Performance Of Small And Medium-sized Enterprises Research Articles

The influence of digital capabilities on the export performance of SMEs: evidence from China

ABSTRACT There is a lack of relevant research on the relationship between digital capability and export performance of small and medium-sized enterprises (SMEs) in China. This study, based on the theory of transaction costs (TCT), takes the perspective of digital governance and control and uses structural equation modelling (SEM) to conduct empirical analysis using survey data from 332 Chinese SME exporters on Alibaba.com. The study focuses on how digital capability can improve export performance by reducing perceived uncertainty and transaction costs and expanding export markets. The empirical results show that digital capability has a significant positive impact on reducing perceived uncertainty and transaction costs, thereby driving export market expansion and ultimately improving export performance. The mediating effect analysis shows that transaction costs (transaction costs and perceived uncertainty) plays a significant simple (chain) mediating role between digital capability and export market expansion, while perceived uncertainty does not play a simple mediating role in this process. In addition, export market expansion shows a significant mediating effect between digital capability and export performance of SMEs.

Driving SME performance through technological absorptive capacity and e-business innovation

This study examined the relationship between technological absorptive capacity and the business performance of small and medium-sized enterprises (SMEs), as well as the mediating effect of e-business innovation. Based on data obtained from 179 sunflower oil-processing SMEs in Tanzania and analyzed using partial least squares structural equation modeling, the study established that technological absorptive capacity influences business performance. Further, e-business innovation partially mediates the relationship between technological absorptive capacity and business performance. These findings suggest that technological absorptive capacity indirectly influences SME performance through e-business innovation. On the other hand, findings from the multigroup analysis revealed insignificant differences in the hypothesized relationships between samples from Dodoma and Singida regions, with greater effects observed in Dodoma than in Singida for most of the relationships. The mediating effect of e-business innovation is more profound in the Dodoma sample than in the Singida sample. This study provides important empirical evidence of the role of technological absorptive capacity and e-business innovation in enhancing SME performance. Additionally, evidence from cross-regional comparisons is crucial for examining differences in business performance among SMEs operating in the country. This study has some implications for business managers, governments, policymakers, and academics.

Leadership’s impact on SME performance: A systematic review of its role in enterprise

ABSTRACT In small and medium-sized enterprises (SMEs), leadership is crucial for business success. This review analyses how democratic, autocratic, laissez-faire, and transformational leadership styles impact SME performance, examining 32 studies from Scopus and Web of Science (2020–2023). Findings reveal that leadership significantly influences profitability, employee productivity, growth, and sustainability. Democratic leadership encourages innovation and inclusivity but can slow decision making. Autocratic leadership facilitates swift action under pressure but may hinder employee engagement. Laissez-faire leadership promotes autonomy, ideal for creative industries, although it risks lack of direction if poorly managed. Transformational leadership drives high performance and innovation, although excessive use can lead to burnout. This study synthesizes recent literature, offering practical recommendations for SME leaders, consultants, and policy makers, emphasizing the importance of flexible leadership styles tailored to specific organizational needs and market conditions.

The impact of strategic management on organizational creativity and its influence on the financial performance of SMEs

PURPOSE: This research intends to help small and medium-sized enterprises (SMEs) in Ho Chi Minh City (HCMC) to understand the strategic management process. The study considers an inside-and an outside-in perspective and the intermediary role of organizational creativity in financial performance. It also aims to help SMEs achieve financial performance benchmarks and work towards sustainable development goals. This research is also significant and adds value to the performance management domain. Its overarching objective is to promote long-term business expansion through an exploration of the strategic management process and how organizational creativity and financial performance can be supported. METHODOLOGY: The sample data are collected from 411 SMEs in HCMC using convenience sampling. The data are rigorously screened and cleaned to select a reliable sample for analysis, and Smart PLS software is employed for data analysis to achieve the study’s outcomes. FINDINGS: Factors such as the strategic management process, an inside-out perspective, an outside-in perspective, and the intermediary role of organizational creativity positively impact the financial performance of Vietnamese SMEs in HCMC. IMPLICATIONS: The results show that SMEs are making changes and influencing these factors to improve financial performance. This research contributes value and provides a holistic perspective on the strategic management process for Vietnamese SMEs in HCMC to improve financial performance. ORIGINALITY AND VALUE: The study offers insight into strategic management and highlights the pivotal role of creativity in managing the financial performance of enterprises. The overarching goal is to achieve sustainable development in an increasingly competitive environment. The study also provides a solid foundation for SME managers to restructure their operations for enhanced financial performance. It also offers valuable insights for future scholars to consider and apply in expanding available research models.

IMPACT OF ENTREPRENEURIAL COMPETENCIES ON THE PERFORMANCE OF SMALL AND MEDIUM-SIZED ENTERPRISES: FOCUS ON THE WA MUNICIPAL AREA OF GHANA

This research evaluated the influence of entrepreneurial orientation on the performance of Small and Medium-sized Enterprises (SMEs) in Wa Township of Ghana. Entrepreneurial descriptors included socio-demographic variables involving educational attainment, sex and age, and other determinants including risk-taking, innovative spirit, and determination. Through a questionnaire survey, 411 SME operators were contacted using a random sampling approach. Leveraging SPSS, the data were analyzed using descriptive and inferential means. Correlation and linear regression analyses were executed. Per the correlation statistics, determination alone failed the significance test. The other factors influenced SME performance positively and significantly. According to the regression model, entrepreneurial competencies are vital predictors of SMEs’ performance in Wa Municipality (R-squired = 0.059, Prob>F = 0.000). Innovative capability accounts for the biggest share (13.9%) of the variance (r=0.139; p-value=0.0399). Therefore, to increase SMEs’ success in the Municipality, more efforts should be put into sharpening the innovative proficiencies of firm operators.

Intellectual capital management as a catalyst for organizational agility and performance in post-COVID-19 Romanian SMEs

PurposeThe study seeks to investigate the impact of intellectual capital (IC) management on the performance and agility of small- and medium-sized enterprises (SMEs) in Romania, with a particular focus on the post-COVID-19 recovery period. By examining the roles of human, structural and relational capital, the study sets out to provide insights into how SMEs can build resilience against future socioeconomic disruptions and achieve a sustainable competitive advantage.Design/methodology/approachA quantitative research method was employed, utilizing a questionnaire distributed to 121 managers from Romanian SMEs. The collected data was analyzed using SmartPLS 4 software to test hypotheses regarding the role of intellectual capital management in enhancing organizational agility and performance.FindingsIC, especially human capital, substantially influences organizational agility and performance in SMEs. Findings confirm that adapting to a dynamic work environment requires that SMEs invest in employee development, foster strong internal and external relationships, and embrace new technologies. Furthermore, building an adaptive organizational culture open to change and learning is essential for sustaining long-term competitive advantage in an unpredictable market.Research limitations/implicationsThe study advances theoretical and practical recommendations for academics, managers and policymakers on leveraging IC to enhance organizational agility and performance, offering a roadmap for organizations navigating systemic crises. The main limitation is the context-driven focus of the research on Romanian SMEs.Practical implicationsSwitching to the practical implications, this research offers managers of small and medium-sized businesses (SMEs) in Romania insightful knowledge about how to strategically manage IC to improve organizational agility and performance and illustrates the need for the SMEs to invest in the human capital, to adapt quickly to the market changes and to invest their resources in integrating new technologies, alongside with building strong relationships (both inside and outside the organization) and to cultivate an adaptive organizational culture that is open to change and to learn.Social implicationsThis study provides guidance to the Romanian managers in finding the key to success, by ensuring competitiveness in the nowadays dynamic market, foster innovation and boost the agility and the performance of the organization.Originality/valueThe research is the first one to address the strategic importance of IC management in Romanian SMEs with a view to attaining agility and performance in turbulent times.

The Role of Marketing Artificial Intelligence in Enhancing Sustainable Financial Performance of Medium-Sized Enterprises Through Customer Engagement and Data-Driven Decision-Making

This study aims to examine the impact of marketing artificial intelligence (AI) and the specific channels it uses to influence the performance of Jordanian SMEs. In contrast to prior research that focused solely on the direct effects of marketing AI on organizational performance, our study introduces innovative pathways involving customer engagement, customer satisfaction, and data-driven decision-making. These channels serve as indirect mechanisms through which the impact of marketing AI extends to influence the Sustainable Financial Performance of SMEs. Using a framework for structural equation modeling, we looked at the answers of 250 small and medium-sized enterprises (SMEs) chosen through cluster sampling from industrially active areas in Jordan. Our findings reveal that the adoption of AI technologies leads to a notable 42.5% enhancement in Sustainable Financial Performance among SMEs, driven by a 50% increase in customer engagement and a 76% improvement through data-driven decision-making processes. While our study did not establish a direct correlation between marketing AI and long-term financial performance, it demonstrated the connection between technology adoption, customer-focused strategies, and data-driven practices. The findings offer actionable insights and recommendations for Jordanian SMEs leveraging marketing AI to achieve competitive advantage and sustainable growth. The study offers significant contributions to how marketing AI improves the Sustainable Financial Performance of Jordanian SMEs by identifying crucial indirect pathways. Unlike previous studies, it focuses on the roles of customer engagement, satisfaction, and data-driven decision-making as mediators rather than emphasizing direct impacts. The findings highlight the importance of integrating technology with customer-centric and data-oriented strategies to drive sustainable growth and competitiveness in SMEs.

Is CSR a solution for crisis? Assessing the impact of three CSR dimensions on SME performance in the Nordic context

PurposeThis study aims to investigate the relationship of corporate social responsibility (CSR) dimensions on the financial and nonfinancial performance of Finnish small and medium-sized enterprises (SMEs) amidst crises.Design/methodology/approachSurvey data was collected from 204 SME owner-managers in Finland during the COVID-19 pandemic using a purposive sampling technique, focusing on SMEs in South Ostrobothnia representing Finnish SMEs. The study tests the direct and indirect effects of CSR dimensions on both financial and nonfinancial performance during challenging times using linear regression analysis and path analysis with SEM.FindingsThe analysis reveals that CSR systems thinking competence positively affects financial performance but does not significantly impact nonfinancial performance. On the other hand, community social responsibility and socially responsible human resource management positively influence nonfinancial performance and have an indirect effect on financial performance.Originality/valueThis research underscores the beneficial performance outcomes of SME engagement in CSR during challenging times, emphasizing the enduring value of investing in employees. It highlights that despite industry performance affecting financial outcomes, CSR systems thinking competence contributes to financial performance and community social responsibility and socially responsible human resource management maintain a positive association with nonfinancial performance. Furthermore, this study enriches the existing literature on the CSR-SME performance relationship by exploring its effects within the unique context of a Nordic welfare society facing a crisis.

How Green Innovation and Green Corporate Social Responsibility Transform Green Transformational Leadership Into Sustainable Performance? Evidence From an Emerging Economy

ABSTRACTIn light of the rapidly evolving technology nowadays, a green business model is now required for sustainability and long‐term survival, especially for small and medium‐sized enterprises (SMEs) and general businesses. This study aims to investigate how green transformational leadership and sustainable corporate performance for SMEs interact by examining the coordinating functions of green innovation and green corporate social responsibility in a developing nation. The current study followed the quantitative methodology along with a questionnaire for data collection. The survey's target sample consisted of senior and middle‐level executives from Vietnam's printing and FMCG manufacturing industries. Following the survey, 449 valid responses were gathered, and SmartPLS (version 4.1.0.6) structural equation modeling was used to analyze the collected data. This analysis contributes to the body of knowledge by using the natural resource‐based view Theory and Stakeholder Theory to provide a “three‐green‐model” that includes green transformational leadership, green innovation, and green corporate social responsibility, as well as their combined impact on sustainable corporate performance in a developing nation. The study findings confirm that green transformational leadership has a positive impact on sustainable corporate performance, both directly and indirectly, through green innovation and green corporate social responsibility, leading to better financial and environmental results. This study provides useful insights into how green leadership promotes sustainable growth, giving SMEs a method to balance between social and environmental responsibility and economic success.

Market orientation and firm performance of small and medium-sized enterprises in Zamfara state: a proposed research study

The proposed study investigates the relationship between market orientation and the performance of small and medium-sized enterprises (SMEs) in Zamfara State, Nigeria. Market orientation, comprising customer orientation, competitor orientation, and interfunctional coordination, is posited to influence both financial and non-financial performance outcomes. The study aims to assess how these dimensions collectively impact SMEs' operational efficiency, adaptability, and competitiveness within a resource-constrained and underdeveloped context. Grounded in Market Orientation Theory (MOT), the study seeks to fill gaps in the literature by examining the application of market orientation in developing economies. It also integrates multidimensional performance metrics to provide a comprehensive understanding of SME performance, including stakeholder perceptions of productivity, cost-effectiveness, and responsiveness to market demands. The findings are expected to reveal how SMEs can leverage customer information, respond effectively to competitive pressures, and foster internal collaboration to improve their performance. The study will also provide practical recommendations for policymakers and support organizations to create an enabling environment for SMEs to adopt market-oriented strategies. These include capacity-building programs, infrastructure development, and access to market intelligence. This research contributes to both theory and practice by contextualizing market orientation in a less-developed setting and offering actionable information for SME growth and sustainability. By addressing the unique challenges faced by SMEs in Zamfara State, the study underscores the transformative potential of market orientation as a strategic approach to enhance firm performance and drive economic development in similar regions.

Continuous learning in SMES: the mediating role of resilient dynamic capabilities across the firm life cycle

Purpose Small and medium-sized enterprises (SMEs) are critical in the global business environment, yet they face significant challenges of survival. This study aims to investigate the role of continuous learning and resilience dynamic capabilities (RDC) on SME performance. Design/methodology/approach The authors conducted a quantitative survey of leaders from 290 SMEs to examine the relationship between continuous learning and performance. Structural equation modeling (SEM) is used to test the dependent relationships in this study. In addition, the Monte Carlo Method is used to test the mediating effect of RDC. Findings The results suggest that there is a direct effect of continuous learning on firm performance, as well as an indirect effect through RDC. In other words, the effect of continuous learning on firm performance was partially mediated through RDC. Originality/value The authors also explored whether firm life cycle stage matters regarding the role of continuous learning and RDC in SMEs. The mediating role of RDC becomes more pronounced (fully mediated) as SMEs transition from the growth stage to maturity stage of their life cycle.

Small and medium-sized enterprises (SMEs) in Bali: Corporate social responsibility, competitive advantage and its impact on financial performance

Climate-related concerns have drastically made companies realize the need for better environmental regulations and consolidate them in corporate business strategies such as Corporate Social Responsibility (CSR). CSR improves firm performance by valuing the stakeholders' interests and substantially achieving a competitive advantage over competitors. Recognising a firm's competitive advantage in the market indicates performance and might help the company perform better. The objective of this research is to provide concrete proof related to how CSR affects competitive advantage and its effects on company performance, especially financial performance in SMEs in Bali Province. This study uses primary data in the form of questionnaires distributed to SMEs both directly and online. The sample of this research is the manager / owner of SMEs in Bali Province. Data analysis tools using SmartPLS 4.0. The study's findings indicate that CSR has a direct impact on financial performance (SMEs) and CSR indirectly affects the financial performance (SMEs) through competitive advantage. Competitive advantage was found to partially mediate the impact of CSR and financial performance (SMEs). These findings will be used by SME managers in Bali Province in order to enhance the company's financial performance by considering the use of CSR strategies and strengthening competitive advantage. Implementing CSR can help a company become more competitive and separate itself from competitors by providing an innovative product or service. Finally, corporate social responsibility (CSR) can give a company a competitive advantage by strengthening its marketing abilities, which leads to improved performance.

The role of work ethic mediation on the impact between job motivation on performance and knowledge sharing of SMEs in East Java

This study examines the influence of SME performance, knowledge sharing, work motivation, and the work ethic of SME proprietors. This research was conducted on Small and Medium Enterprises in East Java. The study population comprised 293 proprietors of small and medium-sized enterprises (SMEs) employing between 3 and 10 individuals. The participants in the study were owners of small and medium enterprises situated across East Java. Data collection for each variable was performed using questionnaires. Data analysis methodologies utilize descriptive analysis techniques and quantitative data analysis techniques, such as Structural Equation Modeling (SEM) with Partial Least Squares (PLS). The results demonstrated that the mediating effect of work ethics on the relationship between work motivation and company performance was insignificant. The mediating effect of work ethics on the relationship between work motivation and knowledge sharing was substantial. The correlation between work motivation, work ethics, and knowledge sharing was positive and significant; however, the influence of motivation on company performance was not significant. The motivation of employees negatively affects the performance of small and medium-sized enterprises (SMEs) in East Java. This study offers guidance to managers of small and medium enterprises on implementing work ethics to enhance employee motivation, performance, and knowledge sharing.

Impact of financial and internet support on SME performance: Moderating effect of technology adoption during COVID-19 pandemic

Small and medium-sized enterprises (SMEs) are widely recognised as significant catalysts for economic growth at a worldwide level. The benefits that are frequently highlighted for their promotion, particularly in developing nations like Bangladesh, include their relatively high labor intensity, reliance on local technology and skills, contributions to the growth of entrepreneurialism and innovativeness, and industrial linkage expansion. The objective of this study is to examine the influence of financial and internet support on the performance of small and medium enterprises (SMEs) in Bangladesh during the COVID-19 pandemic while also considering the moderating effect of technology adoption. By going through the literature, the study identified a number of factors namely financial support, ICT support, technological support played a strong role on SME performance during COVID-19. The present study utilises Partial Least Square (PLS) path modelling, a variance-based technique within the framework of Structural Equation Modelling (SEM), to investigate the correlations. A well-structured questionnaire is prepared for collecting primary data from the SME owners or managers and finally 378 data have been collected from the different types of SME entrepreneurs through using purposive sampling technique. Eight hypotheses are tested and found seven positive relationships with moderating interaction of technology adoption between influential factors and SME performance (financial and non-financial).

Foreign ownership and business group affiliation strategies of European hospitality SMEs during difficult times: a double-edged sword

ABSTRACT Despite the growing recognition in the literature that foreign ownership and business group affiliation (BGA) are rewarding for firms in general and hospitality small and medium-sized enterprises (SMEs) in particular, this issue has not yet been subjected to direct empirical investigation during the 2008 financial crisis and the COVID-19 pandemic. Based on a large, updated sample of 207,691 firm-year observations of 37,881 hospitality SMEs operating in 29 Eurozone countries from 2002 to 2021, this research offers new insights into the strategic management of these firms during times of economic downturn. Our results provide evidence that foreign ownership and BGA size have positive impact on the financial performance of European hospitality SMEs. Furthermore, foreign ownership and BGA moderate the negative effect of both crises on the financial performance. In particular, we found that European hospitality SMEs affiliated with large BG suffered more during the difficult times (COVID-19 pandemic). In addition, foreign-owned SMEs operating within the European Union exhibited lower profitability than their Eurozone counterparts during the crisis periods. These findings contribute to the understanding of SMEs’ geographic expansion strategies in the hospitality industry and offer valuable implications for business owners and authorities.

The influence of institutional context in the relationship between green management, perceived barriers to sustainability and innovation performance in SMEs

PropósitoEste estudio examina la relación entre la gestión verde, las barreras percibidas a la sostenibilidad y el rendimiento de la innovación en las PYME latinoamericanas y cómo los factores institucionales formales e informales influyen en esta relación.Diseño/metodología/enfoqueEl estudio utilizó un conjunto de datos recogidos por el Observatorio Iberoamericano de la PYME y se incluyó 15 indicadores de desempeño de países de América Latina publicados en fuentes de datos internacionales para abordar los contextos institucionales formales e informales. Por consiguiente, la muestra de datos final del estudio lo conforman 11,319 observaciones de Pymes de 16 países. El análisis incluyó tres fases. En primer lugar, un análisis factorial exploratorio. Segundo un análisis de conglomerados o clústeres. En tercer lugar, una prueba del modelo teórico de mediación entre los grupos identificados en el segundo estudio. Para ello, el análisis incluyó un análisis multigrupo para la estructura de covarianza mediante un procedimiento de tres etapas por medio de un modelado de ecuaciones estructurales.ResultadosLos resultados revelaron que tanto en las instituciones formales (como las políticas y normativas gubernamentales) como en las informales (como las normas sociales y los valores culturales) las prácticas de gestión verde influyen positivamente en desempeño innovador. Sin embargo, la magnitud de este impacto varía según el nivel de desempeño del contexto de estos países. Además, el estudio mostró que las barreras percibidas a la sostenibilidad no tienen un papel de mediación en esta relación, en ambos contextos institucionales. Finalmente, se observó que el efecto de las barreras percibidas a la sostenibilidad sobre el desempeño innovador disminuye en el contexto institucional informal.OriginalidadEl trabajo aporta valiosas ideas para los responsables políticos que buscan promover el desarrollo sostenible en América Latina, destacando la importancia del apoyo institucional para fomentar la adopción de prácticas verdes por parte de las pymes.

Corporate governance and SME performance: Is technological capability a missing link?

Purpose This paper aims to examine the role of technological capability in the relationship between corporate governance and small and medium-sized enterprise (SME) performance. Design/methodology/approach Using panel data comprising 1,357 European SMEs from 2014 to 2020, this paper examines how technological capability acts as a mediator and moderator within the governance-performance nexus. Findings The results show a positive and significant link between corporate governance mechanisms and SME performance, as well as between technological capability and SME performance. In addition, this paper show that technological capability plays a crucial role in moderating and mediating the governance-performance relationship. Specifically, technological capability accentuates the positive effects of board size, the presence of outside directors and concentrated ownership on SME performance. Conversely, it attenuates the positive impacts of CEO duality and board gender diversity on SME performance. These results highlight corporate governance mechanisms and technological capability’s crucial role in significantly influencing SME performance. Practical implications The results suggest that SMEs should prioritize not only the implementation of effective corporate governance mechanisms but also the strategic utilization of technological innovations to boost performance. European policymakers are encouraged to enact supportive policies on technological innovation to strengthen the governance-performance dynamic. Originality/value This study contributes to the governance-performance literature by offering new insights into the critical role of technological capability, which has been previously explored in partial and fragmented ways.

ENTREPRENEURIAL ORIENTATION AND SME SUCCESS: UNVEILING THE MEDIATING IMPACT OF AMBIDEXTERITY

This research seeks to assess how ambidexterity in exploration and exploitation mediates the relationship between entrepreneurial orientation and the performance of small and medium-sized enterprises (SMEs). Specifically, this study investigates the indirect influence of entrepreneurial orientation on business performance through the mediating roles of ambidexterity exploration and exploitation. A quantitative approach using structural equation modeling (SEM) is employed to examine the relationships among these variables. The research sample comprises 200 SMEs operating primarily in East Java, Indonesia. The findings demonstrate a significant mediating effect (p<0.05) of ambidexterity exploration and exploitation, which enhances the influence of entrepreneurial orientation on business performance. This indirect effect proves to be stronger than the direct impact of entrepreneurial orientation itself. The structural model shows a high R-square value of 68.6%, indicating a strong predictive capability. Additionally, the goodness-of-fit index reflects high model suitability (0.543 > 0.36), and the predictive power of the PLS model is considered medium. The study’s results underscore the importance of fostering both ambidexterity in exploration and exploitation alongside entrepreneurial orientation to optimize SME performance.

The mediating role of innovation in the impact of entrepreneurial bricolage on SME performance in the tourism sector

This study examines the mediating role of innovation in the relationship between entrepreneurial bricolage and the performance of small and medium-sized enterprises (SMEs) in the tourism sector. The research examines how resource-limited SMEs utilize creative problem-solving and resource optimization to enhance their competitive advantage. The study adopts a quantitative approach. Data was collected through surveys and in-depth interviews, data were collected from 46 SMEs in East Java, Indonesia, path analysis reveals that innovation significantly enhances the positive impact of bricolage on SME performance. Path analysis was employed to examine the direct and indirect effects of entrepreneurial bricolage on SME performance, with innovation as the mediating variable. The results demonstrate that entrepreneurial bricolage significantly improves SME performance by fostering innovation, which acts as a crucial mediator. SMEs practicing bricolage are able to optimize limited resources creatively, leading to innovative products, processes, and marketing strategies that enhance competitiveness and performance in the tourism sector. The findings provide practical implications for SME owners and policymakers in resource-constrained environments, offering strategies to leverage creativity and innovation for competitive advantage. The study provides valuable insights for SMEs, policymakers, and researchers. SMEs are encouraged to adopt bricolage as a strategic tool to navigate resource constraints, while policymakers should support innovation by improving resource accessibility and providing training programs. Future research can expand on this study by exploring bricolage practices across different regions and sectors, as well as investigating the long-term impact on SME performance. This research contributes to the limited literature on entrepreneurial bricolage in tourism SMEs, particularly in developing regions such as East Java. It offers new insights into how SMEs can leverage internal capabilities and innovation to achieve sustainable growth and maintain a competitive edge in resource-constrained environments.

Refueling intellectual capital toward innovation performance of SMEs in Saudi Arabia: mediating the role of entrepreneurial opportunity recognition

PurposeThe objectives of this research were to inspect the relationship of intellectual capital (IC), along with its dimensions (human, structural and internal and external relational capital) with innovation performance (IP), to explore entrepreneurial opportunity recognition (EOR) as a mediator between the IC and IP of small and medium-sized enterprises (SMEs) in Saudi Arabia.Design/methodology/approachThis research used data collected via a well-structured questionnaire. The sample size was comprised of 457 participants who were owners and/or managers of SMEs in Saudi Arabia. Further, the findings were extracted from data using partial least squares (PLS) techniques.FindingsThe results indicated that all dimensions of IC, including human capital (HC), structural capital (SC), internal relational capital (IRC) and external relational capital (ERC), had a significant relation with both IP and EOR. It was also shown that EOR positively influenced IP. Furthermore, the results showed that EOR played an important role as a mediator between IC (HC, SC, IRC and ERC) and IP.Practical implicationsThe present research offered a beneficial and novel managerial and theoretical strategy for improving a given firm’s IP with the support of IC and EOR. This finding offered a vision to the management teams of SMEs for full utilization of IC and IP. The present study also provided policymakers, administration and future studies with a path to improving the production and services of SMEs to secure market advantages.Originality/valueAccording to the author’s best knowledge, the present research represented the first attempt to expose the mediating role of the EOR relationship between IC and IP. Furthermore, the present study also developed the relationship between dynamic capabilities (DC) theory, intellectual capital-based view (ICV) theory and resource-based view (RBV) theory, with variables that reveal the theoretical foundation of the study. Finally, the results of this study were verified by the existing literature.