Path Analysis of Entrepreneurship and SME Performance: Focusing on the Mediating Effect of Culture and Structure

Abstract

This study examines how entrepreneurship affects firm performance in small and medium-sized enterprises (SMEs), focusing on the mediating roles of culture and structure and operating systems. Using raw data from the 2022 Entrepreneurship Survey (Corporate Edition), 2,518 SMEs were analyzed through path analysis and bootstrap-based tests of indirect effects. The major variables were entrepreneurship as an organizational orientation toward identifying opportunities, taking risks, and acting innovatively and proactively; culture and structure as an organizational foundation for accepting and implementing change and innovation; operating systems as formal systems supporting entrepreneurial activities; and firm performance, including proposal-related, business, and market outcomes. CEO prior start-up experience and whether the firm was related to Fourth Industrial Revolution technologies were included as control variables. The results are as follows. First, entrepreneurship had significant positive effects on culture and structure (β=.584, p<.001), operating systems (β=.082, p<.001), and firm performance (β=.713, p<.001). Second, culture and structure had significant positive effects on operating systems (β=.820, p<.001) and firm performance (β=.112, p<.001), whereas the direct effect of operating systems on firm performance was not statistically significant (β=.045, p=.080). Third, entrepreneurship had a significant indirect effect on firm performance through culture and structure (B=.064, β=.065, p<.001, 95% CI [.035, .095]). In contrast, the indirect effect through operating systems (B=.004, 95% CI [-.001, .008]) and the sequential indirect effect through culture and structure and operating systems (B=.021, 95% CI [-.005, .045]) were not statistically significant. These findings suggest that culture and structure serve as an important organizational pathway linking entrepreneurship to firm performance in SMEs, whereas the mediating pathway through operating systems was not supported. The results indicate that translating entrepreneurship into firm performance requires not only formal support systems but also a cultural and structural foundation that enables organizational members to accept change and innovation and engage in entrepreneurial activities. This study contributes by simultaneously examining culture and structure and operating systems within a single path model, thereby providing a more detailed explanation of how entrepreneurship is associated with firm performance in SMEs.