External pressure influence on entrepreneurship performance of SMEs: a case study of Malaysian herbal industry

Abstract

Activities of small and medium-sized enterprises (SMEs) have contributed significantly to environmental degradation that causes a disastrous effect on us and our future generation. Considering this, sustainable entrepreneurship practice has been promoted as a resolution of ecological problems capable of addressing climate change issues, public health, and safety concerns, and has become critical for competing in international markets. Literature shows that external pressure provides the impetus for SMEs to achieve a competitive advantage regarding turnover, customer attraction, and market share. This article investigates the standpoints of small and medium-sized businesses under the influence of external pressure on entrepreneurial activities within business dynamics. 300 herbal-based SMEs were surveyed using a structured questionnaire. Data were analyzed using descriptive statistics, exploratory and confirmatory factor analysis, and structural equation model. The results show that external pressure has a positive direct effect on entrepreneurship practices, it also indicates that strategic sustainability orientation provides a form of differentiation among the SMEs. This study suggests that SMEs that seek competitive advantage should resolve their challenges by responding positively to environmental pressure through sustainability. This study contributes to sustainability literature based on incorporation of institutional and strategic orientation theories in entrepreneurship framework.