Unravelling Factors Influencing Firm Performance: Evidence from the SMEs in Tourism Industry

Abstract

The global business scenario seems to be gloomy due to the economic uncertainty caused by the COVID-19 pandemic. The COVID-19 pandemic has impacted many economic sectors and a country’s national GNP, including the tourism industry. The question is whether the influencing factors for firms involved in the tourism industry, especially in developing countries, ensure their future survival. The main aim of this paper is to examine the role of internal resources and external environmental factors on the firm performance of small–medium enterprises (SMEs) in the tourism industry, with a specific focus on SME hotels. Based on a survey carried out among hotel owners or key managerial staff in Saudi Arabia and using partial least squares (PLS), the study aimed to attain the objective of this study. Results from the statistical analysis indicate that both internal and external environmental factors have a positive impact on the performance of SME hotels. The results also revealed a more significant impact from the external environmental factors in influencing firm performance than internal resources. Implications, limitations, and recommendations for future scientific investigation are put forward.