Understanding Financial Literacy and Entrepreneurial Knowledge In Predicting SME Performance: Can Organizational Commitment Play any Role?

Abstract

The current study investigated the nexus of financial literacy, entrepreneurial knowledge, organizational commitment, and SME performance. The study examined how these factors can help improve the performance of SMEs in the Kingdom of Bahrain, that pays much greater importance to these business entities for their strategic growth and survival as an economy. Through using the cross-sectional approach, the current study targeted owners and managers of SMEs in the Kingdom of Bahrain for their opinion using a questionnaire. A total of 262 finalized responses were taken further for data analysis and interpretation using Smart PLS 3.0. The results found that financial literacy influenced SME performance in the Kingdom of Bahrain. The findings of the study also confirmed the critical role of entrepreneurial knowledge in harnessing SME performance. Notably, the two factors were also found to be positively influencing the organizational commitment levels. Lastly, the statistical results also indicated the mediation of organizational commitment in the relationship between financial literacy, entrepreneurial knowledge and SME performance. The study forwards implications for theory and practice followed by scope for further studies.