The Impact of Business Process Capabilities on Firm Performance: A Moderated-Mediation Approach of Strategic Agility and Environmental Turbulence

Abstract

Firm performance is a major challenge in Pakistan. Pakistan's hotel and hospitality industry and SMEs are badly impacted by many organizational challenges such as COVID-19. To get through this upheaval and get back on the solid foundation of strong business performance, the hotels and SMEs in this sector required direction and guidance. Through the mediation of strategic agility and the moderation of environmental turbulence, the objectives of the study are to clarify the impact of business process capabilities on firm performance. The study employed a quantitative research strategy and evaluated the responses of 321 managers working in Pakistan's hotel and hospital industries. The study analyzed data using AMOS 24 and SPSS software, and it employed structural equation modeling (SEM) to assess the hypotheses. The study's findings indicate that business process capabilities have a major impact on firm performance and that strategic agility significantly positively mediates the relationship between business process capabilities and firm performance. Results indicate that environmental turbulence has a negative moderating effect on the mediation relationship between firm performance and strategic agility. The unstable, unpredictable, and destructive environment encourage businesses to focus more intently on maintaining and improving their company performance as well as seeking out more strategically agile approaches. The results demonstrate the detrimental effects of environmental turbulence on the business performance of SMEs in Pakistan's hotel sector.