Managerial competence and financial performance of SMEs: the contingent role of stakeholder engagement

Abstract

This paper examines the moderating role of stakeholder engagement on the relationship between managerial competence and financial performance. Using a survey-based approach, the study examined 423 small and medium scale firms operating in Ghana, a Sub-Saharan African country. The findings indicate that, stakeholder engagement does not assist managerial competence in having a positive impact on financial performance. However, both independent variables, acting separately, have a positive and significant relationship with financial performance. Hence, it was recommended that SMEs should invest more at employing competent managers or in training existing managers to become more competent as that alone, without the assistance of stakeholder engagement, can improve financial performance.