RELATIONSHIP BETWEEN GOVERNANCE, INNOVATION AND PERFORMANCE IN IBERO-AMERICAN CONSTRUCTION MSMES USING STRUCTURAL EQUATION MODELING (SEM)

In the context of micro, small, and medium-sized enterprises (MSMEs) in Ibero-America, the construction sector faces persistent challenges related to innovation and performance. Despite its economic relevance in employment generation and infrastructure development, this sector remains under-researched in terms of strategic management practices. This study analyzes the relationships between corporate governance, innovation, and firm performance in construction MSMEs across the region. Using data from 687 firms in 12 Ibero-American countries obtained from the FAEDPYME 2024 survey, the research applies Partial Least Squares Structural Equation Modeling (PLS-SEM). The model includes three latent constructs: corporate governance (ownership structure, gender diversity in leadership, and managerial education), innovation (product and service improvements, market expansion, strategic alliances, and process innovation), and firm performance (quality, efficiency, satisfaction, adaptability, profitability, and sales growth). The results indicate acceptable factor loadings above 0.6 for all indicators. Innovation exhibits the strongest direct effect on firm performance (β = 0.429), while the model explains 18.4% of the variance in performance (R² = 0.184), indicating moderate explanatory power. The study contributes to the literature on MSMEs in the construction sector within emerging Ibero-American economies and offers relevant implications for academics and policymakers, particularly in the design of strategies aimed at fostering innovation and strengthening corporate governance to enhance competitiveness and sustainable development.