The impact of strategic entrepreneurship and entrepreneurial marketing, entrepreneurship values on small and medium enterprises’ performance: evidence from Saudi Arabia

Abstract

In the current dynamic market environment, small and medium enterprises (SMEs) face the daunting task of competing against established players and navigating rapid change. Drawing upon the Resource Advantage Theory (R-A Theory), this paper tries to investigate the influence of strategic entrepreneurship (SE), entrepreneurial marketing (EM), and entrepreneurial value (EV) on small and medium enterprises SMEs’ performance. The study uses a sample of 188 SMEs from Eastern Province of Saudi Arabia. SmartPLS 3 is a statistical technique employed for data analysis. The findings provide evidence that shows a significant and positive link between EM, EV, and SMEs Performance. On another hand, the link between SE and SMEs Performance was insignificant. This paper contributed to the knowledge on the significance of the effect of (SE), (EM), and entrepreneurial value on firm performance. The study concludes with a discussion on the implications and limitations in addition to the conclusion.

Keywords:

• SMEs performance
• strategic entrepreneurship
• entrepreneurial marketing
• entrepreneurial value

REVIEWING EDITOR:

• Hamida Skandrani, University of Manouba, The Higher Institute of Accounting and Business Administration, Tunisia

SUBJECTS:

• Middle East Studies; Business
• Management and Accounting; Industry & Industrial Studies

1. Introduction

SMEs play a critical role in the economy of most countries. It is widely acknowledged as the backbone of the economy owing to its substantial contributions to employment, innovation, and overall economic growth (Shirokova & Ivvonen, 2016; Surya et al., 2021). SMEs are critical for innovation and technological advancement (Chang & Cheng, 2019; Hsu et al., 2017). They are often more agile and able to adapt to changes in the market quickly. SMEs often serve as the wellspring of novel products, services, and business models, propelling economic growth and enhancing competitiveness (Surya et al., 2021). Studies suggest that SMEs equipped with unique marketing capabilities tend to achieve better overall organizational performance and higher returns on assets (Martin et al., 2020). Effective marketing strategies enable firms to reach new markets, generate sustainable profits, and solidify their position as industry leaders (Khan, 2020; Sudirjo, 2023).

SE is important for firms to create maximum wealth (Fernando Antonio Monteiro Christoph & Luce, 2021). SE is defined as the activities of new or existing companies that are clearly linked to initiatives based on the search for a competitive advantage, and these efforts result in the exploration of new markets, innovative processes, entry into new products, or advancements in technology (Ioniţă, 2022). Nowadays, the major concern for management is the need to balance the seeking of advantage ‘strategic management’ with the seeking of opportunity ‘entrepreneurship’ (Schindehutte & Morris, 2009). The achievement of this balance is known as SE (Kyrgidou & Petridou, 2011). Entrepreneurship involves the discovery of an opportunity and the enactment of a resulting entrepreneurial action (Ferreira et al., 2017). The intent to perform entrepreneurial behaviors and the enactment of such behaviors are important for realizing perceived opportunities (Esfandiar et al., 2019).

Traditional marketing struggles in today’s dynamic market, hindering organizations’ goals (Zahara et al., 2023). To overcome these challenges, EM emerges as a powerful alternative. EM emphasizes innovation, quick market assessments, and informal networks to create value for both customers and organizations (Mahrous et al., 2020). This approach allows businesses to maximize limited resources and find optimal solutions to current challenges (Rezvani & Fathollahzadeh, 2020). Marketing scholars have raised concerns about the sufficiency of traditional marketing practices and have advocated for the necessity of a new marketing paradigm (Brychkov & Domegan, 2017; Pels, 2015). Marketing is one of the fundamental elements affecting organizational performance (De Pelsmacker et al., 2018; Soriano, 2010). In response to the limitations of traditional marketing practices, researchers have advocated for the exploration of innovative marketing strategies. EM emerges as a new field offering innovative ideas and actions better suited for SMEs, EM breaks away from conventional marketing principles and emphasizes creative approaches (Sadiku-Dushi & Ramadani, 2020).

This study uses the (R-A) Theory as a lens to examine how ventures and marketing efforts leverage their unique resources to climb the ladder of performance, especially for smaller businesses (Hunt, 2017). (R-A) Theory focuses on how firms can leverage their resources to gain competitive advantage (Sadiku-Dushi et al., 2019). Based on the (R-A) Theory, which suggests that unique resources can level the playing field (Hunt, 2014). To explore the connections between SE, EM, EV, and the performance of SMEs, the (R-A) Theory is employed to underscore the significance of resources and capabilities in elucidating persistent performance variations among firms. According to (R-A) Theory, the examination of valuable, rare, and imperfectly imitable resource advantages, along with the organization’s ability to exploit them, elucidates the heterogeneity in performance across firms (Varadarajan, 2023). The theory posits that competition is a dynamic process, where firms actively seek comparative advantages in resources to establish positions of competitive advantage in the marketplace (Davis & McCarthy-Byrne, 2022). Furthermore, SE, EM, and EV focus on the need for increased resource investment in SMEs (Lantu et al., 2022; Rezvani & Fathollahzadeh, 2020; Wright et al., 2012). It examines the effect of EM sustainable competitive advantages and the role of opportunity and resource integration in the process (Khan et al., 2022), which emphasize the importance of resources and competitive advantage in achieving superior performance (Hunt, 2014). By actively acquiring, developing, and deploying resources in a strategic manner, entrepreneurs can create and capture value, ultimately leading to long-term success for their firms (Ziyae & Sadeghi, 2021).

In the context of strategic entrepreneurship, SMEs can use their available resources strategically to identify and exploit entrepreneurial opportunities. By leveraging their unique resources, such as knowledge, expertise, networks, and financial capital, SMEs can develop innovative products or services and enter new markets, thereby enhancing their performance (Lumpkin & Dess, 1996). EM involves innovative and resourceful marketing strategies employed by SMEs to promote their products or services. This approach emphasizes the effective utilization of limited resources to create customer value and competitive advantage. By adopting entrepreneurial marketing practices, SMEs can differentiate themselves, establish stronger customer relationships, and achieve better performance (Walker, 2011). Furthermore, EV plays a crucial role in driving SME performance. Values such as risk-taking, innovation, and opportunity recognition shape the entrepreneurial mindset and guide decision-making processes within SMEs. SMEs that embrace and prioritize these values are more likely to proactively seek out and capitalize on strategic opportunities, leading to enhanced performance (Wiklund & Shepherd, 2005). Overall, (R-A) Theory provides a framework for understanding how SMEs can leverage their resources strategically, employ entrepreneurial marketing tactics, and embody EVs to achieve better performance outcomes. By aligning their actions with the principles of RAT, SMEs can improve their competitiveness, drive innovation, and achieve sustainable growth (Sadiku-Dushi et al., 2019).

Ireland and Webb (2007) emphasized that entrepreneurship is fundamentally about the ability to introduce new products, services, processes, or market segments, and to strategically outperform competitors. By successfully innovating, companies can gain a sustainable competitive edge in their target markets. They also become better equipped to anticipate and fulfill emerging customer needs and demands, thereby enhancing customer satisfaction and providing them with positive experiences (Hanaysha, 2023; Hanaysha & Al-Shaikh, 2022). Hence, EM emerges as a timely and effective marketing strategy, enabling companies to excel in their target markets by leveraging their resources to adapt to emerging trends and respond to competition in a proactive manner (Alqahtani et al., 2022).

SE allows companies to effectively pursue both opportunity identification and sustainable advantage, leading to enhanced performance for SMEs (Baldo et al., 2023; Stanković et al., 2022). While new ventures and small businesses excel at identifying opportunities, they struggle to establish a lasting competitive advantage over time. On the other hand, large, established companies may be less adept at spotting new opportunities but excel in building sustainable advantages. SE bridges this dichotomy by combining the strengths of both approaches, enabling SMEs to identify and seize opportunities while also building sustainable advantages (Jahangard et al., 2023). By integrating entrepreneurial and strategic perspectives, SE enables SMEs to adapt to change, innovate, and grow, enhancing their overall performance (Anderson-Seminario & Alvarez-Risco, 2023). Therefore, adopting SE can help SMEs overcome the challenge of establishing a lasting competitive advantage while seizing new opportunities in the market.

Moreover, there is limited research focused on Saudi SMEs, making it a compelling context for investigating the factors influencing SME growth. This study explored determinants such as firm size, managerial experience and training, financing, and network relationships, revealing their significant correlation with firm growth (Rafiki, 2020). In light of these findings, Abdulrab et al. (2021) suggest that managers in the KSA should prioritize entrepreneurship and adopt distinctive strategic approaches. Additionally, policymakers are encouraged to implement entrepreneurship initiatives tailored for the benefit of SMEs. Existing research on entrepreneurship and marketing in SMEs of developed countries provides a foundational understanding (Alqahtani et al., 2022; Wynn & Jones, 2019), but further studies are crucial to delve into specific sub-fields and shed light on valuable connections between relevant factors (Manishimwe et al., 2022; Rezvani & Fathollahzadeh, 2020). Moreover, despite entrepreneurial strides in emerging and Arab economies, a research gap persists in these regions (Alon & Rottig, 2013; Wang, 2023; Wei et al., 2019), especially when it comes to Saudi Arabia.

The present study examines SE, EVs, and EM as proper management techniques capable of increasing SMEs’ performance. The research aims to theoretically investigate SE, EM, and EV and their influence on SMEs’ performance. To date, EM, EVs, and SE are still under-researched areas in the entrepreneurship literature (Bakir & Gunduz, 2020; Gupta et al., 2020). Globally, both EM and entrepreneurship have been widely studied in SMEs in many developed countries (Peterson, 2020; Sadiku-Dushi & Ramadani, 2020). However, there is a need for more research in this area and its subfields to investigate the suggested relationships among its variables (Gupta et al., 2020; Hallbäck & Gabrielsson, 2013; Jones et al., 2013; Masango & Lassalle, 2020). Existing studies on the link between SE, EM and EV on SMEs performance have produced ambiguous findings, highlighting the need for further exploration in this under-researched domain within EM (Becherer et al., 2012; Danibrahim et al., 2022; Eggers et al., 2020; Sadiku-Dushi et al., 2019; Shirokova et al., 2013). Moreover, a critical review of the past research indicates a significant lack of research examining the EM-SMEs performance relationship in both developed and emerging markets (Bhat & Khan, 2014). This gap is particularly evident in developing countries like Saudi Arabia, where research on SE, EM and EV as a broader entrepreneurial concept is also rare. Given these limitations, the authors were compelled to empirically investigate the link between SE, EM and EV and SMEs performance in the context of Saudi Arabia, a promising economy undergoing significant transformation.

This study adds valuable insights to our current understanding of how small and medium-sized enterprises (SMEs) perform by utilizing (R-A) Theory and investigating the interconnections among SE, EM, and EV. Unlike previous empirical research, this research incorporates more comprehensive measures of SE, surpassing the limited scope of studies that rely on the scale developed by Kyrgidou and Petridou (2011). Notably, the examination of the relationships among SE, EM, EV, and SME performance holds particular significance in the context of Saudi Arabia, where these factors pose challenges for firms aiming to achieve a competitive edge and sustain elevated performance levels. The rest of the paper is organized as follows. Initially, a review of existing literature is presented to discuss potential connections between SE, EM, EV, and SME performance, laying the foundation for the formulation of research hypotheses. Subsequently, a detailed methodology is outlined, encompassing the measurement of variables. The findings are then deliberated upon, and the paper concludes with insights into managerial practices and limitations in addition to the conclusion.

2. Literature review

2.1. Strategic entrepreneurship (SE)

SE is a cyclical process that involves entrepreneurial and strategic activities. The process begins with using the entrepreneurial mindset to outline new opportunities and proceeds to the company’s movement to strategic behavior in the form of strategic resource management, after which the company enters the entrepreneurial movement by applying creativity and developing innovation (Ireland et al., 2003). An entrepreneurial mindset is defined as “a focus on creativity and renewal, capturing scanning efforts to seek out, identify and develop opportunities for new business” (Ireland et al., 2003). Resource management entails a number of strategic techniques to shape, pool, and mobilize companies’ resource stocks to frame and filter those opportunities identified within the previous stage. The strategy involves obtaining, accumulating, and divesting the resources wanted by the firm (Sirmon et al., 2007). The innovating component appears to be the way in which creativity is realized and used in the organization. Innovation in entrepreneurship can help organizations take advantage of entrepreneurial opportunities in radical, intermittent, and sometimes disruptive ways that ultimately direct opposition from relevant industries toward entrepreneurial firms" or "direct industry opposition toward entrepreneurial firms (Danneels, 2004). Scholars define SE as “simultaneously exploring for future business domains while exploiting current domains” (Webb et al., 2010). SE means that a business recognizes that it is important to exploit opportunities that have a long-term effect (Hodge & Ratten, 2015).

SE encompasses elements such as innovation (Ketchen et al., 2007), entrepreneurial culture, and entrepreneurial leadership (Ireland & Webb, 2007; Kraus & Kauranen, 2009). Although SE has been found to have unique features, the literature generally argues that SE is no different from strategic management. Despite the perception that both concepts are similar, the latter (i.e., strategic management) is known to lead organizations through strategies and strategic orientations, whereas the former (i.e., SE) is more focused on driving organizations to stay ahead of their competitors through an entrepreneurial mindset, managing resources strategically, innovation and competitive advantage.

An analysis of SE Hitt et al. (2011) reveals that entrepreneurship and strategic management are not separate disciplines that can be analyzed in isolation; they are complementary disciplines that have a significant impact on the development of the study of organizations. Companies that are able to recognize opportunities but lack the skills to use them do not realize their potential for creating wealth. Similarly, businesses that maintain their competitive edge but fail to see new opportunities that can be exploited in the environment will face increasing risks to their businesses due to changes in the market; this may result in a slowdown in the creation of value (wealth) or even a reduction in previously generated value (Ioniţă, 2022).

SE involves dimensions such as entrepreneurial mindset to identify opportunities, managing resources strategically, creating innovation, and executing competitive advantages. These dimensions are crucial for the superior performance of SMEs (Naeiji & Siadat, 2019; Yudhanto et al., 2023). The ability to investigate potential entrepreneurial ventures while leveraging current competitive advantages is a key aspect of SE (Schröder et al., 2021). The dimensions of continuous innovation, opportunity-based mindset, proactive behavior, risk-taking, and value creation have positive effects on the competitiveness of knowledge-based firms (Ireland et al., 2023). The literature supports the positive relationship between SE and performance (Kiyabo & Isaga, 2019; Ziyae & Sadeghi, 2021). Entrepreneurship activities have been found to significantly contribute to firm growth and profitability, as well as enhance success by increasing product diversity, creating new market opportunities, and generating new ways of competing with other market players (Wei & Duan, 2023). The effects of firm-level entrepreneurship on firm growth and profitability have been well-established in the literature (Matusik, 2016; Zulfikri & Iskandar, 2022).

The practice of SE leads to the creation of fresh market prospects, a wider range of products, and novel ways for companies to compete with other market players. All these aspects contribute to the overall success and well-being of firms. Many studies have examined the impact of SE on performance (Klein et al., 2013; Luke et al., 2011; Wright et al., 2012). According to Shirokova and Ivvonen (2016), SE is the main driver of firms’ wealth-creation processes. There is immense literature on entrepreneurship that suggests that SE is positively related to business performance (Kantur, 2016; Veidal & Korneliussen, 2013). These findings contradict with other studies (Anwar & Shah, 2021; Jan & Anwar, 2022), Therefore, as the first hypothesis, we propose the following:

• H1. There is a strong and meaningful correlation between SE and SMEs’ performance within the emerging market context of Saudi Arabia

2.2. Entrepreneurial marketing (EM)

EM has emerged as a key concept in the field of marketing and entrepreneurship, focusing on the innovative and resourceful marketing strategies employed by small and medium enterprises (SMEs) (Gilmore, 2011). Lam and Harker (2015, p. 341) said, “If entrepreneurship is the soul of a business, marketing is the flesh.” The development of EM has given rise to a central interest in understanding key market developments in the fields of entrepreneurship and marketing. Early work on EM demonstrated that marketing could be applied to entrepreneurial contexts (Stokes, 2000) and considered how traditional marketing practices could be reconsidered to benefit the creation and growth of SMEs. The marketing process represents a significant innovation for SMEs (O’dwyer et al., 2009).

EM is a strategy that is commonly employed by new businesses, startups, and small businesses (Rezvani & Fathollahzadeh, 2020). It involves the use of innovative marketing techniques and strategies that allow entrepreneurs to create a unique brand identity and establish a competitive advantage in the marketplace. This approach to marketing involves a combination of traditional marketing practices and the use of digital technologies to reach customers in a more targeted and effective way (Chou et al., 2020). One of the key principles of EM is the ability to identify and target niche markets. By focusing on a specific market segment, entrepreneurs can tailor their marketing efforts to the needs and preferences of that particular group of customers (Fernando Antonio Monteiro Christoph & Luce, 2021; Sigué & Biboum, 2020). Taking risks and experimenting are important aspects of EM. Because entrepreneurs often operate with limited resources, they must be creative and innovative in their marketing efforts. This may involve trying new marketing channels or tactics, experimenting with pricing strategies, or testing different messaging and branding approaches (Alqahtani et al., 2022). EM is a dynamic and ever-evolving field that requires entrepreneurs to be adaptable, creative, and willing to take risks. By employing innovative marketing strategies and leveraging digital technologies, entrepreneurs can build strong brand identities and establish themselves as competitive players in the marketplace (Shahzad et al., 2021).

Under highly uncertain market conditions, we emphasize that EM contributes to businesses’ ability to compete. Marketing plays an important role in business success (Morrish & Jones, 2020). While many studies have claimed that traditional marketing methods are ineffective in improving SMEs performance, EM can improve the performance of companies in uncertain environments in a more effective manner (Alqahtani & Uslay, 2020; Eggers et al., 2012). Morrish et al. (2010) claimed that when conducting marketing during all life cycle stages, EM is an effective approach to success. A notable contribution of their work was the proposition that entrepreneurs and customers are very important to companies, and, hence, they must be at the heart of companies’ decisions when configuring marketing strategies, doctrines, and tactics. EM is also suitable for all stages of the product life cycle and can accelerate the speed of commercialization (Whalen et al., 2016). Some studies, such as that of Deshpandé et al. (2013), suggest that the EM process is important for creating, evaluating, and exploiting opportunities in large companies.

In today’s business environment, which is characterized by increased dynamism, turbulence, and intense competition, entrepreneurs must move from traditional managerial ideas to new and creative activities, such as EM (Hills et al., 2010). EM is a marketing strategy used by small businesses to grow through entrepreneurship (McAdam, 2004). In entrepreneurship, EM is understood as a marketing tactic to identify the advantages and opportunities of SE and to use the appreciation of opportunities and innovation competencies to produce economic rent (Hoque & Awang, 2019). Toghraee et al. (2017) conducted a comprehensive review of the EM literature and indicated that there is considerable heterogeneity in research approaches, which indicates that there is a challenge at the intersection of entrepreneurship and marketing; they recommend improving the quality of quantitative research. The concept of EM is often linked to the marketing activities of SMEs that have restricted resources and, thus, must rely on creativity. Kocak (2004) claimed that EM is a blend of EO and MO. This study conceptualizes EM as a combination of EO, MO, and LO. EO addresses the needs of society and the environment as well as organizations’ success (Martens et al., 2018). It also depicts the degree of innovation, proactiveness, and risk propensity in organizations (Brettel et al., 2015) and is described as a strategic orientation (Hakala, 2011).

Past research has found that EM has a positive influence on SMEs performance (Hamali, 2015; Hamali et al., 2016; Mugambi & Karugu, 2017; Sadiku-Dushi et al., 2019; Sadiku-Dushi & Ramadani, 2020). These findings contradict with other studies (Becherer et al., 2012; Danibrahim et al., 2022; Eggers et al., 2020; Sadiku-Dushi et al., 2019; Shirokova et al., 2013). Therefore, there is a need for further research in order to discover the cause of these ambiguous findings. Thus, as a second hypothesis, we propose the following:

• H2. There is a notable and positive connection between EM and SMEs’ performance within the emerging market context of Saudi Arabia.

2.3. Entrepreneurial value (EV)

In this paper, we explore the influence of EV on SMEs performance, drawing on various academic studies and empirical evidence. EVs are a complex phenomenon that includes a need for achievement and a sense of personal responsibility (Munawar et al., 2023). A company’s exploration activities should promote innovation, proactiveness, and risk taking while preventing unnecessary stress and rigidity; firms should instill EVs in their employees, prioritizing innovation, market leadership, personal initiative, and creativity. Such values enable constructive entrepreneurial behaviors that transform uncertainty into opportunities for growth and success (Ireland et al., 2003). Understanding the core values that underlie entrepreneurship is an important step toward successfully pursuing a business career. Although the term “entrepreneur” is derived from the word “to venture,” it can be broadly interpreted as someone who creates without capital. Essentially, being an entrepreneur requires a person to have the will and creativity to pursue a desired end without being restrained by a lack of capital (Acs et al., 2013). Most entrepreneurs are self-motivated individuals who understand the relationship between their values and business strategies. For example, they cannot succeed in business if they prioritize personal gratification over customer service. Instead, they must understand when to pursue short- and long-term goals to maximize their business’s success. Doing this requires balancing values and goals when choosing business strategies (Castillo-Benancio et al., 2023).

The relationship between EVs and SMEs performance is generally considered positive, meaning that firms that can create more EVs tend to have better performance outcomes (Zulfikri & Iskandar, 2022). EVs can also lead to the creation of new business models, which can enable firms to reduce costs and increase efficiency. This can improve a firm’s bottom line and make it more competitive in the marketplace (Shirokova et al., 2013). Moreover, utilizing R-A theory offers opportunities for advancement by incorporating it with the Entrepreneurial Value-Creation approach. EV creation allows latecomer companies to exploit resources by seizing external opportunities (Arshi et al., 2022; Mishra & Zachary, 2015). Thus, employing entrepreneurial skills to generate a resource advantage at the opportune moment can establish the necessary theoretical foundation for research on market entry timing. The literature suggests that EV plays a crucial role in driving SME performance, and understanding its influence can help entrepreneurs and managers enhance their businesses (Ambarwati et al., 2022). EVs are beliefs and principles that guide entrepreneurs’ actions and decisions. These values, which include innovation, risk taking, proactiveness, and creativity, are often reflected in companies’ cultures and have been shown to have a significant positive impact on SMEs performance (Rauch et al., 2009). An entrepreneur’s values can influence the culture, practices, and decisions within their company. Entrepreneurs who prioritize these values tend to be more successful in identifying new opportunities, adapting to changes in the market, and achieving greater levels of growth and profitability. Therefore, firms that prioritize these values and create a culture that supports them are likely to experience higher levels of success in the long run (Hitt et al., 2011). Additionally, EVs can help firms create a culture of innovation and risk taking, which can lead to continuous improvement and long-term growth (Tipu, 2017). The emphasis on EV may vary across different SMEs and may not always directly translate to improved performance as indicated by Uno et al. (2023). The context-specific nature of EV and their alignment with the overall strategic vision of the business can lead to varying outcomes (Baldo, Chen McCain, & Jouflas; Kapasi & Stirzaker, 2023; Lin & Chou, 2022). EVs predict SMEs’ performance; firms that can create more EVs tend to have better performance outcomes. Therefore, as a third hypothesis, we propose the following:

• H3. There is a positive significant link between EVs and SMEs’ performance within the emerging market context of Saudi Arabia.

3. Research methodology

3.1. Research design

Table 1 displays the results of the descriptive analysis conducted using the statistical package for social sciences (SPSS) version 27. The confirmation of the developed model was carried out through partial least square structural equation modeling (PLS-SEM), assessing the R² and predictive relevance of the model. Consistent with the methodology proposed by Hair et al. (2014), a bootstrapping approach was employed to assess the significance levels for loadings and path coefficients. The data analysis was performed using Smart-PLS version 3.3.2. The questionnaire in this study included 41 original items adapted from current literature. SE was measured with 10 items based on (Kyrgidou & Petridou, 2011); EM was measured via three dimensions EO, MO, and LO consisting of 23 items based on (Chirico et al., 2011; Deshpandé & Farley, 1998; Wang, 2008); EVs were measured using five items adapted from (Shirokova et al., 2013). Finally, SMEs performance was measured using three items adapted from (Kohtamäki et al., 2010).

Table 1. Respondents of profile.

	Frequency	Percentage
Gender
Male	99	52.7
Female	89	47.3
Age
Less than 30 years	17	9.0
31–44 years	123	65.4
45–54 years	34	18.1
More Than 50 Years	14	7.4
Educational Level
Diploma or less	30	16.0
BA/BC	119	63.3
MA/MC	34	18.1
Ph.D.	5	2.7
Human capital
Less than 50	95	50.5
51–100	38	20.2
More than 101	52	27.7
Entrepreneurship Experience
Less than 5 years	74	39.4
6–15 years	78	41.5
16–25 years	21	11.2
More than 26 years	13	6.9
Age of the Firm
Less than 3 years	42	22.3
3 – 6 years	75	39.9
7 – 10 years	23	12.2
More than 10 years	48	25.5

3.2. Sample size and data collection

To determine the size of the sample, this study followed Gurău (2012), Tabachnick and Fidell (2013) suggestion of a range of 15–20 observations per studied variable. This guideline provides a general rule of thumb to ensure an adequate sample size for effectively analyzing the associations between variables in a study. This research focused on SMEs in the Eastern Province of Saudi Arabia. According to Monsha’at (2022) report, Saudi Arabia contains over 750,000+ SMEs, and 56,250+ SMEs are concentrated in the Eastern Province. Because there was no population frame or list of population elements available to draw probability samples from (Sekaran & Bougie, 2016), a convenience sample, which is a non-probability sample, was used. In line with the approach taken by Rezvani and Fathollahzadeh (2020), this study targeted entrepreneurs as participants. Questionnaires were then created online using Google Drive, and a link was distributed to SMEs’ owners/managers in the Eastern Province.

Data was collected between March to May 2023. Researchers utilized the Monsha’at (2022) database, which encompasses over 56,250 SMEs in the Eastern Province of Saudi Arabia. Following the guidelines of Krejcie and Morgan (1970) for sample size determination, a minimum of 381 SMEs were targeted from the entire research population. Ultimately, 215 questionnaires were returned, and the final analysis incorporated 188 responses. Due to the potential for bias and inaccurate results, responses with missing data were excluded from the analysis. Table 1 describes the demographic characteristics of the respondents with complete data. Consistent with earlier studies in strategic entrepreneurship, this study utilized a convenience sampling technique to select participants (Kantur, 2016). This non-probability method, which is also cost-effective, allows for the gathering of data within a short timeframe, and enhances practicality and efficiency, it is essential to acknowledge the limitations regarding generalizability (Burakauskaitė & Čiginas, 2023; Maguraushe et al., 2020).

3.3. Common method bias (CMB)

Common method variance (CMV) is a frequently encountered challenge in social science research, typically arising from the utilization of a single source for data collection methods and techniques. We implemented various procedural measures to mitigate the impact of common method variance (MacKenzie & Podsakoff, 2012; Podsakoff, MacKenzie & Podsakoff, 2012; Viswanathan & Kayande, 2012). To alleviate concerns about evaluation apprehension, participants were explicitly notified that the questionnaire did not have right or wrong answers. They were assured of the confidentiality of their responses throughout the research process. This study applied Hermans (1970) one-factor test to assess the issue of CMV. We identified no noteworthy Common Method Variance (CMV) issues, as the primary factor explained 27.33% of the variance, which is below the suggested limit of 50% (Fuller et al., 2016). Additionally, the use of semantic differential scales and five-point Likert scales were incorporated, following the recommendations of Dawes (2008). Kock (2015) recommended a comprehensive collinearity test to evaluate common method variance when using structural equation modeling-partial least squares (PLS-SEM). In this research, an assessment was conducted for both lateral collinearity and vertical, as suggested by Kock and Lynn (2012). The finding indicated that variance inflation factor (VIF) values ranged from 1.74 to 1.92 and remained below the established threshold of 3.30, confirming that CMV was not an issue in the analysis (Kock, 2015; Kock & Lynn, 2012).

4. Findings

4.1. Respondents profile

The respondents profile factors in this study include, level of education, age, human capital, entrepreneurship experience, age of the firm is indicated in Table 1.

As demonstrated in the Table1 among 188 respondents, there were more male (52.7%) than female (47.3%). Approximately 65.4% of all respondents were between the ages of 31 and 44, which is the majority of respondents, the age groups less than 30 were (9%), between 45-54 (18.1%), and above 50 years were (7.4%). As for the respondents’ level of education 63.3% of the respondents had bachelor’s degree, 18.1% had a master’s degree, 16% had a diploma or less, 2.7% Ph.D.’s degree. Regarding human capital, 39.4% respondents reported to had less than 50, 41.5% between 51-100, and 27.7% had more than 101. The respondents’ years of experience, less than 5 years 39.4%, between 6-15 years were 41.5, between 16-25 years 11.2, more than 26 were 6.9%. Regarding the age of the firm, less than 3 years were 22.3%, between 3-6 years were 39.9%, between 7-10 years 12.2, more than 10 years 25.5%.

4.2. Measurement model assessment

Measurement models are used to test the validity and reliability of the indicators employed to measure the latent variables. It estimates the factor loadings, which represent the correlation between an indicator and the latent variable. Assessing the measurement model is important for examining convergent validity and discriminant validity by indicating the loading factors, Cronbach’s alpha (CA), and composite reliability (CR). CA is a commonly used statistic for assessing the reliability of items. It is a measure of internal consistency that assesses the extent to which the items on a scale measure the same construct. A CR coefficient of 0.7 or higher is generally considered to indicate good reliability (Hair et al., 2014), as demonstrated in Table 2, the CR coefficients in our study exceeded this threshold."

Table 2. Reliability and validity.

Constructs	Items	Loadings	CR	AVE
Entrepreneurial mindset	SM1 SM2	0.853 0.720	0.767	0.623
Managing resources strategically	SM4 SM5	0.818 0.773	0.775	0.633
Innovation	SM6 SM7 SM8	0.752 0.813 0.789	0.828	0.616
Competitive advantage	SM9 SM10	0.763 0.852	0.790	0.654
Entrepreneurial orientation (EO)	EO1 EO2 EO3 EO4 EO5 EO6 EO7	0.694 0.688 0.835 0.709 0.770 0.792 0.649	0.892	0.542
Market orientation (MO)	MO2 MO3 MO4 MO5 MO6 MO7 MO10	0.667 0.643 0.713 0.773 0.818 0.631 0.756	0.880	0.515
Learning Orientation (LO)	LO1 LO2 LO3 LO4 LO5	0.797 0.797 0.694 0.805 0.673	0.869	0.571
Entrepreneurial values (EV)	EV1 EV2 EV3 EV4 EV5	0.867 0.876 0.822 0.751 0.668	0.898	0.641
SMEs Performance (SMEP)	SMEP1 SMEP2 SMEP3 SMEP4	0.867 0.842 0.797 0.796	0.896	0.682

We investigated the construct validity of the study by evaluating both convergent and discriminant validity. To determine the presence of convergent validity, we utilized factor loadings and average variance extracted (AVE). The examination of AVE allowed us to assess the convergent validity of each latent construct. Furthermore, we assessed discriminant validity by analyzing the anticipated interaction between the variance and the variables. An AVE value greater than 0.50 serves as an indication of the significant validity of each variable. ‘Table 2 demonstrates that all arrangements passed this preventative test of discriminant validity, with AVE values ranging from 0.515 to 0.682.

4.3. Discriminant validity

Discriminant validity is a statistical measure used to assess the construct validity of an item scale. It assesses the extent to which a scale measures the construct that it is supposed to measure. There is evidence that discriminant validity indicates whether certain latent constructs are different from each other (Duarte & Raposo, 2010). In the present study, comparing the squared engagement of binary constructs with the AVEs of all constructs established both AVE and discriminant validity (Fornell & Larcker, 1981). This is clearly indicated in Table 3, which demonstrates that there are no discriminant validity issues, as demonstrated by the low correlations among the square roots of the average variances.

Table 3. Square roots of AVE.

	1	2	3	4	5	6	7	8	9
Competitive advantage	0.809
Entrepreneurial mindset	0.258	0.789
Entrepreneurial orientation	0.372	0.416	0.736
Entrepreneurial values	0.361	0.359	0.532	0.801
SMEs performance	0.267	0.251	0.522	0.525	0.826
Innovation	0.421	0.327	0.509	0.391	0.319	0.785
Learning orientation	0.291	0.266	0.299	0.335	0.242	0.270	0.756
Managing resources strategically	0.332	0.483	0.431	0.358	0.392	0.463	0.212	0.796
Market orientation	0.412	0.243	0.552	0.589	0.490	0.468	0.271	0.329	0.717

4.4. Structural model assessment

The most important aspect of assessing the structural model is the process of evaluating path coefficients. Path coefficients are estimating the link between the variables in the model and can help identify which relationships are significant and which are not. Path coefficients are represented by standardized path coefficients, which can be used to compare the strengths of different relationships. To assess the goodness-of-fit index, we used R-squared (R²) as it adjusts the standard errors of the model. In SEM-PLS, the R² value helps evaluate how well a model predicts the observed data (Götz et al., 2010). The predictive relevance, often denoted as Q², estimates a model’s ability to predict the out-of-sample values of endogenous constructs. This is a valuable metric for assessing a model’s predictivity (Henseler et al., 2016). Following Henseler et al. (2016), recommendation, we conducted blindfolding, and all Q² values were found to be considerably above zero. Table 4 demonstrates the finding of R² compared to Q². For SMEs performance, the R² value is 0.37 and the Q² value is 0.25, indicating a strong effect size (Hair et al., 2013). In addition, to assess the statistical significance of the path coefficients, bootstrapping with 5,000 resamples is essential for evaluating the t-values. Table 4 illustrates the path coefficients for the model.

Table 4. Path coefficients.

HyP	Paths	Beta	SE	R^2	Q^2	T-Value	p-Value	Findings
H1	SE -> SMEs performance	0.085	0.090			0.942	0.346	Not Supported
H2	EM -> SMEs performance	0.353	0.092			3.854	0.000	Supported
H3	EV -> SMEs performance	0.254	0.082			3.089	0.002	Supported
Endogenous latent construct SMEs performance				0.37	0.25

H1 presumed that SE is positively connected to SMEs performance, but Table 4 indicates that there is no significant link between SE and SMEs performance (β = 0.085, t = 0.942, p > 0.05). Thus, H1 was not supported. H2 predicted that EM would be related to SMEs performance. The findings showed an important and positive link between EM and SMEs performance (β = 0.353, t = 3.854, p < 0.05), meaning that H2 is supported. H3 predicted that EVs would influence the SMEs’ performance results. Table 4 indicates a positive and significant link between EV and SMEs performance (β = 0.254, t = 3.089, p < 0.05). Thus, H3 was supported.

5. Discussion and conclusion

SE and SMEs performance are two critical areas in the field of business management. SE refers to the process of developing innovative ideas and strategies that create and sustain competitive advantages. In the existing literature, the perception of SE was found to be essential in enhancing firms’ competitiveness and profitability. Unfortunately, the findings of the current study showed no significant link between SE and SMEs performance. The relationship between SE and SMEs performance is not always straightforward; rather, it is complex and multifaceted. Some studies have found that too much emphasis on entrepreneurial activities may lead to a lack of focus and direction, which can negatively affect SMEs’ performance. The potential reasons behind the observed lack of significance between SE and SMEs performance, SMEs in the Eastern Province may neglect other critical aspects of their operations, such as efficiency, productivity, and quality control, which can also undermine performance. This finding aligns with the findings reported in prior research (Adel et al., 2020; Gill, 2021; Kiyabo & Isaga, 2019; Shirokova et al., 2013). While SE can provide significant benefits for firms, including improved innovation, flexibility, and competitiveness, SMEs in the Eastern Province need to balance their entrepreneurial activities with other critical aspects of their operations. Ultimately, the success of a firm’s entrepreneurial endeavors depends on its ability to foster a supportive culture, manage risks, and align its activities with its strategic objectives (Edwards et al., 2023; Gill, 2021; Kantur, 2016; Shirokova & Ivvonen, 2016). One possible explanation for the insignificant link between SE and SME performance could be the influence of cultural factors and regional regulations. Cultural factors shape risk-taking propensity, innovation adoption, and the willingness to explore novel business strategies, which in turn affect strategic entrepreneurship (Baldo et al., 2023). Regional regulations and policies can create an environment that either fosters or hinders strategic entrepreneurial activities, thereby impacting their SME performance (Moghaddam et al., 2023). Additionally, SMEs in the Eastern Province might be grappling with resource constraints that limit their ability to fully engage in strategic entrepreneurship. The implementation of strategic initiatives often requires financial, human, and technological resources, and the lack of these resources may dilute the potential impact on performance. H2 presumed that EM is positively connected to SMEs performance. The present findings indicate a positive and statistically significant correlation between EM and SMEs performance, which suggests that firms that adopt an EM approach tend to outperform their competitors in terms of revenue growth, profitability, and market share. The strong link between these factors is due to the fact that EM allows firms to be more agile and responsive to changes in the market and makes them more willing to experiment with new ideas and take calculated risks. This result is in line with prior research that confirms our results (Eggers et al., 2020; Rezvani & Fathollahzadeh, 2020; Sadiku-Dushi et al., 2019). This study contributes valuable insights into understanding the link between EM and SMEs’ performance. The evidence supports the notion that SMEs can gain a competitive edge by adopting entrepreneurial marketing practices. As SMEs navigate an increasingly dynamic business environment, understanding and leveraging the positive connection identified in this study can contribute to sustained growth and success (Hanaysha & Al-Shaikh, 2022; Khan et al., 2022). (R-A) theory provides a valuable lens for understanding how EM can improve the performance of SMEs. By identifying, developing, and effectively utilizing valuable resources, SMEs can create and sustain competitive advantages, leading to improved innovation, market positioning, profitability, and overall success.

H3 presumed that EVs are positively connected to SMEs performance. The result of this study indicates a significant and positive link between EVs and SMEs performance. EVs are a set of beliefs and principles that guide entrepreneurs in their business activities. These values include creativity, risk taking, innovation, vision, perseverance, and passion (Shirokova et al., 2013). The findings indicate that EVs are essential for firm success. This finding is consistent with previous findings (Berson et al., 2008; Shirokova et al., 2013; Tomczyk et al., 2013). The effective application of entrepreneurial values by business actors in their operations reflects a sense of self-efficacy. When individuals possess a robust belief in their abilities, it is accompanied by heightened motivation. The strength of entrepreneurial commitment significantly influences business performance; insufficient commitment can negatively affect overall business outcomes (Ambarwati et al., 2022). Cultural values of entrepreneurial team members play a role in the structure and performance of entrepreneurial teams (Permatasari et al., 2023). The cultural values held by team members play a significant role in shaping the structure of the entrepreneurial team, consequently influencing the overall performance of the team (Bashokuh-E-Ajirloo et al., 2023). Therefore, fostering entrepreneurial values and considering cultural values can lead to improved performance in both SMEs and entrepreneurial teams. After analyzing the research on the impact of SE, EM, and EVs on SMEs’ SMEs performance, it can be concluded that EM and EVs have a significant positive effect on firms’ performance. In contrast, the findings show that SE has an insignificant effect on firms’ performance. First, EM emphasizes the importance of customer-centricity, creativity, and resourcefulness in marketing activities. This approach helps firms differentiate themselves from competitors, develop strong relationships with customers, and create unique brand identities (Rezvani & Fathollahzadeh, 2020; Sadiku-Dushi et al., 2019). Second, EVs, such as risk-taking, creativity, and innovation, are essential for firms to succeed in today’s dynamic and competitive business environment. These values foster an entrepreneurial culture that encourages experimentation, learning, and adaptation (Shirokova et al., 2013). Finally, SMEs must identify and exploit opportunities that lead to innovative products or services that can help them achieve a sustainable competitive advantage and improve SMEs performance. By integrating entrepreneurial thinking into their business strategies, firms can create value for their stakeholders, enhance their reputations, and increase their market shares.

6. Implications

EM and EVs have been identified as crucial factors that contribute to SMEs’ performance. The practical implications of these factors involve the integration of entrepreneurial thinking into strategic management processes. For SMEs to develop and exploit opportunities in a proactive and innovative way, they must focus on continuous innovation and creativity to remain competitive and align their strategy with their entrepreneurial capabilities to create a sustainable competitive advantage (Hisrich & Ramadani, 2018). SMEs must develop a portfolio of entrepreneurial projects and manage them effectively to achieve superior performance. Additionally, they must focus on customer needs and preferences to create customer value and adopt agile marketing practices to respond quickly to changes in the market environment (Hagen et al., 2019). SMEs must also develop a culture of entrepreneurship by promoting the values of innovation, risk-taking, and excellence and by recruiting and retaining employees who share these values to create a high-performance culture. EM and EVs are critical factors that drive SMEs’ performance. Firms that embrace these concepts and implement them effectively are likely to achieve a sustained competitive advantage and superior performance. This study provides valuable insights for entrepreneurs and marketing practitioners by highlighting the importance of tailoring marketing strategies to the specific context and emphasizing the potential of entrepreneurial marketing as a flexible and adaptable approach for navigating challenging environments.

7. Limitations and directions future research

This research comes with several limitations. Initially, the investigation focused solely on the relationships among SE, EM, and EV, and the performance of SMEs (Small and Medium Enterprises) within the specific context of the Eastern Province in KSA (Kingdom of Saudi Arabia). Consequently, future studies should delve into exploring additional variables that might impact the interplay among SE, EM, EV, and SMEs’ performance (Abdulrab et al., 2021; Kiyabo & Isaga, 2019; Munawar et al., 2023). Second, we gathered data from SMEs in the Eastern Province of KSA. The results may be different for other locations. Therefore, future research should consider obtaining respondents from other broader locations. Thirdly, the present study encompassed SMEs in a general sense. To enhance the applicability of findings, future research should consider narrowing down to specific industries or sectors within KSA or other countries. Fourthly, subjective performance measures based on entrepreneurs’ perceptions were utilized due to the challenge in obtaining objective financial performance measures and providing a thorough interpretation of findings. Hence, future research should place emphasis on incorporating objective performance indicators. Fifthly, this study only examines the direct relationship between independent and dependent variables, future research can concentrate on moderating the role of marketing agility or competitive intensity. Lastly, this study relied on cross-sectional data, leaving the question unanswered regarding whether EM or EV positively influences the long-term performance of SMEs. Additionally, a notable gap exists in the literature concerning longitudinal studies. Therefore, future research should investigate the longitudinal effects of EM or EV on the extended-term performance of SMEs.

Ethics declarations

The study was conducted according to the guidelines of the Declaration of Helsinki and approved by the Deanship of the Scientific Research Ethical Committee, King Faisal University (project number: GRANT5,426, date of approval: 28 February 2023).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Data will be made available on request.

Additional information

Funding

This work was supported by the Deanship of Scientific Research, Vice Presidency for Graduate Studies and Scientific Research, King Faisal University, Saudi Arabia [GRANT5,426].

Notes on contributors

Mohammed Alshagawi

Dr. Mohammed Alshagawi, PhD, MS, is associate Professor in the Department of Management at King Faisal University and was a Fulbright Fellow at Smith College for the 2010-2012 academic year. Dr Mohammed holds PhD in Strategic Management from the University of St Andrews in Scotland. Mohammed has had the opportunity to present several lectures on women entrepreneurship at different American universities. His teaching interests include strategic management, innovation and entrepreneurship and venture growth strategies.

Hashed Mabkhot

Dr. Hashed Mabkhot PhD, MSc, is Assistant Professor in the School of Business, King Faisal University, Dr. Mabkhot holds PhD in Marketing from the University Utara Malaysia in Malaysia. His research interests are in marketing, branding, green consumer behavior, digital marketing, entrepreneurship which are areas he has presented and published at various international conferences and journals.