Entrepreneurial orientation and performance of small and medium-sized enterprises

Abstract

Purpose This paper aims to investigate the effects of entrepreneurial orientation (EO) on the performance of small and medium-sized enterprises (SMEs) with mediating role of differentiation strategy in Pakistan. Design/methodology/approach A theoretical framework has been developed to base the hypotheses, as also to determine the exact approach in this study. To establish the influence of EO on the performance of SME, a five-point Likert scale questionnaire has been used to collect data from middle and senior managers who operate in SMEs in the manufacturing sectors. The sample illustrates 166 incumbents, comprising 68.07 per cent from middle management and 31.93 per cent from senior management operating in manufacturing sector of SMEs, by means of a stratified random sampling technique. The collected data were analyzed using SPSS and Amos graphics software. Hypotheses were tested by using structural equation modeling (SEM) technique. Findings EO, as a whole, presents a significant positive effect on the performance of SMEs. Moreover, differentiation strategy partially mediated the relationship between EO and performance of SMEs. Two dimensions of EO, proactiveness and risk-taking propensity, strongly increased firm performance while innovativeness, competitive aggressiveness, autonomy and competitive energy did not cause any significant change. The findings differ from the current view of western enterprises that innovativeness (INO) played a major role by increasing performance of SMEs. The results transpired that innovativeness (INO) tends to reduce performance of SMEs, but the p-value did not reach a high significance value. Research limitations/implications The main limitation of this empirical study is comparatively a small size of the sample. The analysis of power suggests that a larger sample could have provided more reliable and extensive results. Regardless of that, the analysis of reliability, using the Cronbach's alpha, exhibited the consistency of outcomes in providing an accurate portrait of the EO influences on the performance of SME. Practical implications The study verifies that two dimensions of EO have considerable effects on the performance of SMEs, while the others have not, whereas, the EO, as whole, has significant positive effect on performance of SMEs. These findings should be helpful for researchers looking for appropriate performance measures, and for entrepreneurs aiming at getting support for their decisions and evaluating their performance. Originality/value The current study appears to be first of its kind focusing on the link between EOs, as whole, and its dimensions, to performance of SMEs and differentiation strategies within the specific context of Pakistan.

Behavioural Finance and Investment Decisions: Does Behavioral Bias Matter?

“…From Table 4, investment decision making is also positively influenced by overconfidence bias. These results are consistent with the studies conducted by Qadri and Shabbir (2014), Lim (2012), Qureshi et al (2012), Shah et al (2019), and Bashir et al (2013) that report that overconfidence has a significant positive impact on investor's decision making. Meanwhile, the findings are inconsistent with Kafayat (2014), and Kengatharan and Kengatharan (2014) that found that overconfidence does not influence decision making.…”

Entrepreneurial Networks, Entrepreneurial Orientation, and Performance of Small and Medium Enterprises: Are Dynamic Capabilities the Missing Link?

“…Majority of the studies conducted on the relationship between entrepreneurial orientation and performance have shown positive impact (Alkhazali et al, 2020). But on the other hand, few researchers contradicted the ndings and highlighted that the relationship between entrepreneurial orientation and performance have insigni cant (Cho & Lee, 2018;Shah & Ahmad, 2019;Hernández-Linares, Kellermanns, López-Fernández, & Sarkar, 2019), or least in uence (Vega-Vázquez, Cossío-Silva, & Revilla-Camacho, 2016; Masa'deh, Al-Henzab, Tarhini, & Obeidat, 2018) or negative (Taheri, Bititci, Gannon, & Cordina, 2019) or curvilinear (Yoon & Solomon, 2017), or inverse U shaped (Luu & Ngo, 2019) relationship. This shows that the ndings cannot be considered as conclusive, which provide justi cation for analysing the construct again.…”

“…Performance of SMEs is a widely researched area. Yet there is no consensus on the way that how the performance should be measured because the major issue with SMEs is informality (Shah & Ahmad, 2019). The nancial records are not properly maintained, and even if the accounts are maintained, they are not audited, therefore, the question of reliability of the accounts can never be resolved.…”

“…Entrepreneurial orientation helps rms to develop better solution through differentiation for enhancing adoption to the environmental complexities (Shah & Ahmad, 2019). This, as a result weakens the ability to compete the rm in the turbulent market environment.…”

“…Past literature over entrepreneurial network, entrepreneurial orientation, and rm performance is very confusing as it shows positive, negative, insigni cant, and U-inverted results (Vega-Vázquez, Cossío-Silva, & Revilla-Camacho, 2016;Yoon & Solomon, 2017;Cho & Lee, 2018;Masa'deh, Al-Henzab, Tarhini, & Obeidat, 2018;Hernández-Linares, Kellermanns, López-Fernández, & Sarkar, 2019;Shah & Ahmad, 2019;Taheri, Bititci, Gannon, & Cordina, 2019). Several scholars have suggested conducting further research on the issue for identi cation of the factors that cause these controversies in the ndings.…”