Linking entrepreneurial orientation to SMEs’ performance

Abstract

Purpose The purpose of this paper is to measure the relationship between entrepreneurial orientation (EO) and performance of small- and medium-sized enterprises (SMEs). The aim is to contribute to the extant literature about the role of EO for SMEs development, and more specifically to identify implications that can inform knowledge-based initiatives of entrepreneurship universities focussing on the development and diffusion of the entrepreneurial culture and capacity. Design/methodology/approach This research paper adopts a quantitative approach to investigate a conceptual framework linking EO to SME’s performance. The central postulated hypothesis is that EO positively affects performance of SMEs. This hypothesis has been tested by using a system of partial least squares of structural equations modelling, adopting the SmartPLS® 3.0 software (Ringle et al., 2015). The empirical context analysed 170 SMEs operating in the Bajio Region (México) in the leather–footwear sector. Findings The results provide evidence that Mexican companies that manifest EO have a positive effect on their firm performance. Similarly, findings emphasise that both risk taking and innovativeness are currently the central axes of EO for the analysed companies. Accordingly, entrepreneurial universities should be engaged in the development of EO of students, academic staff and companies by focussing on knowledge-based actions that can foster the improvement of some specific features of the EO. Practical implications The results provide insights about the relationships between EO and the performance of SMEs indicating that potentials initiatives of entrepreneurship universities aiming to support the development capacity of SMEs as well as of students and academic staff should be focussed on the critical dimensions characterising EO. Originality/value This paper provides insights into the role of EO for SMEs performance. It provides three main contributions. First, derived from literature research, it proposes a working definition of EO. Second, the empirical research findings support an understanding of the relationship between EO and Mexican SMEs performance and propose a multiple and reflective dimension of EO’s model. Moreover, finally, this research provides some implications for entrepreneurship universities aiming to create and diffuse an entrepreneurial culture and capabilities by fostering the development of the EO.