Performance Of Small And Medium-sized Enterprises Research Articles

Social competence and SME performance: extending the nonfinancial perspective

PurposeThe purpose of this paper is to investigate the influence of entrepreneurs’ social competence (SC) on small and medium-sized enterprise (SME) performance.Design/methodology/approachPrimary data of 250 manufacturing SMEs were collected through a survey method. The influence of SC on performance was tested using structural equation modelling (SEM).FindingsOverall, the findings suggest that SC dimensions have a positive influence on SME performance in terms of nonfinancial perspective. More clearly, the findings show that out of five dimensions of SC, which include social adaptability, social perception, social expressiveness, persuasiveness and impression management; social perception, persuasiveness and impression management have direct effect on customer perspective; persuasiveness, social expressiveness and social adaptability have a direct influence on internal business processes and social adaptability, social perception, impression management and social expressiveness are directly related with learning and growth. Contrary to expectations though, social perception and social adaptability were significantly and negatively associated with internal business processes and customer perspective, respectively, while there was no significant correlation between social expressiveness, persuasiveness and impression management with customer perspective, business processes and learning and growth in that order.Practical implicationsThe current study affirms that SMEs managed by entrepreneurs and managers who possess high levels of SC, may have a better performance compared to those operated by entrepreneurs with low levels of SC. This justifies a need for SME entrepreneurs and managers to work hard to improve their SC capabilities.Originality/valueThis study is pertinent and unique because, it extensively examines each of the five dimensions of SC in relation to nonfinancial indicators of SME performance. Besides, the study also provides additional evidence of the impact of SC on SME performance by suggesting that entrepreneurs who are socially competent are more likely to own highly successful ventures.

Effect of Strategic Leadership on Performance of SMEs During Covid-19 Pandemic in Nairobi County, Kenya

The global economy and enterprises have faced significant impacts due to the COVID-19 pandemic, necessitating leadership styles capable of navigating change and uncertainty effectively. Strategic leadership has emerged as a promising approach for establishing agile strategies amidst rapid transformations in business environments. This study aimed to assess the impact of strategic leadership on the performance of Small and Medium-sized Enterprises (SMEs) during the pandemic in Nairobi County, Kenya. Employing a descriptive and correlational research design, the study targeted 584 respondents from various SME industries in Kenya, with 237 respondents obtained using a stratified random sampling technique. Descriptive and inferential statistics, including correlation and regression analyses, were conducted using SPSS version 23. The findings revealed that SMEs in Nairobi County recognized the importance of strategic leadership for their prosperity, with a significant positive correlation between strategic leadership and performance (r (183) = 0.430, p < 0.05). Strategic leadership accounted for 18.5% of performance variance, indicating a substantial impact (F (1,181) = 41.174, p < 0.05). Moreover, the intercept between strategic leadership and performance showed a notable improvement (β = 0.230, p < 0.01), suggesting a 23% performance enhancement with effective strategic leadership implementation. In conclusion, the majority of SMEs in Nairobi County demonstrated strong strategic leadership, fostering absorptive and adaptive capacities crucial for navigating turbulent business environments. The study underscores the importance of institutionalizing strategic leadership within SMEs to enhance their ability to formulate and execute strategies effectively amidst rapid changes.

How to improve market performance through competitive strategy and innovation in entrepreneurial SMEs

Despite the limited resources of small and medium-sized enterprises (SMEs), they can still manage to be competitive and survive in the current environment by implementing competitive strategies that lead to innovation and improve their market performance. The aim of this study is to examine and analyse the effect of business strategy on market performance in Spanish small and medium-sized entrepreneurial enterprises, and the mediating effect of innovation is explored as a solution to business crises. In addition, we analyse the moderating effect that the perceived risk of COVID-19 may have on this relationship, as well as whether the commercialisation capacity of SMEs exerts an impact and improves performance based on innovation. Taking 1,842 Spanish entrepreneurial firms with fewer than 250 employees as a reference and using partial least squares structural equation modelling (PLS-SEM), our study shows that entrepreneurial SMEs that apply a competitive strategy can achieve enhanced innovation. Moreover, this innovation has a direct and positive effect on the market performance of SMEs, and this effect is greater under higher marketing capability. Our findings suggest a heterogeneous effect on the impact of the perceived risk of COVID-19 on the strategy-innovation relationship. In entrepreneurial SMEs that adopt a differentiation strategy, the perceived risk has an enhancing impact, while in entrepreneurial SMEs that follow cost strategies, the effect is negative.

Lean strategy in SMEs: Inventory leanness, operational leanness, and financial performance

Lean strategy, aimed at optimizing resources, minimizing energy usage, and achieving zero waste in the production process, has been increasingly embraced to reduce systemwide costs in manufacturing. However, practitioners in small and medium-sized enterprises (SMEs) often lack the necessary expertize to implement lean strategies successfully. This study systematically examines the impact of lean strategy on the financial performance of Chinese SMEs. Specifically, we categorize lean strategy into two components: inventory leanness and operational leanness. We introduce a novel measure, the empirical production leanness indicator (EPLI), to quantify systematic production practices aimed at waste reduction. Drawing on a large sample of SMEs, our empirical findings suggest that both inventory leanness and operational leanness exhibit an inverted U-shaped relationship with an SME’s financial performance. In conclusion, this study contributes to the lean literature and offers significant practical implications for SMEs seeking to benefit from adopting lean strategies.

Does empowering leadership affect SMEs' sustainability performance through knowledge transfer?

Today’s small- and medium-sized enterprises (SMEs) require greater engagement across organizational boundaries. This study examines the relationship between empowering leadership, knowledge transfer, and the sustainability performance of SMEs in three countries. It aims to enrich the field of empowering leadership and knowledge transfer in SMEs by demonstrating their impact on financial, environmental, and social performance. To do so, we use a sample of 392 SMEs from France, India, and the USA. The results suggest that empowering leadership has a direct effect on financial performance but hinders environmental performance. Additionally, although knowledge transfer may limit financial performance, it enhances environmental and social performance. This work is one of the first studies to examine the role of knowledge transfer as a mediator between empowering leadership and sustainability performance. Moreover, it may be used as a reference for improving the sustainability performance of SMEs.

Perceived value of microfinance and SME performance: The role of exploratory innovation

This study examines how perceived value of microfinance and exploratory innovation affect small and medium-sized enterprises (SME) performance in the context of a developing nation. Drawing on the strategic innovation and microfinance literature, we hypothesize that (1) perceived value of microfinance affects exploratory innovation and SME performance, and (2) exploratory innovation serves as an effective mechanism through which microfinance enhances SME performance. We employ partial least squares structural equation modeling (PLS-SEM) to test our hypotheses. Using a sample of 581 Ghanaian SMEs with microfinance, the results of the PLS-SEM support our hypotheses. We further conducted a qualitative analysis of comments provided by the SMEs (n = 144) to gain a deeper understanding of exploratory innovation in developing economies. Our findings show that SMEs purposefully attempt to strengthen their exploratory innovation in microfinance. We discuss the theoretical and practical implications of these findings as well as future research avenues.

Increasing SME Performance Through Quality Information Technology and Top Management Support

This research aims to analyze the influence of information technology quality and top management support on the performance of the city of Semarang. This research contributes to providing feedback for SME managers or owners in making decisions regarding the importance of digitizing accounting, in this case, the accounting information system. This quantitative research uses an explanatory research approach guided by a questionnaire that tests the relationship and influence between research variables. Data analysis was obtained using the SEM approach by analyzing 132 respondents who had used the accounting information system application for at least one year. The research results show that the quality of information technology use and top management support significantly affect SME performance. The implication of this research underscores the importance of investing in improving the quality of information technology and top management support for the performance of small and medium-sized enterprises (SMEs) in Semarang City. It indicates that the utilization of effective accounting information systems and active support from top management can enhance the competitiveness and operational efficiency of SMEs. Therefore, SME managers or owners need to consider adopting and optimizing accounting information systems in their strategic decision-making processes to enhance business performance and growth.

The role of competitor orientation and proactiveness in competitive advantage for small- and medium-sized enterprises performance

Background: As small- and medium-sized enterprises (SMEs) are the primary source of job creation in Nigeria and contribute 48% of the country’s gross domestic product (GDP), their performance must be enhanced and sustainability ensured. The article suggests that through competitor orientation and proactiveness, SME managers and owners can achieve competitive advantage which ultimately promotes firm performance.Aim: The article aims to examine how competitor orientation and proactiveness in competitive advantage enhance the performance of SMEs in Nigeria.Setting: The study focused on registered SME owners and managers who are operating in Nigeria, using Lagos State as a case study.Methods: This study was conducted through administering questionnaires to owners and/or managers of SMEs as the unit of analysis. A quantitative research design was used with stratified and simple random sampling as the sampling method, with the sample comprising 100 SME owners and/or managers.Results: The results of the study indicated that competitive advantage mediates the relationship between competitor orientation, proactiveness and SMEs’ performance indirectly. It further revealed that competitor orientation and proactiveness have significant effects on SMEs’ performance.Conclusion and contribution: The article reveals how competitive advantage, which is influenced by competitor orientation and proactiveness, contributes to increased SMEs’ performance in SME sectors. Thus, to gain a competitive edge over their rivals, the study recommends that SME owners and managers consider competitor orientation and proactiveness more seriously, as these factors ultimately boost their performance.

Early, Rapid or Global? Internationalization Speed and SME’s Performance

The article investigates the impact of three dimensions of the speed of internationalization speed – the entry timing, the initial speed and the pace of international expansion – on the performance of exporting small‐ and medium‐sized enterprises (SMEs). To this purpose, we adopt a mixed-method approach analysing quantitative and qualitative data on Italian-exporting SMEs. The results show that entry timing, which is not relevant per se, moderates the positive impact of the initial speed on SME’s performance. Furthermore, a higher pace of international expansion is negatively related to the performance of SMEs. Building on the early internationalization literature, the study contributes to the existing literature on performance outcomes of the speed of internationalization of SMEs. The study has managerial implications for managers and entrepreneurs who are planning to internationalize.

Effect of Crisis Leadership on Performance of SMEs During Covid-19 Pandemic in Nairobi County, Kenya

The relationship between crisis leadership and organizational success amidst the COVID-19 pandemic, particularly in the context of Small and Medium-sized Enterprises (SMEs) in Nairobi County, Kenya, remains understudied. This study aimed to address this gap by investigating the impact of crisis leadership on SME performance during the pandemic. Employing a descriptive and correlational research design, data were collected from 237 respondents representing various SME industries in Kenya through a stratified random sampling method and a questionnaire. Analysis of the data using SPSS version 23 revealed significant findings. Firstly, crisis management was found to be positively correlated with safeguarding the reputation of organizations, which in turn can influence long-term sales and profits positively. Secondly, there was a significant linear relationship between crisis leadership and SME performance, with crisis leadership explaining 56.2 percent of the variance in performance. Additionally, the intercept between crisis leadership and performance showed improvement, underscoring the importance of effective crisis leadership in enhancing organizational outcomes. In conclusion, the study highlights the importance of crisis leadership in ensuring business continuity and mitigating the impact of crises, such as the COVID-19 pandemic. It emphasizes the need for leaders to possess the requisite skills, knowledge, and abilities to navigate turbulent times successfully. Furthermore, the study underscores the role of SMEs in developing strong leadership capabilities to enhance performance and mitigate potential crisis-related disruptions. It recommends that executive and management teams within SMEs in Nairobi County focus on strengthening leadership competencies and developing organizational guidelines for effective crisis management across various operational domains. Implementing these recommendations enables SMEs to enhance their crisis preparedness and responsiveness, thus fortifying their continuity and bolstering overall performance amidst adversities. This study enriches the crisis management and organizational resilience literature, especially within the SME domain, offering pertinent insights for practitioners, policymakers, and researchers.

Gauging the Impact of the Digital Ecosystem and Skill on SMEs’ Performance

Mastering the digital ecosystem has become crucial to a business’s continued success in recent years. Therefore, Malaysia has started producing entrepreneurial graduates with high entrepreneurial characteristics. To assess the effectiveness of the Malaysian university curriculum in entrepreneurship, this paper therefore tries to gauge the impact of the digital ecosystem and digital skills on the performance of university graduates in small and medium-sized enterprises (SMEs). Primary data was collected from 321 university alumni who are entrepreneurs using purposive sampling. Findings demonstrated that digital ecosystem factors such as knowledge management, e-readiness, and ICT utilization influence SME performance. Digital skill also depicts a positive significant relationship with SME performance. Overall, the findings imply that management involvement in fostering the empowerment of the digital ecosystem and digital skill in business management is required. In addition, universities’ curricula must prioritize the focus areas and strategies for developing a more positive digital ecosystem and digital skill.

Innovation capability, strategic flexibility and SME performance: the roles of competitive advantage and competitive intensity

PurposeThis study aims to explore the mediating role of competitive advantage and the moderating role of competitive intensity in the relationship between innovation capability (IC) and small and medium-sized enterprise (SME) performance and between strategic flexibility (SF) and SME performance.Design/methodology/approachThe study adopted a survey research design. The data were collected from a conveniently selected sample of 159 SMEs in Nigeria using a self-reported questionnaire. Mediation and moderation analyses were performed using Hayes' PROCESS macro v3.FindingsResults showed that IC and SF positively affect SME performance. Also, competitive advantage significantly mediates the relationship between IC and SME performance and between SF and SME performance. Additionally, competitive intensity positively and significantly moderates the relationship between IC and SME performance but fails to significantly moderate the relationship between SF and SME performance.Practical implicationsThe findings have managerial implications for SME owners and managers. The findings suggest the need for SMEs to develop more IC and increase their SF. Thus, SME owners and managers should invest more in developing IC and SF. More specifically, they should invest more in research and development, the development of intellectual capital (consisting of human capital, structural capital and relational capital) and new technologies, products, services and processes. Also, they should nurture an innovation culture, encourage creative and innovative acts and allow employees to experiment with new ideas without hindrances.Originality/valueTo the best of the author’s knowledge, this study is the first to provide empirical evidence of the mediating role of competitive advantage and the moderating role of competitive intensity in the relationship between IC and SME performance and between SF and SME performance in the context of emerging economies such as Nigeria. The study validates dynamic capabilities theory by demonstrating that IC and SF are dynamic capabilities that give SMEs a competitive advantage and enhance their performance.

Towards a more flexible SMEs: can HR flexibility spur the nexus between capacity-enhancing HR practices and job performance?

PurposeThe study investigates the mediating effect of HR flexibility in the relationship between capacity-enhancing HR practices and job performance in small and medium-sized enterprises (SMEs) operating in Egypt.Design/methodology/approachOn the basis of the literature review, the results imply a quantitatively tested conceptual model. The model is empirically validated using the partial least squares method to structural equation modelling (PLS-SEM) with survey data from 270 SME owners and managers in Egypt. The sample was selected using a quota sampling approach for small and medium-sized businesses and a proportionate stratification sampling method for the industry and region.FindingsFindings for the sample revealed that capacity-enhancing HR practices affected job performance positively and significantly. The findings also revealed a direct, positive and significant impact of capacity-enhancing HR practices on HR flexibility and HR flexibility on job performance. Functional flexibility was identified as a significant mediator of the capacity-enhancing HR practices-job performance link, whereas behavioural and skill flexibility were not significant mediators for such a relationship.Research limitations/implicationsThe study's cross-sectional design is an evident weakness. All variables were self-reported; this may raise issues regarding method bias. Other limitations include the generalisability of the study's findings outside the setting in which it was conducted. The accuracy of the field study results would have been enhanced if they had not been limited exclusively to the geographical confines of Egypt.Originality/valueThe paper proposes many implications emphasising the role of HR flexibility in enhancing the performance of SMEs. The study developed a mediation model to understand how SMEs boost the performance of human resources by focusing on flexibility dimensions. Accordingly, companies may strategically employ flexible practices and provide an environment that encourages skill and behavioural development.

Effect of Knowledge Management Practices on Organizational Performance in African SMEs

Abstract
 Purpose: The aim of the study was to investigate Effect of Knowledge Management Practices on Organizational Performance in African SMEs
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: Knowledge Management (KM) practices have a positive impact on the performance of African Small and Medium-sized Enterprises (SMEs) by enhancing innovation, improving decision-making, and increasing customer satisfaction. However, challenges related to knowledge transfer and limited resources can hinder the full realization of KM benefits in these organizations. Cultivating a strong learning culture is crucial for continuous improvement. KM strategies must be adapted to the local context and cultural nuances of African countries to maximize their effectiveness.
 Unique Contribution to Theory, Practice and Policy: Resource-Based View (RBV) theory, social capital theory & dynamic capabilities theory may be used to anchor future studies on effect of knowledge management practices on organizational performance in African SMEs. SMEs in Africa should tailor their knowledge management practices to align with their unique organizational cultures, structures, and resource constraints. Governments in African countries should consider implementing policies that provide incentives, subsidies, or tax breaks to SMEs that adopt effective knowledge management practices.

The Role of Digitalization in Cross-Border E-Commerce Performance of Italian SMEs

The utilization of digital technologies is rapidly increasing businesses’ capacities for innovation and growth, especially in the case of small and medium-sized enterprises (SMEs), with strong benefits in efficiency, competitiveness, and market reach. We aimed to study the impact of digital technologies on cross-border e-commerce (CBEC) in Italian SMEs, with regard to three main ICT areas: e-business, e-marketing, and e-commerce. Using a regression analysis, the study found that e-business tools have an unclear impact on cross-border e-commerce, while e-marketing tools, such as data tracking for medium-sized enterprises and social media for all SMEs, have a positive and significant impact on the online export performance. Finally, we examined the impact of being present on a marketplace rather than having a proprietary e-commerce website, and we found that having a presence on marketplaces such as Amazon or Alibaba is more effective than having a proprietary e-commerce website in terms of cross-border online sales. These results are useful both for policy makers and managers, since making informed decisions to develop SMEs is crucial for industrial strategy effectiveness.

Fueling SMEs’ product innovation through entrepreneurial passion during COVID-19: The role of dynamic capability and environmental opportunities

Abstract COVID-19 may not only pose threats but also provided opportunities for innovation and growth for many high-tech small- and medium-sized enterprises (SMEs). This study investigates the relationship between entrepreneurial passion (EP), dynamic capability (DC) for innovation and product innovation performance in SMEs during COVID-19. Hierarchical regression and bootstrapping methods were employed per the survey data of 195 Chinese SMEs. The results reveal that EP is an imperative antecedent of DC and product innovation. DC also positively mediates the relationship between SMEs’ product innovation performance and top managers’ EP. In addition, this mediation effect of DC becomes more pronounced when firms are facing more opportunities. These findings advance the existing literature by specifying the process top managers use to cultivate product innovation within SMEs in times of crisis.

Effects of Domestic and International External Collaboration on New Product Development Performance in SMEs: Evidence from China

This study attempts to examine the influences of domestic and international external collaboration on new product development (NPD) performance in small and medium-sized enterprises (SMEs) and further explores the mediating mechanism of knowledge integration capability and the moderating effects of the innovation climate and organizational legitimacy. In this study, we collected data from 236 manufacturing SMEs in China by means of questionnaires, and multiple hierarchical regression analysis was used to test hypotheses. The results reveal that both domestic and international external collaboration are positively associated with SMEs’ NPD performance. Knowledge integration capability mediates domestic and international external collaboration–SMEs’ NPD performance relationships. Innovation climate positively moderates domestic external collaboration–SMEs’ NPD performance relationship and organizational legitimacy positively moderates domestic and international external collaboration–SMEs’ NPD performance relationships. This study expands the research on the relationship between external collaboration and NPD performance by categorizing external collaboration into two dimensions, domestic and international, and examining their direct influences on SMEs’ NPD performance. Moreover, through examining the mediating effect of knowledge integration capabilities and moderating effects of innovation climate and organizational legitimacy, this paper explains how, and under what conditions, domestic and international external collaboration facilitates the improvement of NPD performance in SMEs.

Increasing the competitive advantage and the performance of SMEs using entrepreneurial marketing architectural innovation capability in North Sumatera, Indonesia

The aim of this study is to analyze how to improve the competitive advantage and performance of small and medium-sized enterprises (SMEs) in North Sumatra through marketing entrepreneurship and architectural innovation capabilities. The type of research is quantitative research. The study focused on UMKM in North Sumatra who offered the following categories of products: handicrafts, food and beverages, coffee shops, bakeries, fashion, clothing, and services. The research population consists of all 84,758 UMKMs in North Sumatra. As for the sample number ranging between 100 and 200, or at least 5 times the number of variable indicators, when using Structural Equation Modeling (SEM). The entire sample size for stage 1 was 102 SME samples from Medan city. To analyze the research data, the study used SmartPLS (Partial Least Squares). The findings of this study show that market orientation (MO) has a negative and insignificant impact on SME performance from data processing and hypothesis testing results. Entrepreneurship Marketing Architecture Innovation Capacity (EMAIC) has a beneficial and significant impact on Competitive Advantage (CA). The ability of Enterprise Marketing Architectures (EMAC) to innovate has a significant and beneficial impact on their success. Entrepreneurship orientation (EO) provides tangible proof of SME success through competitive advantage (CA). Corporate orientation has no direct impact on SME performance through competitiveness (CA).

How dynamic capabilities enable Chinese SMEs to survive and thrive during COVID-19: Exploring the mediating role of business model innovation.

As a response to the damage caused by the spread of COVID-19, the Chinese government has implemented severe quarantine measures that have greatly affected the operational patterns of small and medium-sized enterprises (SMEs). This paper explores the critical role of dynamic capabilities (DCs) in helping Chinese SMEs manage crises, adjust their business strategies, and mitigate the uncertainty caused by the epidemic. Although the importance of DCs in promoting organizational resilience is well recognized, academic research on their specific contributions to business model innovation (BMI) and SME performance improvement during crises remains scarce. Our study fills this gap by pioneering the development and empirical testing of a microintegrated mediation model linking DCs, BMI and organizational performance. By surveying 257 Chinese SMEs severely affected by a pandemic, we verify our hypotheses using partial least squares structural equation modeling (PLS-SEM). Our results strongly show a positive relationship between DCs and BMI and SME performance. In addition, we found that BMI plays a partial mediating role in the interrelationship between DCs and SME performance. Our findings clarify the critical role of BMI as a channel through which SMEs' DCs can be transformed into higher performance in the face of sudden crises. Thus, our results not only contribute to the broader discussion of strategic management and organizational theory but also provide theoretical and practical insights into the mechanisms by which SMEs can increase their flexibility and resilience in a crisis. Thus, our results not only contribute to the broader discussion of strategic management and organizational theory but also provide theoretical and practical insights into the mechanisms by which SMEs can increase their flexibility and resilience in a crisis. Importantly, this study suggests policy and market strategies that can support SMEs in leveraging DCs and BMI for sustained performance, thereby contributing valuable insights for policymakers and business leaders aiming to fortify economic stability and growth in the face of global health emergencies.

Managing Technological Innovation: Dynamic Capabilities, Collaborative Innovation, and Born-Digital SMEs' Performance

In contrast to the digital transformation of the incumbents, born-digital small- and medium-sized enterprises (SMEs) embrace digital logic in the organization's design, processes, and governance from the very start. So far, scholars have focused on the digital transformation of the incumbents; thus, little is known about how dynamic capabilities, collaborative innovation, and firm performance interact in the context of born-digital SMEs—a new generation of digital firms with no legacy of the incumbent firm. Therefore, the study's research question is how dynamic capabilities and collaborative innovation affect the performance of born-digital SMEs. We aim to investigate the impact of the dynamic capabilities of born-digital SMEs on their performance when collaborative innovations mediate it. The empirical research was based on 268 complete viable responses from born-digital SMEs in the U.S., Sweden, and Lithuania. The study results show that dynamic capabilities' effect on born-digital SMEs' performance is more potent when mediated by collaborative innovations. Furthermore, the study highlights that although the impact of dynamic capabilities on partnership networks and relational collaboration is significant, only relational collaboration significantly affects the performance of born-digital SMEs. Our study contributes to the management of technology literature by advancing knowledge on dynamic capabilities and collaborative innovation of born-digital SMEs. In addition, we are exposing the limited role of partnership networks in born-digital SMEs' superior performance and spotlighting the significance of relational collaboration—cocreating innovative products and services and sharing the cocreated value among the relevant partners.