The interplay of entrepreneurial orientation, total quality management, and financial performance

Abstract

This study strives to explore the nexus between entrepreneurial orientation (EO), total quality management (TQM), competitive intensity (CI) and firm performance in the context of an emerging laggard economy in the South-Eastern European region. Moreover, the present study aims to examine the effect of each dimension of EO (innovativeness, proactiveness, and risk-taking) on the TQM and firm performance. The proposed conceptual model and research hypotheses were tested through structural equation modelling (SEM). Our results show that TQM partially mediates the relationship between EO and firm performance and that as the intensity of competition increases, the direct effect of EO on firm performance becomes stronger. Thus, this study contributes to the EO and TQM literature by arguing that EO as a strategic orientation is positively related to firm performance outcomes through the mechanism of TQM practices. Moreover, this study adds to the current literature by revealing that the effectiveness of the synergetic effect of EO and TQM of firm performance outcomes is contingent on the market environment conditions (i.e. competitive intensity). Regarding the relative importance of EO dimensions, findings indicate that innovativeness and proactiveness are vital pillars of organisational processes aimed at developing TQM practices to enhance firm performance outcomes.