Enhancing SME Performance through Entrepreneurial Orientation: The Roles of Empowerment, Entrepreneurial Competence, and Technology Support

Abstract

This study examines how SME empowerment, entrepreneurial competence, and technology support shape SME performance through entrepreneurial orientation in Baubau City, Indonesia. A quantitative explanatory, cross-sectional design was employed. Data were collected from 100 SME owners using a five-point Likert questionnaire with proportional representation of business categories and districts, subject to eligibility criteria, and analyzed using partial least squares structural equation modeling (PLS-SEM) in SmartPLS 4. The measurement model demonstrated satisfactory convergent validity and reliability. The structural model explained 44.5% of the variance in entrepreneurial orientation and 51.7% of the variance in SME performance. Empowerment had a strong positive effect on entrepreneurial orientation (β=0.535, p<0.001), while entrepreneurial competence also had a positive effect (β=0.199, p=0.028). Technology support did not significantly predict entrepreneurial orientation (β=0.055, p=0.570). SME performance was positively associated with empowerment (β=0.283, p=0.001), entrepreneurial competence (β=0.202, p=0.006), technology support (β=0.163, p=0.031), and entrepreneurial orientation (β=0.294, p<0.001). Entrepreneurial orientation mediated the empowerment–performance relationship (β=0.158, p=0.002), but did not mediate the competence–performance or technology–performance relationships. The findings indicate that entrepreneurial orientation is a selective strategic conversion mechanism: empowerment improves performance partly by strengthening proactive, innovative, and risk-oriented behavior, whereas competence and technology primarily contribute through direct pathways. The study advances an integrative strategic performance perspective for SMEs in an emerging, island-based regional economy.