Entrepreneurial orientation and generic competitive strategies for emerging SMEs: Financial and nonfinancial performance perspective

Abstract

In the competitive markets, business ventures have not only emphasized financial performance but nonfinancial performance has also become the need of the day due to its significant role in increasing customers. However, minor attention is given to the relationship between entrepreneurial orientation, business strategy and nonfinancial performance of emerging small and medium enterprises (SMEs). This study scrutinizes the effect of each dimension of entrepreneurial orientation (i.e., innovativeness, risk‐taking, and proactiveness) and each of generic competitive strategies (i.e., differentiation and cost leadership) on the performance (financial and nonfinancial) of emerging SMEs. We surveyed 373 SMEs operating in Pakistan through a structured questionnaire. For the data analysis and hypotheses testing, we used AMOS.21. The findings display that innovativeness, proactiveness, and risk‐taking significantly improve financial performance while insignificantly impact nonfinancial performance. Differentiation and cost leadership strategies significantly spur financial as well as nonfinancial performance of SMEs. This study advises that top managers of SMEs in the emerging economies need to maintain a focus on entrepreneurial activities and formulate unique competitive strategies to attain higher performance. This research further recommends policymakers to initiate entrepreneurship programs for SMEs to configure entrepreneurial posture of the businessmen. Further recommendations have stated.

The role of entrepreneurial orientation in tangible and intangible resource acquisition and new venture growth

“…The response rate achieved in this research was 50.83%. A similar response rate has been quoted in other studies in the same industry (Anwar, 2018; Anwar & Shah, 2021).…”

“…EO is the most dominant element for new ventures to upsurge their international performance and gain a competitive position in the marketplace (Clark & Covin, 2021). EO proxies such as risk‐taking, innovativeness, and proactiveness are the most arrogant elements, which help firms to become financially successful in developing countries (Anwar & Shah, 2021; Khan, Salamzadeh, Kawamorita, & Rethi, 2020). When top managers are in favor of entrepreneurial activities, that is, innovative, risk‐taking, and proactiveness, they achieve higher level performance (Linton & Kask, 2017; Semrau, Ambos, & Kraus, 2016; Shirokova, Osiyevskyy, & Bogatyreva, 2016).…”

Mediating role of strategic orientations in the relationship between entrepreneurial orientation and performance of Saudi SMEs

“…Furthermore, technology orientation is measured using a 12-item scale adopted from Gatignon and Xuereb (1997). Moreover, the performance of SMEs is measured using 10 items adopted from Anwar and Shah (2020) and Danso et al (2016). The efficiency of SMEs is measured relative to their main competitors or industry over the last three years (1 = 'extremely declining'; 5 = 'extremely improved').…”

“…Pro-activeness improves financial efficiency (Hossain & Al Asheq, 2019) and has an important influence on SMEs (Jalali et al, 2013). Proactive companies gain a strategic edge through customer demands, innovative campaigns and higher charges (Anwar and Shah, 2020). Mahar and Ghumro (2019) indicated that competitive aggressiveness and autonomy are important for the organisational successes of SMEs.…”

Entrepreneurial orientation and the efficiency of SMEs: The role of government financial incentives in an emerging industry

“…Additionally, we focused on the traditional theory of EO where three dimensions are used in the literature (Mason et al, 2015; Miller, 1983). These dimensions are still acceptable in research and provide a complete picture of EO (Anwar & Shah, 2020; Mason et al, 2015). However, the modern theory of EO claims five dimensions; competitive aggressiveness and autonomy as an addition (Dess & Lumpkin, 2005; Lumpkin & Dess, 1996; Shah & Ahmad, 2019; Soriano et al, 2012).…”