Mediation of firm innovativeness and moderation of environment turbulence on entrepreneurial orientation and firm performance

Abstract

The objectives of this study are to examine; the direct effect of entrepreneurial orientation, firm innovativeness on firm performance; the indirect effect of firm innovativeness between entrepreneurial orientation and firm performance; and the moderating role of market turbulence between firm innovativeness and firm performance. Using a quantitative approach, this study has collected data through a survey questionnaire from a sample of 300 Pakistani IT-based SMEs operating in South Punjab, Pakistan. The data was analyzed in SPSS and PLS-SEM software. The results revealed a significant direct positive impact of entrepreneurial orientation and firm innovativeness on business performance. The result also confirmed the partial mediation of firm innovativeness between entrepreneurial orientation and business performance. The moderating role of environmental turbulence indicated that SMEs owners’ market and technological environment decrease the firm performance. Overall, these findings highlighted the importance of entrepreneurial orientation, firm innovativeness, market turbulence and technological competition jointly influence the direction and strength of the SMEs performance. This study enhanced firm performance and innovation-based research by identifying the configurationally market conditions that augment or limit the value of firm innovativeness. Besides, the study has highlighted the role of environmental turbulence on firm performance as the studies on this issue is scarce.