Abstract
This study tested the suitability of personal wealth in measuring SMEs’ performance as compared to already known firm growth measures. Guided by the knowledge-based view, the study aimed at determining the influence of learning orientation on SMEs performance under the mediation of competitive advantage using firm growth and personal wealth measures. A structured questionnaire was used to collected data from 300 owners-managers of welding industry SMEs located in Dar es Salaam, Mbeya, and Morogoro urban centres in Tanzania. Measurement and structural models were developed by the aid of SmartPLS 3 software through application of structural equation modelling technique. Determination of indirect influence of learning orientation on SMEs’ performance through competitive advantage was accomplished by bootstrapping the original sample using 5000 samples. Findings inform that competitive advantage mediates the relationship between learning orientation and SMEs’ performance for both firm growth and personal wealth performance measures. This study has contributed to the understanding that learning orientation influences SMEs’ performance under the mediation of competitive advantage using personal wealth as measures of SMEs’ performance. The findings imply that the knowledge-based view is suitable in describing not only physical resources but also intangible resources such as learning orientation. Literature will benefit from future studies that will investigate the influence of other constructs on SMEs’ performance under the mediation of competitive advantage using the same firm growth and personal wealth performance measures. Such studies will ascertain whether the findings of this study are specific to learning orientation construct or applicable to other constructs as well. Keywords: Competitive advantage, firm growth, learning orientation, personal wealth, SMEs’ performance DOI: 10.7176/EJBM/12-24-06 Publication date: August 31 st 2020
Highlights
SMEs’ performance is an independent variable commonly used in entrepreneurship and strategic management studies
In an attempt to operationalize knowledge management, this study found that learning orientation is an appropriate construct that can describe knowledge as a unique resource that is capable of creating competitive advantage to promote firm performance
Assessment of factor loadings on each construct revealed that differentiated products (Total DPR) dimension of competitive advantage (CA) had a factor loading of 0.242 for firm growth measures and 0.301 for personal wealth measures
Summary
SMEs’ performance is an independent variable commonly used in entrepreneurship and strategic management studies. Despite its frequent use as a dependent variable, scholars have not yet agreed on its generic measures (Mahmood & Hanafi 2013a; Mahmood & Hanafi 2013b). Measurement of SMEs’ performance is still fragmented, the situation that leads to mixed results when studying the determinants or factors that influence SMEs’ performance. Mixed results create an environment that pose threats towards comprehensive knowledge accumulation and theory building. Financial performance measures such as growth in sales, number of employees, profit, assets and equity (Shepherd & Wiklund 2009) are commonly used in literature. In addition to firm growth measures, non-financial performance measures are used, these include but not limited to customers’ satisfaction, customers’ referral rate, growth in customers’ base and market share (Chong 2008)
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