The mediating effects of market orientation on the link between entrepreneurial orientation and innovation performance: evidence from micro and small enterprises

Integrating entrepreneurial and market orientation enhances innovation performance, fosters competitive advantage, and supports growth in dynamic markets. This study investigates the influence of entrepreneurial and market orientation on innovation performance in micro and small enterprises in the Amhara Region, Ethiopia. Additionally, it explores the mediating role of market orientation in the relationship between entrepreneurial orientation and innovation performance within these enterprises. A quantitative approach, utilizing cross-sectional data and an explanatory research design was employed in this study. Data were collected from 315 participants, including owners/managers of firms, using structured questionnaires. Structural equation modeling with AMOS was applied to analyze the relationships among variables, ensuring robust examination of the hypothesized linkages. The results indicate that entrepreneurial and market orientations substantially and positively influence innovation performance. Additionally, market orientation partially mediates the relationship between entrepreneurial orientation and firm innovation performance. This study demonstrates that micro and small enterprises with a robust entrepreneurial orientation tend to achieve superior innovation performance. It also emphasizes the importance of market orientation, showing that firms prioritizing market orientation excel in innovation-related activities. Based on these findings, micro and small enterprises should integrate market-oriented strategies and entrepreneurial orientation to optimize their innovation performance.