The impact of market uncertainty on international SME performance

Abstract

This research explores the performance of international small and medium-sized enterprises (SMEs) in Iran. Iran as the 18th biggest market in the world, can potentially be an attractive market for firms. However, SMEs need to navigate the market uncertainty to achieve their performance goals. This study explores this issue by placing competitive advantage to mediate market uncertainty and international SMEs’ performance. A foreign SME in Iran is considered a company with 99 employees or less, and which was founded abroad but have an established branch within the country. We used the partial least square (PLS) method to analyse the data gathered from 166 foreign SMEs in Iran. The findings imply that market uncertainty significantly affects performance. Nevertheless, competitive advantage does not mediate the relationship. This study offers insights to international SMEs on how to leverage comprehensive knowledge on market uncertainty to enhance their performance in developing markets. The empirical findings from this research reaffirms the notion that international SMEs ought to be informed about the effects of uncertainty in order to achieve high performance. This is particularly important in developing markets which are more prone to ambiguity.