Examining the Moderating Effect of Environmental Hostility on the Relationship between Entrepreneurial Orientation and International Performance of Indonesian SMEs

Abstract

This paper aims to investigate the role of environmental hostility in moderating the relationship between Indonesian small and medium enterprises' entrepreneurial orientation and their international performance. As SMEs involved in international business activities and often encounter unpredictable environments, they are expected to deal with various threats and risk that are related to intense competition in price and product, shrinking market and supplies, and as well as governments reviewed and altered rules. Thus, this paper will discuss about the entanglement of environmental hostility on Indonesian SMEs entrepreneurial orientation effort and their international performance. The main objective of this study is to discuss a conceptual framework that indicates the interrelationship between entrepreneurial orientation, environmental hostility and international performance of Indonesian SMEs. The proposed framework will examine the implication of Indonesian SMEs' environmental orientation and international performance when the foreign countries' business environment is in unfavourable condition. The findings of the study are expected to help Indonesian SMEs to be alert and more critical about hostile business environment in foreign countries as it can affect their business operation overseas. Additionally, Indonesian SMEs can apply strategic insights concerning potential impacts of uncertainties in foreign business environment to improve their international performance.

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