STRATEGIC ORIENTATION AND FIRM PERFORMANCE IN SMALL BUSINESSES: THE MEDIATING ROLE OF HUMAN RESOURCES (HR) INCLUSION IN EKITI STATE, NIGERIA

Abstract

This study investigates the relationship between strategic orientation and small-business performance, with particular emphasis on the mediating role of human resource inclusion in Ekiti State, Nigeria. Although strategic orientation has increasingly been recognized as a key determinant of competitiveness, many small businesses in developing economies continue to underperform, indicating a disconnect between strategic formulation and effective implementation. Prior research has largely overlooked the internal organizational processes that facilitate this linkage, especially the role of employee inclusion. Anchored in the Resource-Based View (RBV), this study advances theoretical understanding by positioning human resource inclusion as a vital intangible capability that enhances the effectiveness of strategic orientation. It argues that the value derived from strategic resources is contingent on the extent to which employees are actively engaged in decision-making and execution. Methodologically, the study employs Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine both direct and indirect relationships among the variables. Data were obtained from 237 owners and managers of small businesses. The findings reveal that strategic orientation, in isolation, does not significantly influence firm performance. Instead, its impact is realized through inclusive human resource practices that foster employee participation, commitment, and innovation. This underscores a structural limitation within many SMEs, where strategic initiatives are not adequately supported by participatory management systems. The study therefore recommends that both policymakers and business managers prioritize integrating inclusive human resource practices alongside strategic capability development to enhance performance, resilience, and long-term competitiveness.