Entrepreneurial Orientation, Organizational Culture and Business Performance in SMEs: Evidence from Emerging Economy

Abstract

The study objective is to empirically examine the mediating role of organizational culture on entrepreneurial orientation (EO) and business performance relationships in Algerian manufacturing SMEs. A sample of 180 Algerian Small medium enterprise (SME) owners/managers was collected for the year 2021 by using structured questionnaires. This study has contributed to the existing theory by evaluating the mediating role of Organizational Culture (OC) by using interaction effect in partial least squares structural equation modeling (PLS-SEM). The results have supported the hypothesized direct and mediate relationship: Entrepreneurial Orientation has the highest effect on the Organizational culture. On the other hand, Entrepreneurial Orientation has a medium influence on business performance. In addition, Organizational culture has a medium influence on business performance. Additionally, Entrepreneurial orientation and organizational culture together explain 50.2% of the variances for the business performance construct. On the other hand, 38.9% of the variances are explained by the entrepreneurial orientation for the organizational culture construct. Their relationship receives considerable scholarly attention in the literature, but few studies have been conducted among Algerian manufacturing SMEs. Hence, this investigation’s purpose is to add to the research in the newer context of Algeria. Thus, this study was an attempt to bridge this gap in the literature. This study can be used to supplement existing theories on organizational culture and small-business performance. This paper discovers an excellent link between entrepreneurial orientation and small and medium enterprise performance, with organizational culture as a partial mediating factor. This research also has significant implications for academics and practitioners to understand better entrepreneurial orientation, organizational culture perspectives, and organizational performance. The conclusions have been empirically intended to help SME authorities and future academics understand the function of entrepreneurial orientation and culture in improving the organizational performance of SMEs, particularly in North Africa.