The impact of entrepreneurial orientation on firm performance: Exploring the moderating influence of trust and organizational commitment in the Indian IT/ITE sector

Abstract

The purpose of the research study is to test how entrepreneurship orientation influences Indian MSME’s performance and to delineate the moderation effect of trust in leadership and employee commitment on the relationship between entrepreneurial orientation and firm performance. Based on the social exchange theory, the study tested how firm performance is affected by Entrepreneurship Orientation such that relationships can be exchanged by trust and commitment. Applying descriptive research design, data were collected from randomly selected IT and ITE consulting firms located in Bangalore (A metro Tier I city in the country which presents close to 80 percent of Indian IT and ITE companies’ establishment (timesofindia, 2020)). The hypothesized model was tested using SEM analysis. This study aims to: (1) examine the relationship between entrepreneurial orientation and firm performance within the context of Indian Micro, Small, and Medium Enterprises (MSMEs), with a specific focus on consulting organizations; (2) assess the moderating influence of trust among members on the relationship between entrepreneurial orientation and firm performance; and (3) investigate the interaction effect of managerial commitment on the relationship between entrepreneurial orientation and firm performance, thereby enhancing our understanding of the dynamics at play within MSMEs, particularly in the consulting sector. The capability of being innovative which measures entrepreneurial orientation impact firm performance and being proactive in the business over entrepreneurial orientation positively impacts firm performance while risk-taking attitude and firm performance relationship are not significant. This result is in support of the previous research report that showed only the innovativeness and proactiveness variable. Further, it is noticed from the hierarchical regression analysis that proactiveness and firm performance are moderated by the level of trust that the employee has in his/her functional manager, and proactiveness and firm performance are also moderated by the employee’s level organizational commitment.