Small Firms, Big Moves: How Strategic Orientations Drive Innovation and Resilience in Qatar—A PLS-SEM Approach to Capability Development and Business Performance

Abstract

In Qatar’s rapidly evolving economy, small- and medium-sized enterprises (SMEs) play a vital role in driving economic diversification and sustainable development. However, they face persistent challenges, including limited resources, capability gaps, intense competition, restricted access to finance, and environmental volatility, contributing to high failure rates. Grounded in Dynamic Capabilities Theory, this study examines the relationships between empowering leadership, market orientation, and business performance, with innovation and adaptive resilience specified as mediating mechanisms. Survey data from 343 SME owners, leaders, and managers were analysed using partial least squares structural equation modelling (PLS-SEM). The findings indicate that market orientation is positively associated with business performance through both direct and indirect relationships, whereas empowering leadership is associated with business performance indirectly through its positive relationships with innovation and adaptive resilience. Furthermore, adaptive resilience emerged as the strongest predictor of business performance among the variables examined. This study proposes a dynamic framework for understanding SME competitiveness and provides valuable insights for academia, policymakers, and business leaders.