Entrepreneurial Orientation and Small and Medium-sized Enterprises’ Performance; Does ‘Access to Finance’ Moderate the Relation in Emerging Economies?

Abstract

The main objective of the underline study is to examine the influence of entrepreneurial orientation (EO) on financial and non-financial performance of small and medium-sized enterprises (SMEs) with the moderating role of access to finance. Because SMEs—due to fair reasons such as lack of resources and lack of managerial skill—are often unable to succeed in their mission, the managers look for much less risky and convenience factors to compete in the market. A variety of factors has been tested but the role of finance in this perspective has received minor attention. Hence, the underline study tested finance as a moderator between firm resources and their performance. To test the model, a structured questionnaire is used to collect data from 326 Pakistani SMEs. Structural equation modelling in AMOS is used to test the hypotheses. Our finding suggests that EO significantly enhances SME’s financial and non-financial performance in emerging economies. On the other hand, access to finance significantly moderates the relationship between EO and SME’s financial performance while it is not significantly moderating between EO and non-financial performance. This research recommends policymakers and practitioners to focus on accessing adequate finance while Small and Medium-sized Enterprises Development Authority encourages banks and financial institutions to facilitates SMEs. Furthermore, the possible implications have been discussed.