Sequential Mediation of Innovativeness and Competitive Advantage between Resources for Business Model Innovation and SMEs Performance

Abstract

Business model experimentation is becoming common for the businesses with the advancement of technology and is considered as a key role behind innovativeness for gaining competitive advantage which leads to performance. However, in the developing countries business model experimentation is not widely used by the small and medium enterprises. Therefore, the purpose of the research was to analyze the sequential mediation of innovativeness and competitive advantage between resources for business model experimentation and performance of small and medium enterprises. For the said purpose predeveloped questionnaire was adopted to collect the data from the small and medium enterprises operating in Karachi city of Pakistan. Structural equation modeling was used to analyze the direct and mediating effects. The findings revealed that innovativeness fully mediates between business model experimentation and competitive advantage, however, competitive advantage has the direct effect on performance, but the mediating role was found insignificant. All the direct relations are significant, however, in sequential mediation, the mediating effect holds partially. The findings are significant for the policy makers as well as academicians because the findings open the horizon for conducting research over business model experimentation in the developing countries and it is suggested to analyze the similar framework over other cities as well as while analyzing the demographic effects.