The Effect of Entrepreneurial Orientation on the Firm Performance through Strategic Flexibility: A Study on the SMEs Cluster in Malang

Abstract

In the globalization era, the competition faced by all companies can not be avoided, as happened to small businesses in the city of Malang. Globalization will lead to the environment becomes increasingly complex and changing. To cope with the ever-changing environment changes, so SMEs need to increase the EO to improve firm performance. The purpose of this study was to determine the effect of EO on the firm performance.The population in this study are the owners or managers of SMEs cluster in Malang. Quantitative approaches were used to data collecton from 140 SMEs cluster and data was analyzed by using AMOS 16. The results indicate that the significance of the direct effect of EO on firm performance is reduced when the indirect effect of EO through strategic flexibility is included in a total effect model. Consequently, EO is positively related to firm performance, and strategic flexibility plays a mediating role in this relationship.