A Quantitative Study on the Role of Government Incentives in Fostering Entrepreneurship in the Saudi SME Sector (Journal of Management Practices Humanities and Social Sciences)

Summary

• Survey data from 212 creative small- and medium-sized business managers and founders in Saudi Arabia were analyzed using PLS-SEM.p.1
• All three policy instruments have a positive impact on entrepreneurship, with targeted financial grants having the greatest direct impact, followed by tax breaks and subsidized training.p.1
• A survey link was sent to 350 eligible contacts; 258 questionnaires were returned and 212 retained, a net response rate of 60.57%.p.7
• Path coefficients were 0.349 for targeted financial grants, 0.245 for tax breaks and 0.180 for subsidized training.p.11
• The predictors together explain 66.6% of the variance in fostering entrepreneurship.p.11
• The effect of grants falls from a β of 0.473 at low bureaucratic burden to 0.225 at high burden.p.12
• The effect of tax breaks falls from a β of 0.417 at low bureaucratic burden to 0.073 at high burden.p.12

Key insights

1. Targeted financial grants are the primary direct effect on entrepreneurship, with a path coefficient of 0.349.p.11
2. Perceived bureaucratic burden has the largest effect size (f2 = 0.049), followed by tax breaks (f2 = 0.022).p.11
3. Subsidized training has a significant path (0.180) but a very small effect size (f2 = 0.003).p.11
4. The positive effect of subsidized training falls from a β of 0.333 at low bureaucratic burden to 0.027 at high burden.p.12
5. Bureaucratic burden had the greatest negative influence on tax breaks (β = −0.172, p=0.002), followed by subsidized training (β = −0.153, p = 0.001).p.14
6. Policymakers should treat capacity building as a complement to, not a replacement for, access to finance.p.15
7. ZATCA is advised to implement simplified, automated and digital exemption portals for fiscal support programs.p.15