INTERACTION OF ENTREPRENEURIAL ORIENTATION, MARKET ORIENTATION, AND INNOVATION CAPABILITY ON THE FINANCIAL PERFORMANCE OF SMES IN QUEZON PROVINCE: A PLS-SEM APPROACH

This study investigated the interaction of entrepreneurial orientation (EO), market orientation (MO), and innovation capability (IC) on the financial performance of small and medium-sized enterprises (SMEs) in Quezon Province, Philippines, using a Partial Least Squares Structural Equation Modeling (PLS-SEM) approach. The research aimed to provide a comprehensive profile of SMEs in the region and explore the relationships between EO, MO, and IC and their collective impact on financial performance. A quantitative research design was employed, with a sample of 200 SME owners and managers selected through purposive sampling. The study found a significant positive relationship between entrepreneurial orientation and financial performance and a moderate positive relationship between market orientation and financial performance. Innovation capability was found to directly and substantially impact financial outcomes. Moreover, the study confirmed that innovation capability mediated the relationship between entrepreneurial orientation and financial performance. The findings emphasized the importance of fostering innovation and entrepreneurial traits in SMEs while identifying areas for improving business practices. The study provided practical recommendations for SME owners and policymakers to enhance business performance, including promoting innovation and refining business models to achieve long-term success. Further research was suggested to explore the role of digital transformation in enhancing SME performance.