Predicting sustainability performance of informal micro and small enterprises with competitive advantage as a mediator

The study on informal business entrepreneurship is still at the infant stage. Informal businesses contribute significantly to the Sub-Saharan African economy, especially through employment creation, contributing to the promotion and diversity in entrepreneurship and economic growth. Notwithstanding this contribution, informal business sustainability performance has received little attention from the perspective of the empirical investigation. Therefore, this present research has fulfilled this gap by investigating empirically the mediating effect of competitive advantage between entrepreneurial competencies and sustainability performance and the direct effect of entrepreneurial competencies, competitive advantage, financial capital, human capital, social capital, government support, and business environment on the sustainability performance of micro and small enterprises through the resource-based view and social capital theories. Through the implication of cross-sectional design, data were randomly gathered from 356 micro and small entrepreneurs operating in the informal sector. Structural equation modelling (SEM) is the main statistical method used in this study. The research analysis findings make a new contribution by identifying the relevant factors that influence informal business sustainability. The results of the study revealed that competitive advantages have not only a positive and significant effect on the sustainability performance of micro and small enterprises but have also a mediating effect between entrepreneurial competencies and sustainability performance. The outcomes also portrayed a significant and positive direct effect of opportunity recognition competency, commitment competency, competitive advantage and government support on the sustainability performance of micro and small enterprises. The Important and Performance Matrix Analysis of this study endorsed that entrepreneurial opportunity recognition competency, commitment competency, competitive advantage, and government support are the most important factors on predicting sustainability performance in the context of informal entrepreneurship in Senegal. In a nutshell, the results suggest that the research model provides a better understanding of informal business sustainability practice in the services and agriculture sectors. Based on the findings of the study, the theoretical and practical implications, as well as limitations for future studies, are also discussed.