Effect of Entrepreneurial Orientation on SMEs’ Innovation Performance in Sri Lanka

Abstract

The critical phenomenon that SMEs' innovativeness denotes has growing interest from developing country researchers from multiple fields over the last decades. Thus, the study's objective is to examine the Entrepreneurial Orientations' effect on SMEs' innovativeness in Sri Lanka. Risk-taking, proactiveness, autonomy, innovativeness, and Competitiveness have been used to operationalize the Entrepreneurial Orientation concept, and SMEs' innovation performance was conceptualized based on three dimensions. A self-administrated questionnaire is distributed to the SEM owners and collected seventy-six completed questionnaires. Descriptive statistics and multiple regression analysis were used to analyze the data. Results of the study shown that OE as a whole significantly impacts innovative performance. Specifically, while the four dimensions of EO, namely, risk-taking, proactiveness, innovativeness, and autonomy, significantly impact SMEs' innovative performance. But, Competitiveness does not have a significant influence on SMEs' innovation performance. The study focuses only on OE that influences SMEs innovation performance. The most considerable significant portion of enterprises in Sri Lankan business sector represents SMEs. It is anticipated that Sri Lankan policy makers, SME owners, and business decision-makers will help SMEs better understand policymakers' significant impact on SMEs' innovation performance.