Dimensions of Entrepreneurial Orientation and SME Performance: Moderating Effect of Absorptive Capacity of the Firm

Abstract

This paper investigates a model of SME performance based on the dimensions of entrepreneurial orientation and absorptive capacity of the firm. The model tested the direct effects of innovativeness, risk-taking and proactiveness on firm performance and the moderating role of absorptive capacity on the relationship between the dimensions of entrepreneurial orientation and firm performance. Structural equation modelling with multi group analysis was used to test the model in the context of small and medium scale hotel and restaurant industry in Sri Lanka. Results indicate that highly entrepreneurial-oriented SMEs with high level of absorptive capacity achieve higher level of performance.

Export-Related Dynamic Capabilities and Export Success: Absorptive Capacity Moderated Mediating Effect of Ambidexterity

“…Researchers, investigating other interactions of AC apart from its direct relationship with performance, found that AC had a moderator effect between firm capabilities and EP (e.g. Herath and Mahmood, 2014;Wang and Han, 2011;Yeoh, 2009;Ibarra-Cisneros et al, 2021). According to Herath and Mahmood (2014), Ibarra-Cisneros et al ( 2021) the existence of AC as a moderator in the relationship between AMBI and firm performance allows allocation of organizational resources to make this relationship stronger.…”

“…Herath and Mahmood, 2014;Wang and Han, 2011;Yeoh, 2009;Ibarra-Cisneros et al, 2021). According to Herath and Mahmood (2014), Ibarra-Cisneros et al ( 2021) the existence of AC as a moderator in the relationship between AMBI and firm performance allows allocation of organizational resources to make this relationship stronger. Lane et al (2006) assert that AMBI is an external focused adaptive learning capability and it needs to be complemented with the internal knowledge to achieve business activities and financial ends.…”