Influence of internal and external challenges on financial performance of SMEs in Saudi Arabia moderated by business support

The COVID-19 pandemic caused global disruptions, impacting small and medium enterprises (SMEs) severely. SMEs, representing 90% of businesses in Saudi Arabia, are essential to the economy but face challenges, including exclusion from major industries. Post-pandemic, SMEs grew significantly, reaching 892,063 by June 2022, as reported by Monsha’at. This study explores the effects of internal and external challenges on the financial performance of SMEs in Saudi Arabia, emphasizing the moderating role of business support. It also highlights the importance of human capital investment over technological adoption to drive SME growth. A quantitative approach was employed, gathering 390 responses from SME owners and managers. Data analysis utilized SPSS and AMOS, applying exploratory factor analysis and structural equation modelling. Using the resource-based view theory, the study found that both internal and external challenges significantly impact financial performance. Business support was found to significantly moderate the relationship between internal challenges, such as resource leakage and lack of skilled labor, and SME performance. External factors, including regulatory constraints, further exacerbate difficulties, especially post-COVID-19. The findings underscore the need for enhanced financial and non-financial business support to improve SMEs’ performance.

Text 125155 - Full Text.pdf Download (2MB) Official URL or Download Paper: http://ethesis.upm.edu.my/id/eprint/18819

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