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The Impact of Corporate Governance and International Orientation on Firm Performance in SMEs: Evidence from a Developing Country

Author

Listed:
  • Kankan Wen

    (School of Chinese Language and Literature, Ningxia Normal University, Guyuan 756000, China)

  • Noha Alessa

    (Department of Accounting, College of Business and Administration, Princess Nourah bint Abdulrahman University, P.O. Box 84428, Riyadh 11671, Saudi Arabia)

  • Karifala Marah

    (Department of Economics and Management, Zhejiang Normal University, Jinhua 321017, China)

  • Kwame Kyeremeh

    (Department of Publishing Kwame Nkrumah, University of Science and Technology, Kumasi AK-385-1973, Ghana)

  • Emmanuel Sampson Ansah

    (Department of Economics and Management, Zhejiang Normal University, Jinhua 321017, China)

  • Vincent Tawiah

    (DCU Business School, Dublin City University, D09 E432 Dublin, Ireland)

Abstract

Small and Medium-Scale Enterprises (SMEs) have been adopting corporate governance and international strategies to improve performance. However, little is known about the success of corporate governance practices and the international orientation of SMEs, especially in developing countries. Therefore, the objective of this paper is to examine the influence of corporate governance practices and international orientation on the performance of SMEs in a developing country. We used a survey to hand-collect data from 270 SMEs in Ghana in 2022. Consistent with prior studies, we perform robust reliability tests, including confirmatory factor analysis and the Cronbach alpha test. Further, we use the structural equation modelling to test the hypothesis of whether corporate governance and international orientation affect firm performance in SMEs. Our results are as follows. First, we found that international orientation drives good corporate governance practices, and this exerts a positive influence on firm performance. Second, we established that international orientation positively and significantly moderates the relationship between corporate governance and firm performance. The results imply that engaging in the international market offers new knowledge to SMEs in developing countries. Therefore, investors and the government should develop strategies and policies that support the internationalization of SMEs in developing countries.

Suggested Citation

  • Kankan Wen & Noha Alessa & Karifala Marah & Kwame Kyeremeh & Emmanuel Sampson Ansah & Vincent Tawiah, 2023. "The Impact of Corporate Governance and International Orientation on Firm Performance in SMEs: Evidence from a Developing Country," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:6:p:5576-:d:1104120
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    References listed on IDEAS

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