A structural equation model on performance of small and medium enterprises (SMEs) in Region XI

Abstract

This study aimed at creating a causal model on performance of small and medium enterprises (SMEs) in Region XI, Philippines as influenced by entrepreneurial marketing, customer focus and knowledge management. The research design used was descriptive-causal design through structural equation modeling among 400 SME employees with at least managerial or supervisory positions. Findings showed that entrepreneurial marketing, customer focus and knowledge management positively correlated and showed significant relationship with the performance of SMEs. Results revealed that the best fit model expressed a comprehensive new concept that performance of SMEs as measured in terms of employee satisfaction and firm performance is best anchored on strong evidence of entrepreneurial marketing as defined by pro-active orientation and risk management; and further reinforced by customer focus as indicated by organizational customer orientation. In conclusion, the final model illustrated the direct causal relationships of entrepreneurial marketing and customer focus and was found to be the best fit model on performance of SMEs. Overall, findings of this study contribute to a better understanding and clarity of how small and medium-sized businesses may improve their performance. Keywords: business administration, entrepreneurial marketing, customer focus, knowledge management, performance, SEM, Philippines