SmartPLS-SEM Analyses Approach in Validity and Reliability of Entrepreneurial Orientation, Social Capital and Government Support Policies on SMEs Performance Instrument

Abstract

SMEs vary in applying entrepreneurial orientation (EO) coupled with other internal and external resources to achieve performance goals. We determined this heterogeneity using EO, social capital, and government support policies, which are vital for SMEs strategic decisions on performance. Despite the abundance of EO research, little is known about how the predictors have impacted the performance of Ghanaian SMEs. This study validated an interactive model for SMEs sustainable performance using 372 questionnaires. Data screening issues of common method variance were conducted prior to analysis with Smart PLS-SEM. Findings established an Average Variance Extracted values above 0.50 with composite reliability (CR) values of (0.838) to (0.948) for all the variables. SMEs performance had the maximum CR value of (0.948) whilst social capital (SC) scored the lowest of (0.838). In totality, this research five EO as well as SC and Government support policies variables proved vital in contributing to Ghanaian SMEs performance. The implications are that EO, SC and prudent Government support policies are needed for SMEs sustainable performance. Next, the findings imply that government and its allied institutions support to SMEs are crucial to boost their EO and SC, making them more competitive in wealth creation in every business milieu.