Entrepreneurial Competencies,Institutional Voids and Performance of Small and Medium Enterprises: Evidence from an Emerging Economy

Abstract

The entrepreneurs leverage their competence to exploit the entrepreneurial opportunities in a market leading to improved firm performance. This study investigates the relationship between entrepreneurial competences and financial and non-financial performances of small and medium enterprises (SMEs). It further investigates whether presence of institutional voids moderates this relationship. Using the survey method, the data were collected from owner-cum-founder of 204 SMEs from manufacturing sector, in the National Capital Region of India, an emerging economy. A structured questionnaire was used to capture the data. The results suggest that entrepreneurial competence significantly affects the financial performance of the firm whereas it has insignificant effect on the non-financial performance. Further, institutional voids moderate the relationship between entrepreneurial competence and non-financial performance of the firms whereas it does not show any moderating effect on the relationship between entrepreneurial competence and financial performance of SMEs. This study does have some managerial implications for entrepreneurs who can use their competencies to the fullest while working around institutional voids. This study contributes to advance the understanding about the role of institutional voids in influencing the relation of entrepreneurial competence with SMEs’ performance.