The moderating effect of entrepreneurial culture and government support on the relationship between entrepreneurial orientation and firm performance

Abstract

This research paper empirically examined the moderating effect of entrepreneurial culture and government support on the relationship between entrepreneurial orientation and perceived financial firm performance in the context of province Khyber Pakhtunkhwa, Pakistan. The literature on firm-level entrepreneurship studies argued that external environmental factors vary across countries and regions, therefore, investigating the relationship between entrepreneurial orientation and firm performance is contingent on the external factors known as an entrepreneurial ecosystem of the region. Data were collected from 392 managers, senior officials and owners of the SME's representing four different business sectors of food and beverages, textile and leather products, wood and wood products, arms ammunition and other manufacturing products geographically located in Peshawar, Gadoon, Risalpur and Hattar industrial zones of Khyber Pakhtunkhwa. Proportionate stratified random sampling technique was utilized to give proper representation to each sub-population stratum. Data analysis was performed in IBM SPSS 23 and IBM SEM AMOS 23. Constructs Measurement model, structural model, and path analysis were done through AMOS structural equation modeling. Further, to examine the moderation effect of the variables entrepreneurial culture and government support on the relationship between Entrepreneurial Orientation and firm performance Baron and Kenny's (1983) three-step approach was used. Findings of the present research revealed a significant positive relationship between entrepreneurial orientation and SME's firm performance. Moreover, entrepreneurial culture significantly moderates the relationship between entrepreneurial orientation and firm performance, whereas government support does not moderate the relationship between Entrepreneurial orientation and firm performance. Keywords: Entrepreneurship, entrepreneurial orientation, perceived firm performance, entrepreneurial ecosystem, entrepreneurial culture, government support.