Drivers of emerging market professional service firm success: the role of internal firm competencies and capabilities

Abstract

Purpose The purpose of this study is to investigate the effects of emerging market professional service small and medium-sized enterprises’ (PSF SME) internal competencies and capabilities on their ability to establish relationship value among clients and achieve superior financial performance. This study addresses the paucity of research on emerging market PSF SMEs and their ability to build value for their clients. Design/methodology/approach Data were collected from 251 senior managers or owners of PSF SMEs who were from an emerging market economy but had operations in various foreign markets. The two-step structural equation modeling procedure was used to analyze the data and investigate the hypothesized relationships. Findings The results show the positive impacts of the PSF SME’s human capital on innovativeness, service capabilities and relationship value. Human capital also had indirect positive impacts on relationship value and financial performance. Service capabilities were found to have a positive impact on relationship value and financial performance. In addition, innovativeness was found to have a positive impact on financial performance. Practical implications Emerging market PSF SMEs can gain competitive advantages and build solid long-term relationships with clients in the global marketplace when they focus on strengthening their human capital resources and successfully leveraging their innovativeness and service capabilities. Originality/value The study fills a gap in international business and management literature by offering guidance on how emerging market PSF SMEs can effectively use their internal resources and capabilities to build solid relationships with clients, deliver superior services and achieve global marketplace success.