Entrepreneurial orientation in small and medium-sized enterprises during economic crisis

Abstract

The economic importance of small and medium-sized enterprises (SMEs) and \nentrepreneurship has increased significantly in recent decades and entrepreneurial activity and \nSMEs are deemed vital to economic progress. Therefore, it is justifiable to study how small \nfirms and entrepreneurs can enhance their performance and emergence in the turbulent \neconomic environment. \nThe concept of entrepreneurial orientation (EO) has recently attracted considerable attention \nin the field of entrepreneurship research. EO generally refers to a firm’s propensity to be \ninnovative, to be proactive and to take risks. A majority of EO studies so far have found that \nadopting EO associated entrepreneurial behaviors will help firms to create or sustain a high \nlevel of performance. \nThis dissertation explores the main drivers and performance implications of EO for SMEs in \ntime of economic crisis. Hence the first objective of this dissertation is to examine the \nperformance implications of EO and to test the role of EO on how firms are treated by the \ncrisis at operative level. The second objective is to expand the prevailing understanding of \ndeterminants of EO by exploring the relationship between owner's work related values, \nattitudes, demographic characteristics, firm’s financial resources and EO. \nEO was found to be a significant and positive factor behind a firm’s long run growth. Hence it \ncan be said that EO has positive implications for firm performance. But on the other hand, \nduring a time of economic crisis the different dimensions of EO had both positive and \nnegative effects on performance of SMEs. The performance implications varied across \ndifferent stages of the crisis and were also dependent on what measure was used for \nmeasuring the performance. The main drivers of EO in SMEs were the personal work related \nvalues of the entrepreneur and his/her prior experience as an entrepreneur. The intrinsic work \nvalues related to interest, responsibility, challenge, self-development or intellectual \nstimulation and values related to status, power, achievement and recognition had a positive \neffect on the level of EO. On the other hand, extrinsic values related to high income, material \npossessions, benefits such as generous holidays, job security, and comfort through good \nworking conditions decreased the level of EO

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