Measuring The Factors Affecting Entrepreneurial And Organizational Performance Of SMEs

It is well known that small and medium-sized enterprises(SMEs),play a vital role in the economic growth of emerging and developed economies.However,SMEs in Pakistan face several problems in doing business or launching new businesses because of less guidance and low entrepreneurial and organizational performance.The core purpose of this study is to explore the effects of knowledge management practices and the dynamic capabilities of entrepreneurs on the entrepreneurial performance of SMEs,which ultimately leads to organizational performance.In view of the prior literature,scholars have found that entrepreneurial performance is the main factor in ensuring the sustainability of SME's performance,which can be affected by several factors.As when the behavior of exchanging and sharing knowledge exists in the company's atmosphere will help to develop entrepreneurial intentions and can assist in improving the performance of entrepreneurs as well as organizations.However,literature described that the dynamic capability of an entrepreneur assists in the development of entrepreneurial performance,particularly in SMEs.Therefore,it is also very important to measure the impact of dynamic capabilities on entrepreneurial and organizational performance of SMEs working in Pakistan.This study also incorporated the impact of potential and realized the dynamic capabilities of an entrepreneur on the performance of SMEs.Moreover,the relationship between knowledge-sharing behavior and innovation capacity offers a potential vision to beat competitors in the market with competitors.These factors can contribute to enhancing dynamic capabilities,which ultimately increase the entrepreneurial and organizational performance.Furthermore,the role of absorptive capacity is to absorb internal and external information.It can be argued dynamic capabilities assist absorptive capacity in increasing the entrepreneurial and organizational performance.The relationship between knowledge sharing behavior,innovative capacity,and absorptive capacity with entrepreneurial and organizational performance was proved in several other dimensions,but not in this study context.Therefore,we integrate these factors from literature to measure entrepreneurial and organizational performance.Most of the studies have discussed the knowledge sharing behavior,innovative capacity,and absorptive capacity as a positive predictor of performance;however,few studies discussed its mediating role only with the organizational performance.In this study,we measured the impact of these factors through dynamic capabilities to fill the existing research gap.The characteristics of an entrepreneur play a vital role in the achievement of competitive organizational advantages,and the accomplishment of desired outcomes from the uncertain work environment particularly exists in developing countries.Based on the previous studies which examined the challenges faced by Pakistani SMEs,the optimistic approach of an entrepreneur will positively contribute to his/her performance.Therefore,driving from the literature,this study also investigates the moderation effect of opportunity recognition abilities of the entrepreneur,positively strengthens the relationship of dynamic capabilities and entrepreneurial performance,and leads to organizational performance.Thus,this study has the following research objectives: The first objective of this study is to identify the impact of knowledge sharing behavior on entrepreneurial and organizational performance and through dynamic capability.The second objective of this study is to investigate the effect of innovative capacity on entrepreneurial and organizational performance and through dynamic capability.The third objective of the study is to explore the impact of absorptive capacity on entrepreneurial and organizational performance and through dynamic capability.The fourth objective of the study is to explore the moderating role of opportunity recognition on the relationship of dynamic capability with the entrepreneurial and organizational performance of textile-based SMEs in Pakistan.The fifth objective of the study is to explore the effect of dynamic capability on entrepreneurial and organizational performance.Driven from the literature,this study is supported by the theories;the theory of entrepreneurship,the organization learning theory,and resource-based theory.Based on the theoretical support,this study proposed a research model that consists of several key factors in context to Pakistan.To test the proposed research model,we applied the structural equation modeling(SEM)technique on the data collected through a structured survey questionnaire.The study used quantitative research and inductive approach for the collection and analysis of research data.The survey was conducted in six major cities in Pakistan and distributed 600 questionnaires to only to the owners of textile-based SMEs.However,from 600 questionnaires,486 were appropriate,with an 81% response rate.The remaining 114 questionnaires were discarded during the initial screening of data because of unengaged and incomplete responses.To test the proposed hypotheses,Smart-Partial Least Square(Smart-PLS v3),software used to analyze the direct and indirect causal effects to validate the proposed hypotheses of the study.The Statistical Package for Social Science(SPSS,25.0),and Smart-PLS were used for initial and final data analysis.The findings of this study revealed that knowledge sharing behavior,innovative and absorptive capacity have a positive and significant impact on entrepreneurial and organizational performance.The results further confirmed that dynamic capability significantly and positively mediates among knowledge sharing behavior,innovative and absorptive capacity to increase the organizational and entrepreneurial performance.The results showed that the knowledge sharing behavior,innovative and absorptive capacity has a positive and significant impact on dynamic capability.This study also confirmed a positive impact of dynamic capability on entrepreneurial and organizational performance.Moreover,the outcomes of the study also confirmed that opportunity recognition positively strengthens the positive impact of dynamic capabilities on entrepreneurial and organizational performance of textile-based SMEs in Pakistan.This study contributes to the existing literature concerning the entrepreneurial and organizational performance of textile-based Pakistani SMEs.The findings of this study are significantly important for policymakers,management,regulators,and academics.The study provides insights into the importance of knowledge sharing behavior,innovative capacity,absorptive capacity,and dynamic capability,in enhancing the entrepreneurial and organizational performance.The main novelties of the study are as follows:(1)This study examined the impact of knowledge sharing behavior,innovative capacity,and absorptive capacity on the entrepreneurial performance of 486,which was not much focus before particularly on textile-based SMEs of Pakistan.(2)The study presented and tested the integrated research model based on the key factors such as;knowledge sharing behavior,innovative capacity,absorptive capacity,and opportunity recognition on SME's entrepreneurial performance.(3)The study also obtained a positive contribution of dynamic capability as a mediator between knowledge sharing behavior,innovative capacity,and absorptive capacity with the entrepreneurial and organizational performance of SMEs.(4)Finally,this study also proves that opportunity recognition has a positive and significant moderating effect,indicating that if an entrepreneur has the dynamic ability to operate SME,his performance will improve due to his characteristics and his perception of opportunities in the external environment.