SURVIVE AND THRIVE: DRIVING FACTORS FOR SMES PERFORMANCE IN MALAYSIA

Abstract

Purpose: The purpose of this paper is to empirically test the relationships between entrepreneurial orientation (EO), total quality management (TQM), and small and medium-sized enterprises (SMEs) performance. It specifically examines whether innovation practices (IPs) mediate the EO, TQM, and SME performance relationships. Design/methodology/approach: A self-administered questionnaire was utilised to collect data from owners/managers of SMEs in Malaysia. The validity and reliability of the instrument were evaluated. Structural equation model utilised to analyse the relationships using PLS 3.3.9. Findings: Statistical outcomes displaying a significant direct effect of EO and IPs on SMEs’ performance, while TQM displayed an insignificant effect on SMEs’ performance. For mediation effect analysis, the indirect effect of EO and TQM on SMEs’ performance through IPs was significant. Research limitations/implications: A sample of manufacturing SMEs was investigated using a quantitative cross-sectional research design. Future research could use qualitative techniques or a longitudinal research design for further information analysis. Practical implications: The research findings provide insights into the owners/managers of SMEs in today’s dynamic manufacturing environment, with a focus on EO and TQM as driving factors to enhance their performance. Originality/value: The research extends the literature on EO and TQM with a comprehensive understanding from the standpoint of Malaysian SMEs.