Entrepreneurship Orientation (EO), Resources, and Small Firm Growth: Evidence from India

Rakesh Gupta
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Rakesh Gupta: Institute of Management Technology India

International Journal of Business and Economics, 2019, vol. 18, issue 1, 41-58

Abstract: Entrepreneurial orientation (EO) is the entrepreneurial behavior displayed by firms that contributes towards their success of firms, but the view that firms who possess higher EO perform well has limited empirical support. A large majority of studies on EO define it as a uni-dimension, consisting of three dimensions - namely, innovativeness, risk taking, and pro-activeness - that co-vary and collapse to make this overarching construct. This masks the influence of individual EO dimensions that possibly explains the reason behind the indifferent results about the EO-firm performance relationship. Some studies have focused on the EO construct as a multidimensional one, comprising five dimensions that act independently as proposed by Lumpkin and Dess (1996). Small firms have limited resources, and so for them knowing which dimensions of EO are significant is an important issue. This study thus focuses on the EO construct as a multidimensional one consisting of five dimensions that act independently and examines the relationship between each EO dimension and growth of small firms and how resources moderate this relationship. It highlights that small firms should make judicious use of their limited resources by allocating them to only those dimensions of EO that contribute to firm growth rather than focusing on the entire EO construct. We analyze the data in this study using structural equation modeling (SEM) and the ordinary least square regression method. The findings of this study empirically establish that individual EO dimensions have a unique and independent influence on small firm growth, varying in strength as well as direction. Further resources moderate the relationship between individual EO dimensions and firm growth differently.

Keywords: entrepreneurial orientation; multi-dimensional construct; resources and small firm growth (SMEs) (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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