Abstract
Entrepreneurial Orientation (EO) involves business mindset and behavior. The firm and industry context of entrepreneurship has always fascinated researchers for inquiry. The main aim of this study is to establish an association of factors such as EO characteristics (innovativeness and risk-taking), Entrepreneurial Management (EM), and Environmental Dynamism (ED) with firm’s financial performance. The objective also includes examining the moderating impact of EM and ED respectively on the link between EO characteristics and firm performance. This investigation covered small-to-medium enterprises (SMEs) in Pakistan from the cities of Islamabad and Lahore, and constituted a diverse sample of entrepreneurs from various sectors. Results reveal direct positive, individual relationships of innovativeness, risk-taking, and EM with firm’s financial performance. As far as moderating influence is concerned, EM and ED could not establish any significant interaction between EO characteristics and firm performance. Interestingly, from the contextual landscape of this study, risk-taking and EM have proved to be stronger, more consistent and stable predictors of performance compared with innovativeness. The EO dimension of innovativeness exhibits dual results of either strong or very weak predictor to performance, hence implying vulnerability. In fact, running full regression, the impact of innovativeness on performance gets diminished in the presence of risk-taking and EM. The investigation also reveals that when controlling for ED the analytical framework shows a slightly better degree of association between predictor and criterion variables. Under the context of this study it, therefore, concludes that SME managers should rely more on risk-taking dimension of EO compared with innovativeness especially in executing entrepreneurial management (EM) approaches.
Highlights
Entrepreneurship has traditionally been studied in the light of new economic activity and risk associated with the new venture process
The correlation of the entire set of item variables from 140 observations are depicted in Table 3, where results display moderate associations of Entrepreneurial Orientation (EO) characteristics, Entrepreneurial Management (EM), and Environmental Dynamism (ED) with firm performance
This study reveals a direct, individual and positive impact of two Entrepreneurial Orientation (EO) dimensions including innovative (IC) and risk-taking (RC) characteristics on firm’s financial performance
Summary
Entrepreneurship has traditionally been studied in the light of new economic activity and risk associated with the new venture process. The subject research has been extended to include characteristics of person behind new venture creation, the entrepreneur. Studies have looked into different approaches of management style and techniques required to run small-to-medium enterprises (SMEs) compared with largescale ventures. In view of extended research interest, various contexts and backgrounds need to be explored in making entrepreneurship a worthwhile research activity. In Pakistan, there is a growing need to study entrepreneurial sector in light of their characteristics and management practices for the interest of academic and research community. This study includes business firms in local context of Pakistan where SMEs rely upon their entrepreneurial instinct and practical skills for business survival
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