Enterprise size economic activity and regional factors as determinants of SME growth in Saudi Arabia

Abstract

The paper examines the determinants of the success of small and medium-sized enterprises (SMEs) in Saudi Arabia with respect to the interaction between enterprise size, type of economic activity, and regional factors. We test a theoretical framework based on the resource-based view and the entrepreneurial ecosystem literature using a near-census dataset of 1,345,809 enterprises in 13 administrative regions and over 50 economic sectors in 2024 and Partial Least Squares Structural Equation Modeling (PLS-SEM). This is, to our knowledge, the first integrated, near-census study to model enterprise size, economic activity, and regional factors jointly and to test regional factors as a moderator, linking the resource-based view with entrepreneurial ecosystem theory. Findings indicate that enterprise size is positively and significantly associated with SME growth ( β = 0.786, p < 0.001) as the hypothesis is correct that bigger SMEs utilize more resources to achieve better performance. The type of economic activity has a small negative impact ( β = − 0.033, p = 0.000014), indicating that there is limited sectoral impact once size is controlled. The size–growth relationship is moderated by region ( β = − 0.166, p = 0.0181), implying that the size advantage is lower in regions with less developed entrepreneurial ecosystems, but not significantly moderated by sector ( β = 0.008, p = 0.315). The baseline model accounts for 73.2 percent of the variance in the SME growth (R 2 = 0.732). The results indicate that regional context matters in explaining SME performance and provide policy implications of developing sustainable growth within Saudi Vision 2030.