, Volume 40, Issue 2, pp 273-291
Date: 17 Nov 2012

Disaggregating entrepreneurial orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME performance

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Abstract

Previous studies have generally established a positive relationship between aggregated measures of entrepreneurial orientation (EO) and firm performance. However, there are theoretical reasons suggesting that three dimensions of EO (innovativeness, proactiveness, and risk-taking) may possess differential relationships with performance in smaller firms. This study utilizes a sample consisting of 1,668 small-to-medium sized enterprises (SMEs) in nine countries across 13 different industries to provide a finer-grained analysis of the EO-performance relationship. Specifically, we theorize and test a non-monotonic influence of innovativeness, proactiveness, and risk-taking on SME performance. Innovativeness and proactiveness displayed predominantly positive U-shaped relationships with SME performance. Risk-taking, however, displayed a predominantly negative U-shaped relationship with SME performance. Further, individualism was found to positively moderate the relationships between innovativeness-performance and proactiveness-performance. Taken together, these results suggest that differential relationships exist between three dimensions of EO and SME performance, with important theoretical implications for future EO research.

A previous version of this manuscript was awarded the Wesley J. Howe Award for Excellence on the Topic of Corporate Entrepreneurship at the Babson Entrepreneurship Research Conference. A condensed version of the paper was published in Frontiers of Entrepreneurship Research (FER).