Branding Capabilities and SME Performance in an Emerging Market: The Moderating Effect of Brand Regulations

Abstract

Purpose – The purpose of this paper is to test the effect of brand regulations on the relationship between enterprises’ branding capabilities (internal and external) and performance. It also examines the hypothesized relationship effects across manufacturing and service-based enterprises. Design/methodology/approach – The study uses data from 384 small- and medium-sized enterprises (SMEs) within an emerging market setting. Moderated hierarchical regression was used to examine the theoretical interrelationships between branding capabilities and enterprise performance within the boundaries of regulations. Findings – Results from the study suggest that both internal and external branding capabilities positively affect enterprise performance. However, the effect is confounded as brand regulations attenuate the relationship between enterprises’ branding capabilities and performance. Varying outcomes across manufacturing and service-based enterprises are also assessed. Originality/value – The study suggests that policy makers should review regulations on businesses, particularly those relating to the small business sector. Regulations that ameliorate activities of SMEs should be implemented to promote existing enterprises, and attract new ones for industrialization in emerging markets. The findings provide evidence for issues of potential research and managerial interest, with implications for both policy makers, small business owners and the academic community.