The primary objective of this study is to critically examine the effect of strategic orientation on the performance of small and medium enterprises (SMEs) in Malaysia. Three most comprehensive constructs, namely, entrepreneurial orientation, market orientation, and interaction orientation were adopted to present a holistic picture of the effect of strategic orientation on firm performance. This study adopts a cross-sectional design and uses the stratified random sampling method to select the potential respondents. The complete data were collected from 473 entrepreneurs who operate in the service sector in Malaysia. Findings of this study show that entrepreneurial and market orientations have a positive effect on superior firm performance. As entrepreneurial orientation is shown to be the construct sharing a positive relationship with all the other constructs in the model, it has been identified as the most significant strategic orientation. SMEs in Malaysia should therefore focus on adopting strategies in market orientation by appropriate marketing efforts, and in entrepreneurial orientation where the entrepreneur needs to adopt a proactive stance to counter challenges in the market of new products and changing customer preferences.
Small and Medium Enterprises (SMEs) can be a cushion for unstable economic condition. They are believed to be able strengthen the economic development of a country. The statistics shows that they are accounted for more than 95 per cent of enterprises across the world. Acknowledging the importance of various contributions of SMEs business performance to an economy, many studies on internal and external factors affecting business performance including entrepreneurial orientation and access to finance has been done. Business performance, however, requires more than resources. To cope with these situations, they must have enough financial access in order to finance their business development. Despite its increasing importance to the economy and individual entrepreneurs, SMEs struggle hard to access to finance. Unfortunately, there is limited study to prove that entrepreneurial orientation would increase access to finance and ultimately increase performance. Therefore, the purpose of this study is to test the relationship of entrepreneurial orientation and access to finance on SMEs performance and unearth whether access to finance can be a mediator in the relationship between entrepreneurial orientation and business performance. For start-up, this study employed a primary data set drawn from 30 SMEs and using regression analysis to test all hypotheses. By testing the mediator effect, this study advances the previous works on this area which considers this effect on business performance simultaneously. The main findings indicate that entrepreneurial orientation and access to finance are positively significant on business performance and entrepreneurial orientation would help business to get access to capital and hence its performance could be improved. Since this study is preliminary stage, the small sample size was the major limitation of this study which inhibited the comparison of the results between industry sectors. A study of this nature is vitally-important to highlight the stakeholder such as government, private bodies, NGOs, policy maker and entrepreneurs on the important of entrepreneurial orientation and accessibility to finance on business performance.
Development of Small and Medium Enterprises (SMEs) is widely recognised as crucial sectors to the growth of internal market as well as international market. Even so, the statistics showed that they depicted of high mortality rate predominantly during their first three years of start-up phase. Recognizing the requisite study to find out the causes behind this issue, numerous prior scholars have done the research about determinants of SME performance. Consequently, previous works always related performance with Resource-based view (RBV) theory, whereby, resources and capabilities in firm level is significant to retain competitive advantage and sustain performance. Motivated to RBV theory, this research purposes to examine the factors of business performance and serial mediating effect by mapping entrepreneurial orientation as capability and access to external financial as resource which could generate competitive advantage and eventually increase SME performance. A data of 284 SMEs was proportionate stratified randomly selected analysed by using Structural Equation Model (AMOS-SEM). Resulting this, this current study highlighted that the relationship between entrepreneurial orientation and SME performance was partially serial mediated by access to external finance and competitive advantage. The study stimuli the authorities such as policy makers and support systems including entrepreneurs, that entrepreneurial orientation and access to external financial resource by SME would offer competitive advantage in the firm which to conclude enhance business performance. Upcoming studies may expand this research via adding and probing either internal or external critical factors that significant to the variant of SME performance.
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