Serene Business Environment Moderated by Competitive Intensity on Performance of Small and Medium Enterprises (SMEs) in Malaysia

Abstract

Effect of business environment on the performance of small and medium enterprises (SMEs) has been widely studied. However, researches on the effect of serene business environment, as well as moderator on performance of SMEs are lacking. Therefore, this research investigated effect of competitive intensity on the relationship between serene business environment and performance of SMEs in Malaysian context. Accordingly, a cross sectional survey design was adopted, and data of 148 respondents was collected and analyzed using descriptive and inferential statistics – frequencies, percentages and partial least square – structural equation modelling (PLS-SEM). From the findings, Malaysia’s serene business environment is an important driver of SMEs’ performance. Yet, the research found that competitive intensity is an important factor that strengthened causal relationship between economic environment and performance, as well as between regulatory environment and performance. However, the effect of competitive intensity in strengthening causal relationship between financial market environment and performance, as well as between technological environment and performance was not found. The current results brought a new insight in this field of study. Therefore, several research implications and recommendations to business managers and policy makers were highlighted.