Entrepreneurial orientation and performance of SMEs: the roles of marketing capabilities and social media usage

Abstract

Purpose Small and medium-sized enterprises (SMEs) are an important contributor to emerging countries’ economic growth. However, SMEs have been struggling to sustain their performance in a highly competitive environment. Thus, this study aims to re-examine the effect of SMEs’ entrepreneurial orientation (EO) on firms’ performance during the COVID-19. This study has also studied the moderating role of social media usage and the mediating role of marketing capabilities and social media usage. Design/methodology/approach This study used a structured questionnaire for data collection, where the unit of analysis was the manager or owner of SMEs. The data were analyzed using partial least square-structural equation modeling. Findings The findings show that an EO has a significant and positive effect on an SME’s performance, but the outcomes are conditional on the role of social media and marketing capabilities. The empirical results reveal that marketing capabilities significantly mediate the relationship between EO and SME performance. In addition, social media usage moderates the relationship between EO and SME performance and it also partially mediates the EO-performance nexus of SMEs. Finally, this study discovers that the EO-Performance nexus of SMEs is serially mediated by social media usage and marketing capabilities. Research limitations/implications This study has important implications for SMEs that are seeking to gain a competitive advantage. For example, an SME should deploy market activities through social media channels. In situations such as a pandemic and uncertainty, this could be the most effective tool. Originality/value This study builds a theory-based mediation-moderation model to explain the link between EO and SME performance. In explaining mediation-moderation effects, the current study provides insight into EO-performance relationships. Moreover, the current model facilitates exploring whether serial mediation passes through social media usage and market capabilities. Therefore, with new findings, the study extends the literature on serial mediation in the EO-performance of SMEs. Additionally, this study extends the literature on the moderating role of social media on SMEs in Indonesia, which has not been investigated. Besides, the current study adds new insight into the EO-performance of SME in COVID-19 condition.