The Impact of Entrepreneurial Orientation, Innovation Capability, and Competitive Advantage on Performance of SMEs in Upper Northeastern Region
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This study investigated how entrepreneurial orientation, innovation capability, and competitive advantage influenced SME performance in Thailand’s Upper Northeastern region—an economically promising yet under-researched area. Using a quantitative design and stratified sampling across SME sectors, 384 valid responses were collected from SME owners and senior managers via structured questionnaires. Data were analyzed using descriptive statistics, Pearson correlation, and Confirmatory Factor Analysis (CFA). The results indicate that the measurement model fits well with the data, as shown by χ²/df = 1.089, CFI = 0.999, and RMSEA = 0.015, confirming the validity of the constructs used. Structural Equation Modeling (SEM) revealed that both entrepreneurial orientation (β = 1.098, p < 0.001) and innovation capability (β = 1.000, p < 0.001) had significant positive effects on firm performance. In addition, the analysis found that competitive advantage partially mediated the relationship between entrepreneurial orientation and firm performance, suggesting that entrepreneurial orientation impacts firm performance both directly and indirectly through competitive advantage. Meanwhile, competitive advantage fully mediated the relationship between innovation capability and firm performance, indicating that innovation alone cannot improve performance unless it is effectively transformed into competitive advantage. Competitive advantage serves as the key mechanism through which innovation capability drives firm performance. Among SMEs in Northeastern Thailand, innovation capability has a greater impact than entrepreneurial orientation, as it enables firms to create unique products, enhance processes, and adapt to market shifts, which is crucial for outperforming competitors in resource-constrained environments.
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