Abstract
Small and medium-sized enterprises (SMEs) are important vehicles for economic and
social development, in particular for job creation; however, they are susceptible to high
failure rates, and are often not resilient enough to survive unexpected crises (such as
the worldwide coronavirus pandemic). This study therefore addressed the following
question: How can SMEs embed capabilities that will support their endeavours to
achieve resilience, growth and performance. The literature review of empirical studies
showed that exports and innovation are positively linked to SME firm performance,
often mediated by the ability to leverage learning benefits; further, the central presence
of the entrepreneur in an SME setting necessitated an examination of entrepreneurial
competence in relation to building those organisational capabilities that enhance firm
performance.
In all, 207 South African manufacturing-based SMEs were surveyed, with the aim of
empirically establishing the effect of absorptive capacity, knowledge management
capability and entrepreneurial competence on export orientation and innovation
capacity, and in turn, the effect of the latter two on SME firm performance. The
research design was quantitative, with constructs measured on a 5-point scale in the
questionnaire, which contained items descriptive of each construct and its theorised
dimensions. Exploratory factor analysis (EFA) was used to identify how many factors
represent the constructs under observation and confirmatory factor analysis (CFA)
confirmed the reliability and validity of the instrument. Structural path modelling
confirmed support for six of the eight hypotheses. Thus, the study demonstrated
empirical support for the hypotheses relating to the positive effect of absorptive
capacity and knowledge management capability on export orientation and innovation
capacity, respectively, and for those relating to the positive relationship between
export orientation and innovation capacity, respectively, with SME firm performance.
This adds to the body of knowledge on factors capable of supporting SME firm
performance. It does, however, leave room for a further examination of entrepreneurial
competence in relation to developing capabilities that will positively affect firm
performance. This study confirmed the empirical relevance of the self-select view of
internationalisation theory, diffusion of innovation theory and the knowledge-based
perspective of the resource-based view.