Entrepreneurial orientation and small firm performance: The moderating role of environmental hostility

Abstract

Objective: The objective of the study is to investigate the relationship between Entrepreneurial Orientation and the performance of small firms in Nigeria to determine the effect of environmental hostility towards this relationship.

Research Design & Methods: A survey was conducted on small firms. The gathered data were analysed with Andrew Hayes’ Simultaneous Entry on SPSS 23.0 and PROCESS 3.

Findings: We discovered that there is no significant relationship between Entrepreneurial Orientation and firm performance, while environmental hostility moderates this relationship positively. We concluded that a hostile environment motivates firms to adopt Entrepreneurial Orientation, and ultimately improve their performance.

Implications & Recommendations: Environmental hostility is a crucial element in determining how Entrepreneurial Orientation relates to small firm performance. Therefore, owners/managers must identify and strengthen these factors that will enable them to improve on their Entrepreneurial Orientation to survive hostile business environments.

Contribution & Value Added: Concerning the Resource-Based Theory (RBT) and contingency theories, this study advances the field of Entrepreneurial Orientation by showing how the two combine to explain the Entrepreneurial Orientation–performance relationship in a developing economy.

Keywords

entrepreneurial orientation; small firms performance; environmental hostility; interaction effects; developing economies