FAMILY BUSINESS CAPABILITIES AND SUSTAINABLE GROWTH OF MSMES: AN EMPIRICAL SEM STUDY
DOI:
https://doi.org/10.69980/b26hkk85Keywords:
Family Business Capabilities, Innovation Capability, Sustainable Growth, MSMEs, Structural Equation Modeling, ADANCO, PLS-SEMAbstract
In the current study, the impact of family business capabilities on Micro, Small, and Medium Enterprises (MSMEs) sustainable growth was investigated, and innovation capability was explored as a mediating variable. MSMEs are substantial part of the emerging economies and have a significant contribution in employment, regional development and economic sustainability and these are family owned. Although family businesses are becoming more and more relevant, there are only few empirical investigations that have studied how capabilities of the family business are linked to entrepreneurial innovation processes and sustainable growth of the business. The study was of a quantitative research design with a structured questionnaire that was administered to the owners and managers of the family owned MSMEs. The resulting responses were 235 valid responses which were then analyzed by Partial Least Squares Structural Equation Modeling (PLS-SEM) with ADANCO software. The measurement and structural models were evaluated using techniques such as reliability, convergent validity, discriminant validity, and bootstrapping procedures.The results showed that the capability of family business has significant and positive effects on innovation capability and sustainable growth of MSMEs. Family Business Capabilities also had a significant positive impact on sustainable growth, and were partially intermediating between family business capabilities and sustainable growth. The results support the assumptions of the Resource-Based View and Dynamic Capability Theory. The study adds to research on family business and MSME literature by emphasising the strategic function of the innovation ability as a tool that can turn strengths of a family business into competitive advantage and business development in the long term.
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