Business Model Innovation and Firm Performance of SMEs During the COVID-19 Pandemic: Test of Serial Mediation Model

The study examines the effect of business model innovation on SME firm performance in its direct and indirect relationship with entrepreneurial orientation and competitive advantages during the COVID-19 pandemic. This study used an analytical research design with a positivist philosophy. Structured equation modeling was used to analyze the survey-based structured data collected from 396 SME managers and owners after the second wave of the COVID-19 pandemic. The study revealed a significant positive association between business model innovation and SME performance. Further, the study established a serial mediation model incorporating entrepreneurial orientation and competitive advantage. The research findings add value in theoretical implications incorporating the serial mediation model. Further, the findings suggest practical implications for SMEs to focus on business model innovation to orient mindset of entrepreneurs and develop competitive advantages. This study also proposes recommendations to policymakers in developing business-friendly assistance to cope with crises. This paper is among the few empirical studies examining serial mediation models to predict firm performance in the SME sector, incorporating business model innovation, entrepreneurial orientation, and competitive advantages during the COVID-19 pandemic. This study fulfills the research gap and contributes to business model innovation.