Entrepreneurial orientation and performance: the interaction effect of customer capital

Abstract

Purpose – The purpose of this study is to advance research on entrepreneurial orientation (EO), resource-based view (RBV), customer (relational) capital, and small and medium enterprises (SMEs) by examining how the interaction effect of customer capital shapes the relationship between EO and firm performance. Design/methodology/approach – This research is considered as a correlational rather than a casual study with 150 questionnaire returned from manufacturing SMEs. This cross-sectional study tested all hypotheses that are related to the research questions and use statistical software SPSS 17 to analyze data. Findings – The study found that a high customer capital strengthens the link between two dimensions of EO (innovativeness and risk taking) and weakens the link between another dimension of EO (proactiveness) and firm performance. Research limitations/implications – First, future studies would benefit from an enhanced development in the measurement of EO dimensions, which relies on richer and more refined conceptualizations. Second, a single informant who was asked to evaluate EO may potentially increase the degree of subjectivity and bias in the responses. Obtaining more than one respondent for the survey from each organization is always highly desirable. Practical implications – The results of the current study cover the limitation of the previous study by independently examining the moderating effect of customer capital as an intangible resource in the relationship between innovativeness and risk taking on firm performance. The paper expands this line of work by adding the idea that the intangible resources of a firm are more likely to contribute to sustaining superior firm performance when they are used with other factors simultaneously. Social implications – Environmental factors, such as government financial aid and protection of organizations outside the industry, may affect the relationship between SMEs and the agents. Establishing extra ties between Iranian firms and agents may be expensive for Iranian manufacturing firms, and they may not be able to create these ties without government support. Originality/value – A research gap exists in understanding how customer capital operates and endows benefits to firms that are beyond their start-up phase and are embarking on international activities. The current study tries to overcome a number of limitations of the previous framework by combining RBV and customer capital. Particularly, “the RBV's lack of specificity have raised questions as to its status as a legitimate theory, and make it difficult to design and test empirically.”

The Effect of Market and Entrepreneurship Orientation on SME’s Business Performance: The Role of Entrepreneurial Marketing in Indonesian Batik Industries

“…Innovation-oriented activities can affect the SME's performance, meaning that the higher the level of innovation undertaken by SMEs performance will further encourage the improvement of the SME's performance. This finding is consistent with several previous studies showing that the level of innovation has a positive and significant effect on company performance (Jalali, 2014); (Mason, 2015). This finding says that there is a positive and significant effect on entrepreneurial orientation on SME's performance.…”

The Moderating Role of Bridging Ties between Risk-Taking, Proactivness and Performance: The Evidence from Iranian SMEs

“…Despite the results of previous studies finding a negative relationship between risk-taking and performance, entrepreneurs generally accept that entrepreneurship involves risk-taking; thus, they are willing to take risks in return for potential rewards (Gebreegziabher & Tadesse, 2014;Jalali et al, 2014;Segal, Borgia, & Schoenfeld, 2005). Furthermore, Mc Clelland (1961) argues that entrepreneurs are more eager to take risks than non-entrepreneurs.…”

“…Jalali et al (2014) found that a firm's customer capital enables Iranian entrepreneurs to develop proactive and risk-taking capabilities resulting in greater profitability. Our results suggest that Iranian entrepreneurs who cultivate different type of ties simultaneously are more likely to perform better.…”

“…Entrepreneurial proactiveness is a fundamental aspect of competitive advantage and innovation output (Brandle, 2001;Jalali et al, 2014). Proactive firms find more opportunities ahead of their competitors, create initiatives that give them advantages in the market, and charge higher prices than their rivals (Craig et al, 2014;Zahra & Covin, 1995).…”

Intellectual Capital, Entrepreneurial Strategy and New Ventures Performance: Mediating Role of Competitive Advantage

“…Similarly, there is a significant positive relationship between IC and CA (r = 0.35, p < 0.01) as well as a significant positive relationship between ES and NVP (r = 0.29, p < 0.01). The correlation values between all the factors less than 0.80 indicate that there is no multicollinearity issue (Jalali, Jaafar, & Ramayah, 2014). …”