioritize innovation-driven strategies supported by intellectual and social capital. Policymakers should design programs that integrate CSR and innovation development to strengthen MSME competitiveness and sustainability. This study contributes to the Knowledge-Based View and Stakeholder Theory by establishing innovation as a full mediator between IC, CSR, and performance. The proposed model provides a novel theoretical framework and empirical evidence explaining how MSMEs in developing economies can achieve superior performance through the synergy of knowledge, responsibility, and innovation.

A growing interest in human resource management (HRM) in small and medium enterprises (SMEs) has not been accompanied by increased knowledge of how different HRM policy orientations can affect SMEs' effectiveness. In this way, the goal of this paper is twofold: to test whether the orientation of HRM towards high-performance work practices (HPWP) –represented by the Abilities-Motivation-Opportunities (AMO) framework– allows SMEs to achieve better performance and to test the moderating role of corporate social responsibility (CSR) orientation. Based on a telephone questionnaire together with data collected from a sample consisting of 1,136 Spanish SMEs that operate in the industrial or services sector, our results show that SMEs perform better when HRM policies are oriented towards the AMO model. In addition, our findings highlight that this performance impact of orienting HRM towards HPWP is positively moderated by a CSR orientation. This paper thus complements HRM-related literature by adding new evidence exploring the impact of the AMO model on firm performance as well as the role played by CSR orientation within the SME context. Implications for the central European audience: Managers should be aware of the importance of considering and implementing appropriate ability, motivation, and opportunity policies for their employees in order to enhance SME performance. In addition, the importance of a CSR orientation is highlighted, which intensifies the impact of HPWP on firm performance. This empirical paper brings evidence from the underexplored high-performance work policies in SMEs, given their importance in stimulating employee and organizational performance. It also takes into account the particularities of the Spanish context, where most businesses are considered to be SMEs.

As small and medium enterprises (SMEs) have limited resources, they need a manageable number of indicators that are simple and easy to use for measuring sustainability performance. However, the lack of suitable indicators tailored to industry needs, particularly for SMEs, has been a major challenge in measuring and managing industrial sustainability. Our study aims to empirically analyze and select the useful and applicable indicators to measure sustainability performance in Italian footwear SMEs. To achieve this objective, we proposed a methodological approach to identify, analyze and select sustainability indicators. First, we carried out a systematic review to identify potential sustainability indicators from the literature. Then, we developed a questionnaire based on the identified indicators and pre-tested it with selected industrial experts, scholars, and researchers to further refine the indicators before collecting data. We applied the fuzzy Delphi method to analyze and select the final indicators. Based on a sample of 48 Italian footwear SMEs, the results of our study show that product quality, material consumption, and customer satisfaction were the top priorities among the selected indicators for measuring the economic, environmental, and social dimensions of industrial sustainability, respectively. The selected indicators stressed the measuring of industrial sustainability performance associated with financial benefits, costs, market competitiveness, resources, customers, employees, and the community. Our study proposed a framework that helps to apply the selected indicators for measuring sustainability performance in SMEs. Finally, our study contributes to the existing theory and knowledge of industrial sustainability performance measurement by providing indicators supported by empirical evidence and a framework to put the indicators into practice in the context of SMEs.

This paper studies the effect of globalization on small and medium enterprises (SMEs) performance in Nigeria. The study adopts an ex post-facto type of descriptive research design. In carrying out this study, the secondary statistics data was used. Data was extracted from CBN bulletin on relevant information which depicts globalization and its effect on SMEs performance in Nigeria.A co-integration model was used to investigate the effect of globalization on SMEs performance in Nigeria. To capture the activities of globalization, three proxies were used to capture the activities of globalization; they include interest rate, bank credit and trade openness while on the other hand, output of SMEs to GDP was used to capture SMEs performance covering the period of 1992 to 2014. It was observed that interest rate, bank credit and trade openness do not improve the performance of SMEs output. The overall effect as shown by the F-statistics reveals that the variables considered in this study are not significant in explaining the level of improvement in SMEs output and performance in Nigeria.

Purpose – The ability to acquire and learn knowledge has been most important challenges faced by business around the word. Especially Small and Medium Enterprises (SMEs). SMEs is a backbone of any emerging economy. The purpose of this paper is to empirically examine the mediating role of absorptive capacity and how it affects Intellectual Capital (IC) and SME efficiency in Pakistan. It also investigates the direct impact of the components of IC on business performance. Design/methodology/approach – Partial least square-structural equation modeling (PLS-SEM) was used to assess the effect of IC dimensions on performance of SMEs and to analyze the mediating role of absorptive capacity in this relationship. Data were collected from 486 SMEs owner/managers using a survey questionnaire with Likert scale items. Findings – The findings of the study show that absorptive capacity, played a positive mediating role in the relationship between the dimensions of IC and those of performance of the Small and Medium Enterprises (SMEs). The dimensions of Intellectual Capital were a strong predictor of SMEs performance and had a profound positive influence. Originality/value – This study contributes to the literature on Intellectual Capital (IC) by examining the role of absorptive capacity in the relationship between IC components and SMEs performance. This research also helps practitioners recognize the importance of transformation and the exploitation of knowledge for business performance.

Small and Medium Enterprises (SMEs) in Indonesia have a strategic role in the national economy and face challenges in global competition. These challenges include limited access to capital, limitations in technology adoption, low innovation capacity, and the need for more human resource development. Many SMEs also operate informally, facing obstacles in obtaining policy support or broader market access. This study aims to analyze the effect of Customer Relationship Management (CRM) and market orientation on SMEs’ performance, with innovation capabilities as a mediating variable. The study was conducted on 348 respondents who were SMEs business actors producing packaged food in North Sumatra. The method used is quantitative through surveys and data analysis using the Structural Equation Modeling (SEM) Partial Least Squares (PLS) technique. The results of the study indicate that Customer Relationship Management (CRM) has a positive influence on SMEs performance (p=0.000) and innovation capabilities (p=0.011). Besides, market orientation also contributes significantly to SMEs’ performance (p=0.000) and innovation capabilities (p=0.000). Innovation capabilities have been proven to improve SMEs’ performance (p=0.000). In the indirect effect, innovation capabilities mediate between CRM and SMEs’ performance (p=0.013) and between market orientation and SMEs’ performance (p=0.000). These results indicate that CRM and market orientation not only have a direct effect on SMEs’ performance but also indirectly through increasing innovation capabilities. Acknowledgment Gratitude to the Directorate General of Higher Education, Research, and Technology of the Ministry of Education, Culture, Research, and Technology of the Republic of Indonesia (Kementerian Pendidikan, Kebudayaan, Riset, dan Teknologi Republik Indonesia, Direktorat Jenderal Pendidikan Tinggi, Riset, Dan Teknologi) for providing financial support through funding for Regular Fundamental Research in 2024 with contract number 103/E5/PG.02.00.PL/2024; 16/LL1/AL.04.03/2024; 10/II.3-AU/UMSU-LP2M/C/2024. Gratitude to the Leaders of the University and the Leaders of Universitas Muhammadiyah Sumatera Utara (UMSU) [University of Muhammadiyah Sumatera Utara] for their support and provision of facilities during the research process. Thank you to all parties who have contributed directly and indirectly to supporting and assisting this research. The assistance, time, and attention given are significant in completing this research.

PurposeThe purpose of this paper is to find out how absorptive capacity (AC), leadership capacity (LC) and government support (GS) affect small and medium enterprises (SMEs) innovation (product innovation [PDI], process innovation [PCI] and distribution channel innovation [DCI]), taking into consideration the role of innovation (PDI, PCI and DCI) on competitive advantage and SMEs performance and the moderating role of customer orientation (CO).Design/methodology/approachThis study gives a theoretical model tested using structural equation modeling. The information used to test the hypotheses came from interviews with the top managers of Vietnam’s SMEs. The 633 survey respondents from the southern part of Vietnam were chosen for the study. The goal of the 47-item questionnaire is to look at how all variables relate to each other.FindingsThe results show that a firm’s LC has the most significant impact on innovation, followed by its AC and GS. According to the study, DCI does not lead to competitive advantage but improves SMEs’ performance. In addition, the study’s findings indicate that CO moderates the relationship between PDI – SMEs performance and DCI – SMEs performance.Research limitations/implicationsThe classification of only three types of innovation (PDI, PCI and DCI) restricted the applicability of the research to other kinds of innovation in SMEs. Second, only AC, LC and GS are identified in this study as external factors that influence business innovation. In this study, the authors have not studied different business industries; the authors recommend that the research in the back on SMEs should investigate their classification into distinct industry groups, including agricultural, forestry and marine products; industry and construction; and commerce and services.Practical implicationsThis study shows the importance of innovation senior management for innovation in SMEs. This study found that innovation, especially continuous innovation, increased competitive advantage and SMEs performance. Companies that wish to innovate must have access to external resources and support. Moreover, enterprises must comprehend their consumers’ wants to achieve innovation and better SMEs’ performance.Social implicationsThis research significantly contributes to enterprise innovation and operational efficiency for the sustainable development of SMEs in Vietnam. It is expected to enhance employment opportunities, maintain social stability and expand Vietnam’s gross domestic product.Originality/valueThis study contributes to the growing knowledge of the indirect and direct effects, the mediating function of innovation (PDI, PCI and DCI) on competitive advantage and SMEs performance and the moderating effect of CO.

Small and Medium Enterprises (SME) product innovation in order to support the concept of green products must be able to convince consumers. Product innovations which have been made that are not in accordance with the tastes of consumers, so the goods are less attractive to consumers. SMEs have difficulties in adjusting products that are environmentally friendly and acceptable to consumers. The high cost in innovating also results in SMEs who hesitate to modify the product. This study aimed to determine, describe, and analyze the effect of green products on the performance of SMEs in Sidoarjo. The first stage was to map green product criterias that affect the performance of environmentally-based SMEs, then analyse the effect of green products on the performance of environmentally-based SMEs. The method used in determining this effect was Partial Least Square (PLS). From the results of data processing, there were factors that influence the performance of environmentally friendly SMEs, namely the green product factor. Then a critical success factor analysis was carried out on the green product factor to determine the strategies that must be taken by environmentally friendly SMEs. The results of the analysis obtained strategy recommendations in improving the performance of SMEs were the strategy of selecting raw materials, choosing energy sources, using the amount of raw materials, and choosing product packaging materials. The strategy was in the context of developing environmentally friendly SMEs so they can improve SME competitiveness.

This paper purposes to develop a corporate social responsibility (CSR) model to guide small and medium enterprises (SMEs) in the South African construction industry (SACI) towards sustainable business performance (SBP). A theoretical CSR model was developed from the literature and validated through Partial Least Squares Structural Equation Modelling (PLS-SEM), using primary questionnaire data obtained from 110 SMEs in the SACI, who are registered on the construction industry development board (cidb) register of contractors between Grade 1 and 6 general building (GB) and/or civil engineering (CE). The PLS-SEM results indicate that CSR drivers influencing the CSR practices of SMEs, along with CSR implementation challenges experienced by SMEs, influence the perception of SMEs pertaining to the relationship between the integration of CSR and SBP all of which influences the CSR activities considered by SMEs to achieve SBP, thus implying that the holistic adaption of the PLS-SEM (CSR model) by SMEs in the SACI equates to more SBP. However, SMEs practicing CSR activities to achieve SBP are subjected to specific CSR: drivers and implementation challenges as well as SME owner perceptions.

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to economic and non-economic activities. Researchers have increasingly focused on the adoption and use of ICT by small and medium enterprises (SMEs) as the economic development of a country is largely dependent on them. Following the success of ICT utilisation in SMEs in developed countries, many developing countries are looking to utilise the potential of the technology to develop SMEs. Past studies have shown that the contribution of ICT to the performance of SMEs is not clear and certain. Thus, it is crucial to determine the effectiveness of ICT in generating firm performance since this has implications for SMEs’ expenditure on the technology. This research examines the diffusion of ICT among SMEs with respect to the typical stages from innovation adoption to post-adoption, by analysing the actual usage of ICT and value creation. The mediating effects of integration and utilisation on SME performance are also studied. Grounded in the innovation diffusion literature, institutional theory and resource-based theory, this study has developed a comprehensive integrated research model focused on the research objectives. Following a positivist research paradigm, this study employs a mixed-method research approach. A preliminary conceptual framework is developed through an extensive literature review and is refined by results from an in-depth field study. During the field study, a total of 11 SME owners or decision-makers were interviewed. The recorded interviews were transcribed and analysed using NVivo 10 to refine the model to develop the research hypotheses. The final research model is composed of 30 first-order and five higher-order constructs which involve both reflective and formative measures. Partial least squares-based structural equation modelling (PLS-SEM) is employed to test the theoretical model with a cross-sectional data set of 282 SMEs in Bangladesh. Survey data were collected using a structured questionnaire issued to SMEs selected by applying a stratified random sampling technique. The structural equation modelling utilises a two-step procedure of data analysis. Prior to estimating the structural model, the measurement model is examined for construct validity of the study variables (i.e. convergent and discriminant validity). The estimates show cognitive evaluation as an important antecedent for expectation which is shaped primarily by the entrepreneurs’ beliefs (perception) and also influenced by the owners’ innovativeness and culture. Culture further influences expectation. The study finds that facilitating condition, environmental pressure and country readiness are important antecedents of expectation and ICT use. The results also reveal that integration and the degree of ICT utilisation significantly affect SMEs’ performance. Surprisingly, the findings do not reveal any significant impact of ICT usage on performance which apparently suggests the possibility of the ICT productivity paradox. However, the analysis finally proves the non-existence of the paradox by demonstrating the mediating role of ICT integration and degree of utilisation explain the influence of information technology (IT) usage on firm performance which is consistent with the resource-based theory. The results suggest that the use of ICT can enhance SMEs’ performance if the technology is integrated and properly utilised. SME owners or managers, interested stakeholders and policy makers may follow the study’s outcomes and focus on ICT integration and degree of utilisation with a view to attaining superior organisational performance. This study urges concerned business enterprises and government to look at the environmental and cultural factors with a view to achieving ICT usage success in terms of enhanced firm performance. In particular, improving organisational practices and procedures by eliminating the traditional power distance inside organisations and implementing necessary rules and regulations are important actions for managing environmental and cultural uncertainties. The application of a Bengali user interface may help to ensure the productivity of ICT use by SMEs in Bangladesh. Establishing a favourable national technology infrastructure and legal environment may contribute positively to improving the overall situation. This study also suggests some changes and modifications in the country’s existing policies and strategies. The government and policy makers should undertake mass promotional programs to disseminate information about the various uses of computers and their contribution in developing better organisational performance. Organising specialised training programs for SME capacity building may succeed in attaining the motivation for SMEs to use ICT. Ensuring easy access to the technology by providing loans, grants and subsidies is important. Various stakeholders, partners and related organisations should come forward to support government policies and priorities in order to ensure the productive use of ICT among SMEs which finally will help to foster Bangladesh’s economic development.

Small and Medium Enterprises (SMEs) play a strategic role in regional economic development; however, their performance remains constrained by limited tangible resources and managerial capacity. In a knowledge-based economy, intangible resources such as social and psychological capital have become critical drivers of sustainable SME performance. This study aims to examine the effects of social capital and psychological capital on SME performance, with knowledge-sharing behavior as a mediating variable. The research was conducted among food and beverage SMEs fostered by the local government in Kediri. Using an explanatory research design, data were collected from 200 SME owners through structured questionnaires and analyzed using Structural Equation Modeling with the Partial Least Squares (SEM-PLS) approach. The results demonstrate that social capital and psychological capital have significant positive effects on knowledge sharing behavior and SME performance. Knowledge-sharing behavior is also found to have a direct positive effect on SME performance and partially mediates the relationships among social capital, psychological capital, and performance outcomes. These findings confirm that intangible capital contributes to SME performance not only directly but also indirectly through internal behavioral mechanisms related to knowledge exchange. This study contributes to the literature by integrating Social Exchange Theory, Positive Organizational Behavior, and the Knowledge-Based View of the Firm within the context of an SME in a developing economy. Practically, the findings highlight the importance of strengthening social networks, psychological resilience, and knowledge-sharing practices to enhance SME competitiveness and sustainability. From a policy perspective, the results provide empirical evidence to support SME development programs that emphasize the development of intangible capital alongside conventional financial and technical assistance.