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Entrepreneurial Orientation, Innovation and SME Performance: A Study of SMEs in Malaysia using PLS-SEM

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  • Nurulhasanah Abdul Rahman

    (School of Management, Universiti Sains Malaysia, 11800 Penang, Malaysia Author-2-Name: Daisy Mui Hung Kee Author-2-Workplace-Name: School of Distance Education, Universiti Sains Malaysia, 11800 Penang, Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - Despite extensive research on Entrepreneurial Orientation (EO) and innovation and performance, there are still limited resources on how these areas benefit Small and Medium Enterprises (SMEs). There are various financial aids and support services that are provided to SMEs. Despite this, SMEs still tend to perform quite low. This paper aims to identify the link between EO and SME performance using innovation as a mediator. Methodology/Technique - To achieve this objective, a quantitative approach is used. Questionnaires are collected from 285 SMEs in Peninsular Malaysia. Structural Equation Modelling (SEM) analysis is applied to test the hypotheses on the direct and indirect relationships between EO and SME performance through innovation. Finding - The findings of this study show that only two aspects of EO (innovativeness and proactiveness) have significant relationships with SME performance. Interestingly, all dimensions of EO have a direct impact on innovation. Further, innovation has a direct effect on SME performance and is a significant mediator between EO and SME performance. Novelty - These findings indicate that EO is a strong predictor of Innovation and SME performance. The discussion provided in this paper strengthens the body of knowledge on Entrepreneurship and acts as a benchmark for future studies on EO, Innovation and SME Performance. Type of Paper - Empirical.

Suggested Citation

  • Nurulhasanah Abdul Rahman, 2020. "Entrepreneurial Orientation, Innovation and SME Performance: A Study of SMEs in Malaysia using PLS-SEM," GATR Journals gjbssr558, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:gjbssr558
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    References listed on IDEAS

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    1. Semrau, Thorsten & Ambos, Tina & Sascha Kraus,, 2016. "Entrepreneurial orientation and SME performance across societal cultures: An international study," Journal of Business Research, Elsevier, vol. 69(5), pages 1928-1932.
    2. Madanoglu, Melih & Altinay, Levent & Wang, Xuan (Lorna), 2016. "Disentangling the effect of family involvement on innovativeness and risk taking: The role of decentralization," Journal of Business Research, Elsevier, vol. 69(5), pages 1796-1800.
    3. Avlonitis, George J. & Salavou, Helen E., 2007. "Entrepreneurial orientation of SMEs, product innovativeness, and performance," Journal of Business Research, Elsevier, vol. 60(5), pages 566-575, May.
    4. Lisboa, Ana & Skarmeas, Dionysis & Saridakis, Charalampos, 2016. "Entrepreneurial orientation pathways to performance: A fuzzy-set analysis," Journal of Business Research, Elsevier, vol. 69(4), pages 1319-1324.
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    More about this item

    Keywords

    Malaysia; Entrepreneurial Orientation; Innovation; SME Performance.;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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