CEO Compensation and SMEs Performance: A Structural Equation Modelling Approach from Jordanian Listed SMEs

Abbas Saad Hamada Alkhuzaie, Alaa Zuhair Mansour, Marwan Altarawneh and Alya Elfedawy

Business and Economic Research, 2024, vol. 14, issue 1, 57-71

Abstract: This study's main goal is to discover whether the CEO's cash comparison affects SMEs' performance, with the bonus having a favorable impact instead. The research comprises an analysis of the SMEs mentioned in the Jordanian Ministry of Industry and Trade. To test hypotheses, data were meticulously collected from a sample of 80 SMEs in Amman, Jordan, a pivotal business hub in the country. Utilizing Structural Equation Modelling through Smart PLS 3, our chosen methodological framework facilitated a comprehensive analysis of the intricate relationships between CEO compensation variables and SME performance. The study's conclusions show a substantial correlation between the performance of SMEs included and the components of CEO compensation in the Jordanian Ministry of Industry and Trade. Despite this, it has been discovered that a few additional incentive factors significantly improve performance in SMEs. This study has shown that some incentive contract theories are appropriate for businesses with specific sizes and operating in particular industries.

Date: 2024
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