This research is founded on a number of fundamental theories and ideas. It is primarily based on the positive self-concepts of internal locus of control and self-efficacy. Previous research has found that people’s resilience can be explained by their positive self-concepts (Britt et al., 2016). The term positive self-concepts’ refers to beliefs that people hold about their lives that help them deal with adverse life events and achieve positive outcomes. The study is also based on the self-efficacy theory (SET), which is a branch of Bandura’s social cognitive theory developed in the 1986 (Bandura, 1986). According to SET, an individual’s expectations and perceived self-efficacy are important predictors for other concepts and behaviours. Self-efficacy refers to a person’s belief in their own power, capacity, and ability to carry out specific behaviours or achieve specific performance outcomes (Bandura, 1997).

The study also draws its foundation from Julian Rotter’s internal locus of control theory (Rotter, 1966). The concept of internal locus of control originated in the social learning theory of personality. It refers to a person’s perception of their surroundings. If they feel in control of their surroundings and the events that occur around them, they have a high internal locus of control. Otherwise, they have an external locus of control (low internal locus of control). In this article, we determine internal locus of control through the assumptions made by entrepreneurs about their ability to manage and master their surroundings. Additionally, we define self-efficacy as an individual’s confidence in their capacity to successfully carry out their entrepreneurial tasks (Zhao and Wibowo, 2021). Both internal locus of control and entrepreneurial self-efficacy contribute to the development of entrepreneurial resilience because they increase people’s capacities for control over their circumstances and responsibilities (Judge and Bono, 2001; Benight and Cieslak, 2011). As a result, people with high levels of both traits may gain more robust control over their environment and grow their entrepreneurial resilience, according to this study. People who have greater control over their small businesses and the capacity to manage them more effectively keep their businesses running and produce better results during difficult times.

Entrepreneurial self-efficacy is the degree to which an individual believes that they can carry out specific tasks and activities, specifically those related to entrepreneurship (Mcgee et al., 2009; Bullough et al., 2014). Individuals with higher self-efficacy have greater confidence in their capabilities, so when faced with difficulties or challenges, they easily overcome them and perform better than those with low self-efficacy (Chen et al., 2001; Nisula and Olander, 2020). Individuals with high self-efficacy have better behavioural and motivational mechanisms in stressful situations that they are likely to face during business operations. As a result, as individuals gain self-efficacy, their skills improve and they cope better with adversity. Individuals with higher self-efficacy are better at developing resilience and recovery process skills during unfavourable times and are better at creating coping strategies and applying them during times of uncertainty (Bandura, 1997; Bullough et al., 2014; Nisula and Olander, 2020). In other words, self-efficacy and resilience are interrelated, as has been demonstrated in several previous studies (Charles Benight, 2004; Linley and Joseph, 2004; Alshebami, 2022). People with a high sense of self-efficacy can complete their tasks and duties, control most situations, and minimize anxiety (Bullough et al., 2014; Zhao and Wibowo, 2021). Furthermore, those who believe in exerting control over their thoughts can defeat setbacks and challenges with ease (Hamill, 2003). Self-efficacy can consequently be regarded as an effective feature to help individuals overcome setbacks and challenges (Bhattarai et al., 2020). In summary, entrepreneurial self-efficacy can increase an individual’s power and capability by allowing them to develop the necessary resilience skills needed to control undesirable events. We further assume:

H1: There is a positive relationship between entrepreneurial self-efficacy and entrepreneurial resilience among entrepreneurs.

The concept of internal locus of control has its root in Rotter’s grounding research (Rotter, 1966), which focused on discussing personality traits. Internal locus of control is defined as the degree to which individuals believe that they have influence over what occurs (Rotter, 1966; Arkorful and Hilton, 2021). Accordingly, those who have high levels of internal locus of control have more positivity and strength to put efforts into achieving their desired goals even through challenging situations, uncertainties, and setbacks (Thompson et al., 2019; Alshebami, 2022). Possessing more internal locus of control allows individuals to effectively and successfully manage depression better than those who have a higher external locus of control and think that fate and luck control them (Kalantarkousheh et al., 2013). When the internal locus of control increases among people, it leads to increasing levels of hope that ultimately result in greater resilience and better wellbeing (Munoz et al., 2017). It can also contribute to solving problems and developing meaningful solutions (Kusumawijaya, 2019; Zhao and Wibowo, 2021).

Literature reveals that individuals’ resilience can be affected by many factors, including internal locus of control, copying, hope, and self-efficacy (Gillespie et al., 2007). There was also evidence confirming the presence of an association between internal locus of control and resilience (Luthar, 1991; Cazan and Dumitrescu, 2015; Georgescu et al., 2019), which provides a foundation for this article to continue investigating the same. We conclude from the above that entrepreneurs’ high internal locus of control and belief that whatever happens to them is the result of their actions and behaviour strengthen their resilience and motivate them to defeat challenges and difficulties in adverse times. Based on the above discussion, we assume the following hypothesis:

H2: There is a positive relationship between internal locus of control and entrepreneurial resilience among entrepreneurs.

It has been explained earlier that the concept of internal locus of control can be traced back to Rotter (Rotter, 1966), who defined it as internal elements that are believed to control the life and surrounding environment of individuals. It is, in other words, the extent to which individuals feel and believe they control their daily activities and events (Arkorful and Hilton, 2021). Those who have more internal locus of control believe that their surroundings have no influence on their actions. They believe that their abilities deal effectively and efficiently with surrounding issues and that they can also develop the necessary strategies and remedies to deal with them (Zhao and Wibowo, 2021). It is further noted that when greater internal locus of control is achieved, more confidence and competence among individuals is developed. This confirms the existence of a positive relationship between high internal locus of control and self-efficacy (Kalantarkousheh et al., 2013).

They also feel more pleased in addition to developing skills and abilities (Lefcourt, 1996). In short, the internal locus of control influences the self-efficacy of people by showing how the expectations of people shape their objectives (Corrado et al., 2021). There exists a reported association between internal locus of control on one side and self-efficacy on the other side (Georgescu et al., 2019). This relationship had been examined by many studies such as (Roddenberry and Renk, 2010; Cascio et al., 2014; Thompson et al., 2019), and all of them have confirmed that both influence an individual’s ability to adapt to a given situation. Despite a considerable number of studies confirming the presence of a relationship between self-efficacy and internal locus of control, there are still some studies with contradictory findings, such as (Condly, 2006). The study of (Condly, 2006). The study reported that the presence of a high internal locus of control does not really indicate having high self-efficacy, because people who think that their actions are the root of a particular outcome may not actually believe they can change it. Accordingly, we conclude that individual entrepreneurs who are able to develop higher internal locus of control and who believe that they control their surroundings can better obtain and develop skills and abilities used to take on adversities in challenging times. Based on this argument, we assume the following hypothesis:

H3: There is a positive connection between internal locus of control and self-efficacy among entrepreneurs.

While internal locus of control gives less importance to the effect of external actions and events to guide individuals’ behaviour (Thompson et al., 2019; Alshebami, 2022) entrepreneurial self-efficacy focuses on the skills and abilities that individuals believe they have that can be used to execute certain activities (Hsu et al., 2019), particularly entrepreneurial tasks and duties (Mcgee et al., 2009; Bullough et al., 2014). The presence of a higher level of internal locus of control increases skill levels, abilities, and the belief that entrepreneurs have in themselves. Accordingly, it allows them to develop resilience to successfully deal with uncertainties, setbacks, and other challenges during adverse times (Judge and Bono, 2001; Kalantarkousheh et al., 2013; Nisula and Olander, 2020; Alshebami, 2022). Both entrepreneurial self-efficacy and internal locus of control work to develop individuals’ resilience behaviour.

Individuals who perceive themselves to have low self-efficacy and internal locus of control tend to act poorly and lose control over events and their actions. They further blame their surroundings for their failures and always focus on the challenges rather than opportunities in the external world (Corrado et al., 2021). Self-efficacy, once it is developed, can act as a roadmap toward the encouragement of resilience behaviour (Prilleltensky et al., 2001; Djourova et al., 2020). Which is confirmed by previous studies that report the existence of a positive relationship between self-efficacy and resilience (Salisu et al., 2020). In conclusion, the availability of high internal locus of control and entrepreneurial self-efficacy help individuals become more entrepreneurially resilient. Becoming a resilient person enables the quick solving of problems as well as reduces fear. This is in comparison to people with lower resilience, who experience poor decision-making and inefficient solutions under tiring conditions (Folkman and Moskowitz, 2000; Tedeschi and Calhoun, 2004). Therefore, and based on the above discussion, we assume the following hypothesis:

H4: Entrepreneurial self-efficacy mediate the relationship between the internal locus of control and entrepreneurial resilience among entrepreneurs.

Figure 1 depicts the study’s model, which is made up of three different constructs: independent, dependent, and mediator. The independent variables are the internal locus of control and entrepreneurial self-efficacy, while the dependent variable is entrepreneurial resilience. Entrepreneurial self-efficacy can also function as the mediator. The model is based on the various theories and concepts described above. It seeks to investigate the relationship and connection between internal locus of control and entrepreneurial self-efficacy on entrepreneurial resilience among Saudi small entrepreneurs. Additionally, it investigates whether entrepreneurial self-efficacy can act as a mediator in the relationship between internal locus of control and entrepreneurial resilience.

This research is quantitative and deductive in nature. It is based on the results of a self-administered survey of Saudi small-business owners. The study relies on primary data and secondary information. For secondary information, it refers to various sources such as books, articles, and theses. Primary data was gathered from a sample of small-business owners in Saudi Arabia. There were 207 male and female participants in total. The respondents conducted business in various parts of Saudi Arabia during the COVID-19 pandemic. The study sample was selected with the help of non-probability sampling using the convenience sampling method. The study uses legitimate metrics from previous studies. The researcher created an online survey that had been previously validated. The validity of the questionnaire was then tested again in a pilot study with 15 participants, after which the link to the questionnaire was distributed to the study participants. It was determined that the questionnaire and measures were free of flaws and could be effectively used in the study. As a result, the survey questionnaire was distributed to respondents and made available online for approximately 1 month.

The study used authentic measures to examine the constructs of the study. These measures have been used and validated by different authors. For example, the entrepreneurial resilience measures were adopted from (Sinclair and Wallston, 2004). While those used for internal locus of control and entrepreneurial self-efficacy were adopted from (Muller & Thomas, 2000) and (Mcgee et al., 2009), respectively. The sample of the measures included questions for entrepreneurial self-efficacy (e.g.: I can deal with and solve effectively day-to-day problems and crises), for internal locus of control (e.g.: My life is determined by my actions), and for entrepreneurial resilience (e.g.: I believe that I can grow in positive ways by dealing with difficult situations). The study employed the Likert scale to measure these items used in the questionnaire, with one indicating complete disagreement and five showing the full agreement of the questions.

PLS–SEM with SmartPLS was used to analyse the data in this study, following (Hulland, 1999). The SmartPLS is used because of its applicability to analyse the small sample and complex models (Hair et al., 2017; Alam et al., 2021). The findings of this analysis were demonstrated as per the directions provided by experts of PLS modelling (Hair et al., 2019).

The study respondents comprised 207 participants, both male and female. There were a total of 172 (83.1%) male participants and 35 (16.9%) female participants. 58% were between the ages of 18–27 years, followed by 20.4% between the ages of 28–37 years of age. 11.6% of people were between 38–47 years of age. Finally, the respondents above 47 years of age totalled 10% of the total sample. Further, regarding the work experience of the study respondents, it is noted that those with less than 10 years of experience comprised 78.7% of the total sample. 6.8% of the respondents reported having between 10–20 years of experience and 14.5% reported having more than 20 years of experience. 30.4% of respondents work in the services sector, 22.2% work in the construction sector, 20.8% in the wholesale and retail sector, 14% in the finance and insurance sector, and 12.6% operate in small production activities.

The path analysis is shown in the Figure 2.

Table 3 demonstrates the different relationships examined in the study.

According to the results disclosed in Table 3, the coefficient value of entrepreneurial self-efficacy on entrepreneurial resilience (H1) was 0.30 with a p-value of (.000) (at 5% significance), which indicates that the entrepreneurial self-efficacy among small Saudi entrepreneurs has a positive and significant effect on entrepreneurial resilience. Concerning (R ²), which is the predictive power, the table demonstrates that the entrepreneurial self-efficacy and internal locus of control can together explain 0.38 of the variance in entrepreneurial resilience, which is considered a substantial ability to predict the variance of an endogenous variable (Chin, 1998). Additionally, the result of (F²), which is the effect size, being 0.09 discloses a small effect according to (Cohen, 1988). Moreover, the t-value revealed that entrepreneurial self-efficacy could explain about 0.04 of the variance seen in entrepreneurial resilience. Finally, the result of (Q²), which indicates the predictive relevance, showed values above zero. All values are thus considered to be well and the model has suitable predictive relevance (Hair et al., 2019).

Furthermore, concerning the second hypothesis (H2), Table 2 also shows that the coefficient value of the internal locus of control on entrepreneurial resilience was 0.37, with a p-value of (.000) (at 5% significance) indicating that the internal locus of control among Saudi small entrepreneurs has a positive and significant effect on entrepreneurial resilience. Concerning (R ²), the table shows that the entrepreneurial self-efficacy and internal locus of control can together explain 0.38 of the variance in entrepreneurial resilience, which is considered a large ability of prediction of the variance of endogenous variables. The result of the (F²), 0.14, reported a small effect according to Moreover, the t-value revealed that the internal locus of control can explain about 0.5 of the variance in entrepreneurial resilience. Finally, the result of (Q²) showed values above zero, indicating that all values are well and the model has predictive relevance (Hair et al., 2019).

Regarding the third hypothesis (H3), Table 2 also shows that the coefficient value of the internal locus of control on entrepreneurial self-efficacy was 0.61 with a p-value of (.000) (at 5% significance), which indicates that the internal locus of control among Saudi small entrepreneurs has a positive and significant effect on entrepreneurial self-efficacy. Concerning (R ²), the table shows that the internal locus of control can explain 0.38 of the variance in entrepreneurial self-efficacy, which is considered a substantial ability of prediction of the variance of endogenous variables. The result of the (F²) also reported a substantial effect according to (Cohen, 1988). Moreover, the t-value revealed that the internal locus of control can explain about 0.11 of the variance in entrepreneurial self-efficacy. Finally, the result of (Q²) showed values above zero indicating that all values are well and the model has predictive relevance (Hair et al., 2019). Concerning the mediation effect and the indirect effect coefficient, Table 2 reports the ability of entrepreneurial self-efficacy to mediate the relationship between internal locus of control and entrepreneurial resilience among Saudi small entrepreneurs. As the p-value of the mediation effect was (.000), the assumed hypothesis was accepted accordingly.

As stated earlier, the small enterprises’ sector in Saudi Arabia during COVID-19 has been badly affected, leading to many challenges for small entrepreneurs and the government of Saudi Arabia. Accordingly, the government took various steps to enhance the sector, including providing financial and technical support to sustain small market enterprises. In addition to the financial and technical support received, entrepreneurs may need psychological support such as increasing their entrepreneurial self-efficacy, internal locus of control and resilience to ensure the maximum benefit of the received support. Accordingly, this study attempted to examine the extent to which entrepreneurial self-efficacy, internal locus of control and entrepreneurial resilience interact with each other. As a result, the findings of this study provided empirical evidence and theoretical support for Saudi Arabia’s policymakers on the importance of developing resilience and personal characteristics among entrepreneurs to effectively develop adaptation strategies during adverse times such as COVID-19. The study emphasizes that the Saudi government must prioritize providing necessary training and support, whether financial, technical, or psychological, to Saudi small-business owners in order for them to manage their daily activities with greater confidence and strength and to remain stable during crisis events. The emphasis should be on developing entrepreneurial self-efficacy and internal locus of control because they play a significant role in increasing entrepreneurs’ control ability, reducing blame on external environments, and allowing them to focus on opportunities rather than obstacles (Djourova et al., 2020; Corrado et al., 2021).

Policymakers in Saudi Arabia can concentrate on developing entrepreneurs’ psychological factors with more emphasis on the internal locus of control and entrepreneurial self-efficacy. They are considered the backbone for developing entrepreneurial resilience that ultimately leads to better business sustainability during adverse and challenging times. Policymakers can enhance these psychological features in small entrepreneurs by providing them with the necessary training that develops their confidence and allow them to acquire more entrepreneurial skills that can be used during difficult periods. Schools and universities can also contribute to increasing internal locus of control and entrepreneurial self-efficacy by introducing these topics into their syllabus and teaching them to the students or potential entrepreneurs.

This research provides significant implications for those desiring to develop This research provides significant implications for those desiring to develop entrepreneurship and SMEs in Saudi Arabia during adverse times. This study is one of the few studies in Saudi Arabia investigating the impact of internal locus of control and entrepreneurial self-efficacy on entrepreneurial resilience among small Saudi entrepreneurs during adverse times, i.e., COVID-19. The study also looks at the role of entrepreneurial self-efficacy in mediating the relationship between entrepreneurial resilience and internal locus of control. The study confirms the applicability of the model developed for this study to the Saudi Arabian context. It also provides empirical evidence on the importance of developing an internal locus of control and entrepreneurial self-efficacy, considered personal characteristics and individual knowledge assets, particularly for small entrepreneurs. The development of these personal characteristics in entrepreneurs strengthens their belief in themselves, allows them to have more confidence, maximizes their ability and control, and ultimately develops the necessary strategies they need to deal with uncertainties and setbacks under challenging times (Bullough et al., 2014; Nisula and Olander, 2020; Arkorful and Hilton, 2021; Zhao and Wibowo, 2021). The study confirms that even when the business environment is risky, individuals with high self-efficacy and internal locus of control can develop resilience and survive with their businesses (Bullough et al., 2014). Furthermore, the study’s findings open the door for other researchers to look into other aspects of an entrepreneur’s characteristics and resilience. It also sheds light on one of the essential critical topics, resilience, that is being discussed in various literature reviews and has piqued the interest of governments and scholars, particularly during COVID-19.