Small and Medium Scale Enterprise (SME) Owner financial literacy, entrepreneurial competencies and financial performance: the role of corporate governance

Purpose The study delves into the role of financial literacy in addition to entrepreneurial competencies in the performance of the SMEs of developing economies. It also focuses on how corporate governance may have a moderating effect in enhancing these competencies toward their impact on SME success. Design/methodology A cross-sectional quantitative research design was adopted for the study. The data was collected from 213 SME owners in Ghana through a structured questionnaire. Stratified random sampling was used to ensure that the sample is representative across sectors, whereas the relationships between the constructs of financial literacy, entrepreneurial competencies, corporate governance, and SME performance was analyzed partial least square structural equation modeling. Findings The results indicate that financial literacy and entrepreneurial competencies are significantly related to SME financial performance. The effects are moderated by corporate governance, which in turn enhances the likelihood of improved financial performance. Limitations The research focused on one developing economy—that of Ghana—which may limit the generalizability of the findings. Practical implications In fact, these findings reinforce the notion that policymakers and owners of SMEs should focus on financial literacy, entrepreneurial skills, and governance practices to improve the financial performance of their businesses. Originality/value The study examines the combination of financial literacy, entrepreneurial competences and corporate governance to predict SMEs performance where research is currently inadequate in the study context. This study also provides a valuable contribution to examining the emergent economies corporate governance role as a moderator that adds depth to extant understanding of the drivers of SME financial performance.