Business strategy and firm performance in SMEs: Recognizing the role of the environmental management process

Abstract

Firm performance (FP) has become a significant challenge for every organization to survive in the markets. The present study investigates the FP directly through business strategy (BS) and environmental management process (EMP) and the mediating role of EMP between BS and FP among small and medium-sized enterprises (SMEs) in Saudi Arabia. The study’s conceptual framework is based on vigorous literature, i.e., Ilmudeen and Bao (2020) and Al Doghan et al. (2022). We gathered quantitative cross-sectional data from employees of SMEs in Saudi Arabia. The conclusions of the study are based on 366 valid samples. Employing path analysis using Analysis of Moment Structures (AMOS) version 26.0, the study’s results exert a positive and significant impact of BS and EMP on FP. Besides, BS also has a significant positive effect on EMP. Finally, EMP is a significant mediator between BS and FP. The study’s findings will assist policymakers and the top management of SMEs in understanding BS and EMP’s roles in connecting to FP and developing policies considering these links. Finally, the findings would enrich the fathom of literature providing empirical evidence from SMEs of Saudi Arabia.