Linking elements of entrepreneurial orientation and firm performance: examining the moderation of environmental dynamism

Abstract

This research is designed to examine the impact of elements of entrepreneurial orientation (EO) on firm performance by considering environmental dynamism as a potential moderator. Data was gathered from 143 textile and leather manufacturing small and medium-sized enterprises (SMEs) in Pakistan. Partial least square (PLS) was employed to analyse the hypotheses. The findings reveal that EO elements positively affect firm performance directly, except in the case of proactiveness. However, the nexus between the elements of EO and firm performance are also positively moderated by the environmental dynamics. Managers can exploit the EO elements according to the environmental situation of the industry. Further, scholars can comprehend better the EO-firm performance link by considering the environmental dynamism of the industry. Innovativeness, proactiveness and risk-taking as distinctive EO elements are hypothesised and their individual effects on firm performance analysed considering the environmental dynamism as a potential moderator.