Linking Entrepreneurial Orientation and Innovation Intensity: Moderating Role of Environmental Turbulence

Abstract

This research aims to investigate the impact of entrepreneurial orientation dimensions on a firm’s innovation intensity along with the moderation of environmental turbulence. The dimensions of entrepreneurial orientation include autonomy, pro-activeness, risk attitude, innovation readiness and competitive aggressiveness, hence the study includes five direct hypotheses and five moderated hypotheses. The data was gathered through an online questionnaire. The sample size of the study was 386 small and medium enterprises (SME) operating in Pakistan. The questionnaire was filled out by executive managers or executive directors of organizations as company representatives. Smart PLS was used to analyze the data. The measurement model was run to ensure validity and reliability. Moreover, the outer loadings, model fit and important statistics were assured. The structural model estimated the proposed relationships of the study. The findings of the study suggested a positive impact of all the dimensions of entrepreneurial orientation on innovation while the moderation effect of environmental turbulence was found to be significant for all the relationships except innovation readiness. The study finally concluded that EO had a significant impact on innovation intensity. Based on the findings, it is recommended that SMEs should enhance entrepreneurial orientation in their respective organizations in order to intensify innovation. The practical objective of this research was to gain knowledge on entrepreneurial orientation and innovation intensity that is crucial for organizations in the contemporary business world. The study has certain implications for the development of organizations’ strategic orientation. SMEs in Pakistan have great potential and in terms of intensifying innovation in enterprises, it is important to focus on entrepreneurial orientation. Thus, SMEs have to be innovative, proactive, and ready to take risks which may ultimately help them improve their performance.

Relational capital and strategic orientations as antecedents of innovation: evidence from Mexican SMEs

“…Matsuno et al (2002) found that EO positively affects firm performance combined with MO. However, a recent meta-analysis (Lopes et al, 2021) Zhou et al (2005) concluded that EO positively affects breakthrough innovations; in the same line, Zaidi and Zaidi (2021) found that EO significantly affects innovation intensity. However, the literature on OE has not differentiated between "new to the company" and "new to the world" innovations.…”

Exploring direct and non-linear effects of entrepreneurial orientation and its dimensions on firm performance in a small, open, transitional economy

“…Results of this study highlight that EO helps small firms successfully reach their intended performance, where innovativeness and proactiveness have an especially important role in this process (Gupta & Batra, 2016;Putniņš & Sauka, 2020;Moric Milovanovic et al, 2021). Moreover, the positive moderating effect of environmental turbulence on EO -performance relationship shows that investing in EO-related strategies in uncertain environments brings affirmative effects to the firms' overall performance (Zaidi & Zaidi, 2021;Hina et al, 2021). Thus, firms should pay particular attention to the changes in their environment, i.e., to invest in environmental scanning activities, set up risk controls emerging from potentially too high levels of EO, focus on and engage in an only limited number of opportunities, as not to waste or deplete their limited and scarce resources (Wales et al, 2021).…”

“…Besides the exhaustive literature on the EOperformance relationship, there is a substantial body of knowledge focused on examining the role of environmental turbulence in this relationship (Engelen, Kube, Schmidt, & Flatten, 2014;Zarei & Shaabani, 2016;Wang et al, 2020). Most scholars observed moderating (Balodi, 2019;Zaidi & Zaidi, 2021;Hina, Hassan, Parveen, & Arooj, 2021) and mediating (Vij & Bedi, 2012;Abiodun & Rosli, 2014) effects environmental turbulence has on the relationship between EO and firm performance. However, some fewer scholars tested the possible nonlinearities of these effects.…”

Does the Relationship between Entrepreneurial Orientation and Subjective Financial Firm Performance Have an Inverted U-Shape? Evidence from Southeast European SMEs

“…Their results imply that EO is highly influenced by the top-management team and its characteristics. In addition to internal factors, many scholars (Hina et al 2021;Zaidi and Zaidi 2021;Wang et al 2020;Zahra 1991) have found that EO is also influenced by external factors such as environmental dynamisms, hostility, and heterogeneity.…”