A Quantitative Study on the Role of Government Incentives in Fostering Entrepreneurship in the Saudi SME Sector

Despite being a major component of the Kingdom’s economic diversification strategy under Saudi Arabia’s Vision 2030, creative entrepreneurs face recurring challenges such as limited access to small business funding, a lack of skills, and difficulties in administrative procedures. Based on institutional theory and incentive theory, this study analyzes the direct effects of three types of public support measures (direct financial support, tax exemptions, subsidy training) and the moderating effect of perceived bureaucratic burden on entrepreneurial orientation. Survey data were collected using a purposive sampling method and a cross-sectional design from 212 creative small- and medium-sized business managers and founders in Saudi Arabia and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The empirical results show that all three policy instruments have a positive impact on entrepreneurship, with targeted financial grants having the greatest direct impact, followed by tax breaks and subsidized training. In addition, perceived bureaucratic burden has a strong negative moderating effect on all three relationships, reducing the positive effect of grants, tax relief, and training programs. The model has an explanatory power of 66.6% in explaining fostering entrepreneurship. From these findings, it can be concluded that financial and capacity-building enablers are indispensable for the success of creative businesses; however, they can only be effective if institutional access is facilitated and procedures are streamlined. The study offers key insights for policymakers and cultural development institutions seeking to maximize public interventions in emerging creative ecosystems.