The role of entrepreneurial orientation and stakeholder orientation on firm performance : the case of Thai small and medium-sized enterprises in steel fabrication industry

Abstract

Even though SMEs in emerging markets and developing economies (EMDEs) seem to play a major role in boosting the country’s economy, researches show that SMEs also have some potential weaknesses such as lack of resources and market power to support expansion and overcome economic crisis. In order to overcome these weaknesses, the study focused on two managerial resources of competitiveness which can be developed internally by SMEs which are Entrepreneurial Orientation (EO) and Stakeholder Orientation (SO).

The positive relationship of EO and SO on firm performance was reported in previous studies; however the empirical researches of EO and SO on firm performance in South East Asian countries in particular are still limited. The objective of this study is to fill this gap by investigating the contribution of EO and SO on SME performance in Thailand. Furthermore, the study also empirically investigated the interaction effect between EO and SO on SMEs performance which has not been reported by the previous study.

Resource-Based View (RBV) and stakeholder theory were employed as major theoretical frameworks to explain the role of EO and SO on SME performance.

The data was collected through a questionnaire survey of 370 small and medium enterprises in Thailand. The data was analyzed using a Partial Least Square regression analysis. Results from the analysis confirmed a support that EO and two key components of SO contributed positively to SMEs performance. The analysis also found the effect of SO key components on the relationship between EO and SMEs performance which confirmed that the interaction effect of SO on the relationship between EO and SMEs performance did exist.

Keywords: Entrepreneurial Orientation (EO), Stakeholder Orientation (SO), SMEs performance, Resource-Based View (RBV), stakeholder theory.

Even though SMEs in emerging markets and developing economies (EMDEs) seem to play a major role in boosting the country’s economy, researches show that SMEs also have some potential weaknesses such as lack of resources and market power to support expansion and overcome economic crisis. In order to overcome these weaknesses, the study focused on two managerial resources of competitiveness which can be developed internally by SMEs which are Entrepreneurial Orientation (EO) and Stakeholder Orientation (SO).

The positive relationship of EO and SO on firm performance was reported in previous studies; however the empirical researches of EO and SO on firm performance in South East Asian countries in particular are still limited. The objective of this study is to fill this gap by investigating the contribution of EO and SO on SME performance in Thailand. Furthermore, the study also empirically investigated the interaction effect between EO and SO on SMEs performance which has not been reported by the previous study.

Resource-Based View (RBV) and stakeholder theory were employed as major theoretical frameworks to explain the role of EO and SO on SME performance.

The data was collected through a questionnaire survey of 370 small and medium enterprises in Thailand. The data was analyzed using a Partial Least Square regression analysis. Results from the analysis confirmed a support that EO and two key components of SO contributed positively to SMEs performance. The analysis also found the effect of SO key components on the relationship between EO and SMEs performance which confirmed that the interaction effect of SO on the relationship between EO and SMEs performance did exist.

Keywords: Entrepreneurial Orientation (EO), Stakeholder Orientation (SO), SMEs performance, Resource-Based View (RBV), stakeholder theory.