Do strategic management, innovation and social capital matter for firm performance in developing countries? Evidence from Morocco, Tunisia and Egypt

Abstract

PurposeUsing the resource-based view and dynamic capabilities theory, we explore the impact of strategic management practices, innovation and social capital on small and medium-sized enterprises’ (SMEs) performance in three developing Arab countries, namely, Egypt, Morocco and Tunisia.Design/methodology/approachDrawing upon firm-level data derived from the standardized World Bank Enterprise Surveys, we use quantile regressions and the marginal effects analysis to test our hypotheses.FindingsOur results show heterogeneity among the three countries as to the factors affecting firm performance. The configuration of performance determinants also differs among firms within each country, depending on their level of performance.Research limitations/implicationsOur findings further the understanding of the performance determinants of SMEs in developing countries within their own local context. They imply important theoretical, methodological, managerial and policy implications.Originality/valueThis study is the first to investigate simultaneously strategic management practices, innovation and social capital as determinants of SMEs’ performance in developing countries. We confirm an important premise of the resource-based view and dynamic capabilities theory, which has not been thoroughly investigated in the literature, claiming that strategic management, innovation and social capital cannot be separately investigated as determinants of firm performance. We do so by going beyond the mere inclusion of interaction terms in regression equations to computing marginal effects.