How Does Entrepreneurial Orientation Influence the Sustainable Growth of SMEs? The Role of Relative Performance

Chiho Ok and He Soung Ahn
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Chiho Ok: College of Business Administration, Jeonju University, Jeonju 55069, Korea
He Soung Ahn: Department of Business Administration, Sejong University, Seoul 05006, Korea

Sustainability, 2019, vol. 11, issue 19, 1-16

Abstract: The answer to the question, “Which factors determine the sustainable growth of small- and medium-sized enterprises (SMEs)?” is still fragmented. While previous studies have paid attention to a firm’s entrepreneurial orientation (EO) as a key driver of SME growth, it is often overlooked that contextual factors can be crucial in order for EO to be effective in yielding sustainable growth in SMEs. This paper focuses on the role of relative performance as a boundary condition in the relationship between EO and sustainable growth of SMEs. We predict that the effect of EO on SMEs’ sustainable growth would differ depending on performance feedback based on their past performance. Our empirical analysis based on panel analysis shows that SMEs strongly pursue sales growth immediately after they achieve lower levels of performance than historical aspiration. However, when their performance goes beyond the historical aspiration level, their growth patterns appear to show a different pattern depending on their level of EO. SMEs with greater EO are more likely to pursue firm growth when performance is above historical aspirations while those with lesser EO are not. Our findings suggest that relative performance is an important boundary condition in the relationship between EO and SMEs’ sustainable growth.

Keywords: SMEs; firm growth; performance feedback; entrepreneurial orientation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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