Is entrepreneurial competency and business success relationship contingent upon business environment? A study of Malaysian SMEs

The purpose of this article is to evaluate the effect of entrepreneurial competencies and the moderating effect of business environment on business success in small and medium sized enterprises (SMEs) in Malaysia.

A sample of 212 Malaysian SME owner‐founders participated in this study. The structural equation modeling (SEM) procedure was used to test the proposed model.

The results showed that entrepreneurial competencies were strong predictors of business success in SMEs in Malaysia. It was also found that the association between entrepreneurial competencies and business success was more strongly evident in hostile and dynamic environments than in more benign and stable environments.

Self‐report was used as the source of all data. This approach, even though criticised by some, was deemed necessary because of difficulties associated with the independent assessment of each of these variables. Nevertheless, future studies should identify ways to obtain competency data from multiple informants to minimise the possibility of response bias.

It was suggested that understanding business success through the lens of entrepreneurial competencies is important because it provides entrepreneurs with knowledge about the way they should operate their business and encourages them to be conscious of the potential positive or negative impacts of their own behaviour.

The study shows that entrepreneurs are capable of minimising the negative impact of business environment if they are willing to equip themselves with the appropriate competencies.