The effect of breadth of external pressure on leaders in small and medium-sized enterprises: does the firm become more entrepreneurial?

Abstract

PurposeThe study explores the relationship between the breadth of external pressures facing leaders of small and medium-sized enterprises (SMEs) and the entrepreneurial stance they adopt for their firm, that is, entrepreneurial orientation (EO).Design/methodology/approachBlending attention theory with EO literature, we argue that increasing breadth of external pressures will challenge leaders' attentions with implications for how they seek innovation, risk-taking and bold acts. We highlight an inflection point after which a negative relationship between the breadth of external pressure and EO will turn positive. We use data from a survey of 125 small-sized wineries in France to test this and capture a range of 15 external pressures on entrepreneurs.FindingsThe main tests and additional robustness tests provide support. It is the breadth of external pressures – as opposed to intensity of any one specific form of pressure – that plays a fundamental role in shaping leaders' adoption of EO in small enterprises over and above internal characteristics.Research limitations/implicationsWhile the results may be context-dependent, they provide support for an attention-based view of entrepreneurial responses by leaders of SMEs under pressure.Practical implicationsSME leaders and entrepreneurs should be aware of how their attention is challenged by breadth of pressures from external sources, as this can influence the EO they adopt for their SME.Originality/valueThis nonlinear perspective on external pressures influencing the EO of small firms has not been taken in the EO literature to date, despite some recent work that considers only a small range of external pressures.