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 anal...

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Bibliographic Details
Published inInternational entrepreneurship and management journal Vol. 20; no. 3; pp. 1677 - 1706
Main Authors Rubio-Andrés, Mercedes, Linuesa-Langreo, Jorge, Gutiérrez-Broncano, Santiago, Sastre-Castillo, Miguel Ángel
Format Journal Article
LanguageEnglish
Published New York Springer US 01.09.2024
Springer Nature B.V
Subjects
Business and Management
Competition
COVID-19
Emerging Markets/Globalization
Entrepreneurs
Entrepreneurship
Financial performance
Innovations
Management
Market strategy
Pandemics
Small & medium sized enterprises-SME
Strategic management
Spain
Marketing capability
Innovation
Market performance
Competitive strategies
Entrepreneurial SMEs
Perceived risk from COVID-19
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Summary: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.
ISSN:1554-7191
1555-1938
DOI:10.1007/s11365-024-00947-9