Entrepreneurial Orientation (EO) and Performance Among Micro, Small and Medium Enterprises (MSMEs) (From an RBV Perspective)
Keywords:
Entrepreneurial Orientation (EO), MSME Performance, EO Dimenssion
Abstract
The research aims to examine the influence of entrepreneurial orientation (EO) on the performance of Micro, Small and Medium Enterprises (MSMEs) from the RBV perspective. RBV says that to achieve sustainable competitive advantage requires resources, these resources can be tangible or intangible resources, are heterogeneous, not perfectly distributed and must meet the VRIN (Valuable), Rare (rare), imitable framework (not easily imitated) and In-imitable (Not replaceable). Entrepreneurial orientation (EO) has been identified as one of the most significant resources that determines company performance and competitive advantage. The concept of EO manifestation consists of innovation, proactiveness, autonomy, competitive aggressiveness, and risk taking. As a result, companies with high EO are considered more innovative in terms of product and market combinations, take bold strategic decisions to seize new opportunities, and stay ahead of the competition. They are also known to favor high-risk, high-reward activities. These behavioral patterns are intangible and distributed among members of the organization, so they are rare, valuable, and cannot be imitated or replaced. Also, it strengthens the valuable, rare, non-substitutable and non-imitable elements of EO resources. A company's EO is unique to that company, so it becomes a source of performance improvement and sustainable competitive advantage.
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References
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Ajamieh A, Benitez J, Braojos J, Gelhard C. IT infrastructure and competitive aggressiveness in explaining and predicting performance. Journal of Business Research. 2016;69(10):46674674.
Akpan AP, Okwudu AA, Imagha OA. Exploring the Link between Employee Relationship Management and Organisational Citizenship Behaviour. Saudi Journal of Econonomics and Finance. 2021;5(4):164–172.
Alegre, J., & Chiva, R. (2013). Linking entrepreneurial orientation and firm performance: The role of organizational learning capability and innovation performance. Journal of Small Business Management, 51(4), 491–507.
Andersen, J., & Samuelsson, J. (2016). Resource organization and firm performance: How entrepreneurial orientation and management accounting influence the profitability of growing and non-growing SMEs. International Journal of Entrepreneurial Behaviour & Research, 22(4), 466–484
Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423.
Anidityas, A. N., Utami, R. N., & Widiyaningrum, P. (2012). Penggunaan Alat Peraga Sistem Pernapasan Manusia Pada Kualitas Belajar Siswa SMP Kelas VIII. Unnes Science Education Journal.https://doi.org/http://journal.unnes.ac.id/sju/index.php/usej. November 2012.
Anitah, W. S. (2011). Strategi Pembelajaran di SD. Universitas Terbuka.
Arief M, Thoyib A, Sudiro A, Rohman F. The effect of entrepreneurial orientation onthe firm performance through strategic flexibility: A study on the SMEs cluster in Malang. Journal of Management Research. 2013;5(3):44–63. DOI: 10.5296/jmr.v5i3.3339.
Arzubiaga, U., Iturralde, T., Maseda, A., & Kotlar, J. (2018). Entrepreneurial orientation and firm performance in family SMEs: The moderating effects of family, women, and strategic involvement in the board of directors. International Entrepreneurship and Management Journal, 14(1), 217–244.
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Barney JB. Gaining and sustaining competitive advantage. 1st ed. Reading, MA: Addison-Wesley; 1997’.
Brouthers, K. D., Nakos, G., & Dimitratos, P. (2015). SME entrepreneurial orientation, international performance, and the moderating role of strategic alliances. Entrepreneurship Theory and Practice, 39(5), 1161–1187.
Covin JG, Slevin DP, Schultz RL. Implementing strategic missions: Effective strategic, structural and tactical choices Journal of Management Studies. 1994;31(4):481–505.
Covin JG, Slevin DP. The Influence of Organization Structure on the Utility of an Entrepreneurial Top Management Style. Journal of Management Studies. 1988; 25(3):217-234.
Covin, J. G., & Slevin, D. P. (1991). A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1), 7–26
Covin, J. G., Green, K. M., & Slevin, D. P. (2006). Strategic process effects on the entrepreneurial orientation–sales growth rate relationship. Entrepreneurship Theory and Practice, 30(1), 57–81
Dimitratos, P., Lioukas, S., & Carter, S. (2004). The relationship between entrepreneurship and international performance: The importance of domestic environment. International Business Review, 13(1), 19–41
Edmond VP, Wiklund J. The historic roots of entrepreneurial orientation research. In H. Lanström and F. Lohrke (Eds.), The historical foundations of entrepreneurship research. Cheltenham, UK: Edward Elgar; 2010.
Ferreira, J. J., Fernandes, C. I., Kraus, S., & McDowell, W. C.(2021). Moderating influences on the entrepreneurial orientation-business performance relationship in SMEs. The International Journal of Entrepreneurship and Innovation,22(4), 240–250.
George G, Wood JR, RD, Khan R. Networking strategy of boards: Implications for small and medium-sized enterprises Entrepreneurship Regional Development. 2001;13(1):269–286. DOI: 10.1080/0898562011005811.
Gupta, V. K., & Batra, S. (2016). Entrepreneurial orientation and firm performance in Indian SMEs: Universal and contingency perspectives. International Small Business Journal,34(5), 660–682.
Ireland, R. D., Covin, J. G., & Kuratko, D. F. (2009). Conceptualizing corporate entrepreneurship strategy. Entrepreneurship Theory and Practice, 33(1), 19–46.
Isichei EE, Emmanuel Agbaeze K, Odiba MO. Entrepreneurial orientation and performance in SMEs: The mediating role of structural infrastructure capability, International Journal of Emerging Markets. 2020;15(6):1219-1241. Available:https://doi.org/10.1108/IJOEM08-2019-0671.
Jia J, Wang S, Zhao X, Yu X. Exploring the relationship between entrepreneurial orientation and corporate performance: The role of competency of executives in entrepreneurial-oriented corporations. Nankai Business Review International.2014;5(3):326–344.
Jinpei Wu. Entrepreneurial orientation, entrepreneurial intent and new venture creation: Test of a framework in a Chinese context, PHD dissertation, Blacksburg, Virginia; 2009. Available:http://hdl.handle.net/10919/28298.
Jogaratnam G, Tse EC, Olsen MD. An empirical analysis of entrepreneurship and performance in the restaurant industry. Journal of Hospitality & Tourism Research. 1999;23(4):339-353.
Jogaratnam G, Tse EC. Entrepreneurial orientation and the structuring of organizations: performance evidence from the Asian hotel industry. International Journal of Contemporary Hospitality Management. 2006;18(6):454-468.
Jogaratnam G. Entrepreneurial orientation and environmental hostility: An assessment of small, independent restaurant businesses. Journal of Hospitality & Tourism Research. 2002; 26(3):258-277.
Kiyabo, K., & Isaga, N. (2020). Entrepreneurial orientation, competitive advantage, and smes’ performance: Application of firm growth and personal wealth measures. Journal of Innovation and Entrepreneurship, 9(1), 1–15.
Lumpkin GT, Dess GG. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Journal. 1996;21(1):135– 172.
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. The Academy of Management Review, 21(1), 135–172.
Luu N, Ngo LV. Entrepreneurial orientation and social ties in transitional economies. Long Range Planning. Elsevier. 2019; 52(1):103–116. DOI: 10.1016/j.lrp.2018.04.001
Mahmood R, Hanafi N. Entrepreneurial orientation and business performance of women-owned small and medium enterprise dvantage as a mediator. International Journal of Business and Social Science. 2013; 4(1).
Mahmood R, Wahid RA. Applying corporate entrepreneurship to bank performance in Malaysia. Journal of Global Entrepreneurship. 2012;3(1):68–82.
Mantok, S., Sekhon, H., Sahi, G. K., & Jones, P. (2019). Entrepreneurial orientation and the mediating role of organisational learning amongst Indian S-smes. Journal of Small Business and Enterprise Development, 26(5), 641–660.
Miller D. The correlates of entrepreneurship in three types of firms. Management Science. 1983;29(7):770-791.
Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770–791.
Mohammadi, P., Fathi, S., & Kazemi, A. (2019). Differentiation and financial performance: A meta-analysis. Competitiveness Review, 29(5), 573–591.
Mokaya SO. Corporate entrepreneurship and organizational performance: Theoretical perspectives, approaches andoutcomes. International Journal of Arts and Commerce. 2012;1(4):133–143.
Nybom, J., Hunter, E., Micheels, E., & Melin, M. (2021). Farmers’ strategic responses to competitive intensity and the impact on perceived performance. Business Economics, 1(6), 74
Porter, M. E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business School.
Putniņš, T.J. and Sauka, A. Why does entrepreneurial orientation affect company performance? Strategic Entrepreneurship Journal. 2019;14(4):711-735.
Rauch A, Wiklund J, Lumpkin GT, Frese M. Entrepreneurial orientation and business performance: An assessment of past research and suggestions for thefuture. Entrepreneurship Theory and Practice. 2009;33(3):761-787.
Richard, O. C., Wu, P., & Chadwick, K. (2009). The impact of entrepreneurial orientation on firm performance: The role of CEO position tenure and industry tenure. The International Journal of Human Resource Management, 20(5), 1078–1095
Rodrı´ guez-Gutie´ rrez, M. J., Moreno, P., & Tejada, P. (2015). Entrepreneurial orientation and performance of SMEs in the services industry. Journal of Organizational Change Management, 28(2), 194–212.
Schumpeter J. The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. New York, NY: Oxford University Press; 1934.
Shamsuddin S, Othman J, Shahadan MA. The dimensions of corporate entrepreneurship and the performance of established organization. ACRN Journal of Entrepreneurship Perspectives. 2012;1(2): 111–131.
Shan, P., Song, M., & Ju, X. (2016). Entrepreneurial orientation and performance: Is innovation speed a missing link? Journal of Business Research - Turk, 69(2), 683–690.
Soares, M. D. C., & Perin, M. G. (2019). Entrepreneurial orientation and firm performance: An updated meta-analysis. RAUSP Management Journal, 55(2), 143–159.
Soininen, J., Puumalainen, K., Srogen, H., & Syrja, P. (2012).The impact of global economic crisis on SMEs: Does entrepreneurial orientation matter? Management Research Review, 35(10), 927–944.
Wang EST, Juan PY. Entrepreneurial Orientation and Service Innovation on Consumer Response: AB & B Case. Journal of Small Business Management. 2016;54(2):532-545.
Wiklund J, Shepherd D. Entrepreneurial orientation and small business performance: A configurational approach.Journal of Business Venturing. 2005;20(1):71-91.
Zahra SA. Being entrepreneurial and market driven: Implications for company performance. Journal of Strategy and Management. 2008;1(2):125–142.
Ajamieh A, Benitez J, Braojos J, Gelhard C. IT infrastructure and competitive aggressiveness in explaining and predicting performance. Journal of Business Research. 2016;69(10):46674674.
Akpan AP, Okwudu AA, Imagha OA. Exploring the Link between Employee Relationship Management and Organisational Citizenship Behaviour. Saudi Journal of Econonomics and Finance. 2021;5(4):164–172.
Alegre, J., & Chiva, R. (2013). Linking entrepreneurial orientation and firm performance: The role of organizational learning capability and innovation performance. Journal of Small Business Management, 51(4), 491–507.
Andersen, J., & Samuelsson, J. (2016). Resource organization and firm performance: How entrepreneurial orientation and management accounting influence the profitability of growing and non-growing SMEs. International Journal of Entrepreneurial Behaviour & Research, 22(4), 466–484
Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423.
Anidityas, A. N., Utami, R. N., & Widiyaningrum, P. (2012). Penggunaan Alat Peraga Sistem Pernapasan Manusia Pada Kualitas Belajar Siswa SMP Kelas VIII. Unnes Science Education Journal.https://doi.org/http://journal.unnes.ac.id/sju/index.php/usej. November 2012.
Anitah, W. S. (2011). Strategi Pembelajaran di SD. Universitas Terbuka.
Arief M, Thoyib A, Sudiro A, Rohman F. The effect of entrepreneurial orientation onthe firm performance through strategic flexibility: A study on the SMEs cluster in Malang. Journal of Management Research. 2013;5(3):44–63. DOI: 10.5296/jmr.v5i3.3339.
Arzubiaga, U., Iturralde, T., Maseda, A., & Kotlar, J. (2018). Entrepreneurial orientation and firm performance in family SMEs: The moderating effects of family, women, and strategic involvement in the board of directors. International Entrepreneurship and Management Journal, 14(1), 217–244.
Barney JB, Ketchen DJ, Wright M. The future of resource-based theory: Revitalization or decline? Journal of Management. 2011;37(5):1299–1315. Available:http://dx.doi.org/10.1177/0149206310391805.
Barney JB. Gaining and sustaining competitive advantage. 1st ed. Reading, MA: Addison-Wesley; 1997’.
Brouthers, K. D., Nakos, G., & Dimitratos, P. (2015). SME entrepreneurial orientation, international performance, and the moderating role of strategic alliances. Entrepreneurship Theory and Practice, 39(5), 1161–1187.
Covin JG, Slevin DP, Schultz RL. Implementing strategic missions: Effective strategic, structural and tactical choices Journal of Management Studies. 1994;31(4):481–505.
Covin JG, Slevin DP. The Influence of Organization Structure on the Utility of an Entrepreneurial Top Management Style. Journal of Management Studies. 1988; 25(3):217-234.
Covin, J. G., & Slevin, D. P. (1991). A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1), 7–26
Covin, J. G., Green, K. M., & Slevin, D. P. (2006). Strategic process effects on the entrepreneurial orientation–sales growth rate relationship. Entrepreneurship Theory and Practice, 30(1), 57–81
Dimitratos, P., Lioukas, S., & Carter, S. (2004). The relationship between entrepreneurship and international performance: The importance of domestic environment. International Business Review, 13(1), 19–41
Edmond VP, Wiklund J. The historic roots of entrepreneurial orientation research. In H. Lanström and F. Lohrke (Eds.), The historical foundations of entrepreneurship research. Cheltenham, UK: Edward Elgar; 2010.
Ferreira, J. J., Fernandes, C. I., Kraus, S., & McDowell, W. C.(2021). Moderating influences on the entrepreneurial orientation-business performance relationship in SMEs. The International Journal of Entrepreneurship and Innovation,22(4), 240–250.
George G, Wood JR, RD, Khan R. Networking strategy of boards: Implications for small and medium-sized enterprises Entrepreneurship Regional Development. 2001;13(1):269–286. DOI: 10.1080/0898562011005811.
Gupta, V. K., & Batra, S. (2016). Entrepreneurial orientation and firm performance in Indian SMEs: Universal and contingency perspectives. International Small Business Journal,34(5), 660–682.
Ireland, R. D., Covin, J. G., & Kuratko, D. F. (2009). Conceptualizing corporate entrepreneurship strategy. Entrepreneurship Theory and Practice, 33(1), 19–46.
Isichei EE, Emmanuel Agbaeze K, Odiba MO. Entrepreneurial orientation and performance in SMEs: The mediating role of structural infrastructure capability, International Journal of Emerging Markets. 2020;15(6):1219-1241. Available:https://doi.org/10.1108/IJOEM08-2019-0671.
Jia J, Wang S, Zhao X, Yu X. Exploring the relationship between entrepreneurial orientation and corporate performance: The role of competency of executives in entrepreneurial-oriented corporations. Nankai Business Review International.2014;5(3):326–344.
Jinpei Wu. Entrepreneurial orientation, entrepreneurial intent and new venture creation: Test of a framework in a Chinese context, PHD dissertation, Blacksburg, Virginia; 2009. Available:http://hdl.handle.net/10919/28298.
Jogaratnam G, Tse EC, Olsen MD. An empirical analysis of entrepreneurship and performance in the restaurant industry. Journal of Hospitality & Tourism Research. 1999;23(4):339-353.
Jogaratnam G, Tse EC. Entrepreneurial orientation and the structuring of organizations: performance evidence from the Asian hotel industry. International Journal of Contemporary Hospitality Management. 2006;18(6):454-468.
Jogaratnam G. Entrepreneurial orientation and environmental hostility: An assessment of small, independent restaurant businesses. Journal of Hospitality & Tourism Research. 2002; 26(3):258-277.
Kiyabo, K., & Isaga, N. (2020). Entrepreneurial orientation, competitive advantage, and smes’ performance: Application of firm growth and personal wealth measures. Journal of Innovation and Entrepreneurship, 9(1), 1–15.
Lumpkin GT, Dess GG. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Journal. 1996;21(1):135– 172.
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. The Academy of Management Review, 21(1), 135–172.
Luu N, Ngo LV. Entrepreneurial orientation and social ties in transitional economies. Long Range Planning. Elsevier. 2019; 52(1):103–116. DOI: 10.1016/j.lrp.2018.04.001
Mahmood R, Hanafi N. Entrepreneurial orientation and business performance of women-owned small and medium enterprise dvantage as a mediator. International Journal of Business and Social Science. 2013; 4(1).
Mahmood R, Wahid RA. Applying corporate entrepreneurship to bank performance in Malaysia. Journal of Global Entrepreneurship. 2012;3(1):68–82.
Mantok, S., Sekhon, H., Sahi, G. K., & Jones, P. (2019). Entrepreneurial orientation and the mediating role of organisational learning amongst Indian S-smes. Journal of Small Business and Enterprise Development, 26(5), 641–660.
Miller D. The correlates of entrepreneurship in three types of firms. Management Science. 1983;29(7):770-791.
Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770–791.
Mohammadi, P., Fathi, S., & Kazemi, A. (2019). Differentiation and financial performance: A meta-analysis. Competitiveness Review, 29(5), 573–591.
Mokaya SO. Corporate entrepreneurship and organizational performance: Theoretical perspectives, approaches andoutcomes. International Journal of Arts and Commerce. 2012;1(4):133–143.
Nybom, J., Hunter, E., Micheels, E., & Melin, M. (2021). Farmers’ strategic responses to competitive intensity and the impact on perceived performance. Business Economics, 1(6), 74
Porter, M. E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business School.
Putniņš, T.J. and Sauka, A. Why does entrepreneurial orientation affect company performance? Strategic Entrepreneurship Journal. 2019;14(4):711-735.
Rauch A, Wiklund J, Lumpkin GT, Frese M. Entrepreneurial orientation and business performance: An assessment of past research and suggestions for thefuture. Entrepreneurship Theory and Practice. 2009;33(3):761-787.
Richard, O. C., Wu, P., & Chadwick, K. (2009). The impact of entrepreneurial orientation on firm performance: The role of CEO position tenure and industry tenure. The International Journal of Human Resource Management, 20(5), 1078–1095
Rodrı´ guez-Gutie´ rrez, M. J., Moreno, P., & Tejada, P. (2015). Entrepreneurial orientation and performance of SMEs in the services industry. Journal of Organizational Change Management, 28(2), 194–212.
Schumpeter J. The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. New York, NY: Oxford University Press; 1934.
Shamsuddin S, Othman J, Shahadan MA. The dimensions of corporate entrepreneurship and the performance of established organization. ACRN Journal of Entrepreneurship Perspectives. 2012;1(2): 111–131.
Shan, P., Song, M., & Ju, X. (2016). Entrepreneurial orientation and performance: Is innovation speed a missing link? Journal of Business Research - Turk, 69(2), 683–690.
Soares, M. D. C., & Perin, M. G. (2019). Entrepreneurial orientation and firm performance: An updated meta-analysis. RAUSP Management Journal, 55(2), 143–159.
Soininen, J., Puumalainen, K., Srogen, H., & Syrja, P. (2012).The impact of global economic crisis on SMEs: Does entrepreneurial orientation matter? Management Research Review, 35(10), 927–944.
Wang EST, Juan PY. Entrepreneurial Orientation and Service Innovation on Consumer Response: AB & B Case. Journal of Small Business Management. 2016;54(2):532-545.
Wiklund J, Shepherd D. Entrepreneurial orientation and small business performance: A configurational approach.Journal of Business Venturing. 2005;20(1):71-91.
Zahra SA. Being entrepreneurial and market driven: Implications for company performance. Journal of Strategy and Management. 2008;1(2):125–142.
Published
2024-10-31
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