THE EFFECTS OF ENTREPRENEURIAL ORIENTATION, HUMAN CAPITAL, AND ORGANIZATIONAL LEARNING CAPABILITY ON BUSINESS PERFORMANCE AMONG SMEs IN JORDAN

Abstract

The role of small and medium-sized enterprises (SMEs) has been acknowledged across the global. The contribution of SMEs towards gross domestic product (GDP) and economy of a country is very much undeniable. This highlights the importance of sustainability amidst the budding SMEs to penetrate the competitive global market. Hence, SMEs need to adopt and practice several essential characteristics to grow, compete, and sustain. As such, this study investigated the impacts of entrepreneurial orientation (EO), human capital (HC), and organizational learning capabilities (OLC) on business performance (BP) of SMEs established in Jordan. Jordan was selected as the sample area due to its interesting environment, which is stable but surrounded by neighbouring countries in crises, hence constriction in resources. The questionnaire survey method was adopted, as a set of questionnaires was distributed to 376 SMEs for this study purpose. The Partial Least Square-Structural Equation Modelling (PLS• SEM) approach was employed in this study for data analysis, after determining the reliability and validity of the dataset. As a result, all the seven hypotheses formulated for this study are accepted. The first five hypotheses reflect the direct relationships or EO-BP, HC-BP, EO-OLC, HC-OLC, and OLC-BP of SMEs, while the last two hypotheses are the mediating effect of OLC on the relationships of EO and HC with BP. All the variables displayed significantly positive correlations with BP of the studied SMEs and OLC, which served as a mediator, enhanced the BP of SMEs. The study implication for SMEs in Jordan highlights the need for the enterprises to adopt innovation and learning in order to further grow and perform exceptionally both in local and global markets. Besides, it was found that autonomy is significant among employees so that they have the freedom and time for innovative activities, thus enhancing BP. Customer satisfaction also needs to be a priority to sustain in the competitive market. Future studies are called to replicate the study in other varied setting to compare the outcomes in light of SMEs spread across the globe.