Stuck in short-term, daily operations, or not?: Unraveling SME's long-term orientation.

Abstract

Long-term orientation (LTO) is an essential strategic option for firms to shape their future success, in particular for SMEs which are often submerged by daily operations. Surprisingly, little is known about the underlying personal and contextual drivers of LTO in an SME context. To unravel why some SME entrepreneurs adopt an LTO, while others seem to be stuck in short term and daily operations, we consider the (interacting) impact of both personal and contextual drivers. We carefully select well known drivers for their impact on various other aspects of SME's LTO: Need for achievement, as a personal driver, and the entrepreneur's perception of the institutional entrepreneurial support (PIES), as a contextual driver. The latter consists of a regulative, normative and cognitive institutional dimension. Based on a study on 176 SMEs in an emerging country, Indonesia, we confirm that both personal as well as contextual drivers individually and interactively impact an SME's LTO. Specifically, when highly achievement motivated entrepreneurs perceive that institutional regulations support entrepreneurial activities, they tend to adopt a higher level of LTO. We discuss implications for SMEs and policy makers, and provide suggestions for future research.