Construction of Competitive Advantage Instrument in Jordanian SME Context Using Structural Equation Modelling

Khaled Alzeaideen

International Journal of Financial Research, 2020, vol. 11, issue 1, 236-251

Abstract: Jordanian SMEs are becoming increasingly hard to endure and thrive in the aggressive entrepreneurial world economy due to weak capital structure, poor leadership and weak marketing strategy, as well as other legislative limitations. As a consequence, Jordan faces problems in achieving full advantage from the SME industry as well, making an inadequate contribution to the domestic GDP. Competitive advantage (CA) can, however, perform a crucial part in achieving fast economic development due to sustainability of SMEs and a coherent appropriate input to Jordan's GDP. But the construction of CA is still underdeveloped and ignores a unifying hypothesis, resulting in fragmented study attempts. In addition, there are now several frameworks for the evaluation and benchmarking of firm performance (FP), but none of these frameworks provide an approach for assessing the competitive advantage of the firm. Therefore, this study aims to explore and determine the dimensionality of items measuring CA construct. The issue has previously been discussed, but there is still no prevalent agreement between scholars as the number of dimensions and items to assess CA should be used. This research investigated the CA measurement items created by past researchers and tailored these items to accommodate the environment of SMEs in Jordan. In this regard, the Delphi technique has been combined by the Structural Equation Modeling (SEM) and also followed the steps of instrument creation developed by Churchill (1979). The primary objective of this research is to develop an instrument capable of assessing CA in Jordanian SME sector. The tool developed in this research provides a relevant and efficient tool that disclosed three aspects by satisfying all the socio-metric properties required by the measuring tool in the social science, namely dimensionality, reliability, and validity.

Keywords: Competitive Advantage (CA); Firm Performance (FP); Small and Medium Enterprise (SME); Structural Equation Modelling (SEM); Gross Domestic Product (GDP) (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:11:y:2020:i:1:p:236-251

DOI: 10.5430/ijfr.v11n1p236

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