Entrepreneurial Orientation, Organizational Culture and Business Performance in SMEs: Evidence from Emerging Economy
Abstract
:1. Introduction
2. Related Work: Entrepreneurial Orientation, SME Performance, and Organizational Culture
2.1. Entrepreneurial Orientation
2.1.1. Innovativeness
2.1.2. Risk-Taking
2.1.3. Proactiveness
2.2. SME Performance
2.3. Organizational Culture
2.3.1. Clan Culture
2.3.2. Adhocracy Culture
2.3.3. Hierarchy Culture
2.3.4. Market Culture
2.4. Entrepreneurial Orientation and SME Performance
2.5. Entrepreneurial Orientation and Organizational Culture
2.6. Mediating Role of Organizational Culture on Entrepreneurial Orientation and SME Performance Relationship
3. Research Methodology
3.1. Variables Measurement
3.1.1. Measurement of the Dependent Variable
3.1.2. Measurement of the Independent Variable
4. Results
4.1. Descriptive Statistics
- The information concerning the management of his company is considered as confidential.
- Information about their behavior is personal.
- The questionnaire is not very long and does not require much time to answer.
- The questionnaire is anonymous: the names of the companies that responded are not published.
4.2. Design and Type of Research
4.2.1. Measurement Model Assessment (Outer Model)
4.2.2. Structural Model Results (Inner Model)
4.2.3. Evaluation of the Overall Model
4.2.4. Mediating Effects Assessment
5. Discussion and Conclusions
5.1. Theoretical Implications
5.2. Practical Implications
5.3. Limitations of the Study and Future Research
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
References
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Variable | Coding of Items | Description of the Items |
---|---|---|
Innovation | Innov1, innov2, innov3 | “My company emphasizes research and development (R&D), technological change and innovation”. “My company is introducing several new product lines or services”. “My company is radically changing its products or services”. |
Proactivity | Proact1, Proact2, Proact3 | “My company takes actions that competitors replicate”. “My company is often the first to introduce new products/services, new techniques or technologies, production methods, etc.” “My company adopts a very competitive position to reduce competition”. |
Risk taking | Risk1, risk2, risk3 | “My company favors high-risk projects that are likely to yield a high return on investment”. “My company typically takes an aggressive and bold posture to maximize the exploitation of potential opportunities”. “I believe that because of the nature of the business environment, far-reaching actions are necessary to achieve my company’s goals”. |
Financial Performance | Perf-1 | My enterprise is usually satisfied with revenue growth. My company is usually satisfied with the increase in the number of employees. My enterprise is usually satisfied with the profit margin. |
Community Performance | Perf-2 | Investment in the community |
Sustainable Development Performance | Perf-3 | Respect for the environment and sustainable development |
Customer Performance | Perf-4 | The quality of service offered to customers is satisfactory. The variety of service offered to the customers is satisfactory. Our clients are satisfied. |
Adhocracy culture | Culture1 | Creates change and promotes adoption of new things and processes. Powerful authority maintaining relations with external stakeholders and involve external resources. Offer training and/or coaching to leaders to enhance these roles. Set up brainstorming teams, project teams and encourage autonomy |
Hierarchy culture | Culture 2 | Highly formalized and hierarchically structured. Leaders make decisions and consider options in terms of how to act, options for work behaviors are minimal. A model leader is a coordinator and organizer who is efficiency-oriented. |
Clan culture | Culture 3 | It is similar to a family-type organization in which people live and function like in a harmonious family. It is centered around emotional ties, friendly work atmosphere, shared values, and goals. A high level of work participation, a sense of community and cohesion. |
Market culture | Culture 4 | Organization operates as a “market”, strong external focus. It is centered around results, profit and task implementation. Leaders are hard drivers, ruthless, and demanding. They encourage the staff to aggressive competition. |
Demographic Characteristics | Algerian SME | ||
---|---|---|---|
Frequency | Percentage (%) | ||
M/W | Man | 81 | 80% |
Woman | 20 | 20% | |
Age of the respondent | 30–40 years | 20 | 20% |
41–50 years old | 67 | 66% | |
>50 years old | 14 | 14% | |
Level of education | Bachelor’s degree | 11 | 11% |
Professional training | 58 | 57% | |
University Studies | 32 | 32% | |
Age of the company | 1–5 years | 4 | 4% |
6–10 years | 15 | 15% | |
11–20 years | 28 | 28% | |
21–30 years | 26 | 26% | |
31–40 years | 18 | 17% | |
41–50 years old | 10 | 10% | |
>50 years | 0 | 0 | |
Number of employees | 10–50 | 16 | 16% |
51–100 | 35 | 35% | |
101–200 | 41 | 40% | |
201–300 | 09 | 9% | |
>300 employees | 0 | 0 | |
sector of activity | Agri-food industry Industrial Public works/construction Services (IT/Digital) | 48 29 18 06 | 47.52 28.71 17.82 5.94 |
Construct | Loading | Composite Reliability | Average Variance Extracted |
---|---|---|---|
Entrepreneurial Orientation | 0.889 | 0.570 | |
Innovation 1 | 0.774 | ||
Innovation 2 | 0.776 | ||
Innovation 3 | 0.865 | ||
Proactivity1 | 0.905 | ||
Proactivity2 | 0.945 | ||
Proactivity3 | 0.829 | ||
Risk taking1 | 0.833 | ||
Risk taking2 | 0.873 | ||
Risk taking3 | 0.863 | ||
Business Performance | 0.824 | 0.540 | |
Perf 1 | 0.750 | ||
Perf 2 | 0.761 | ||
Perf 3 | 0.723 | ||
Perf 4 | 0.706 | ||
Organizational culture (QC) | 0.858 | 0.602 | |
Culture 1 | 0.784 | ||
Culture 2 | 0.744 | ||
Culture 3 | 0.836 | ||
Culture 4 | 0.737 |
Construct | Business Performance | Entrepreneurial Orientation | Organizational Culture (QC) |
---|---|---|---|
Business Performance | 0.735 | ||
Entrepreneurial Orientation | 0.637 | 0.690 | |
Organizational culture (QC) | 0.548 | 0.624 | 0.776 |
Path Coefficient | Standard Error | T Value | p-Value | Decision | |
---|---|---|---|---|---|
EO→BP | 0.390 | 0.055 | 13.337 | 0.001 | Supported |
EO→OC | 0.624 | 0.075 | 8.260 | 0.000 | Supported |
OC→BP | 0.396 | 0.131 | 3.032 | 0.003 | Supported |
R2 | Adjusted R2 | Q2 | |
---|---|---|---|
EO | |||
Innovation | 0.533 | 0.528 | 0.335 |
Proactivity | 0.633 | 0.630 | 0.491 |
Risk-taking | 0.796 | 0.794 | 0.563 |
Business performance | 0.502 | 0.491 | 0.250 |
Organizational culture | 0.389 | 0.383 | 0.221 |
Original Sample | Sample Mean | Standard Deviation | T Statistics | p Value | |
---|---|---|---|---|---|
EO→BP | 0.247 | 0.251 | 0.081 | 3.039 | 0.003 |
EO→Innovation | |||||
EO→Proactivity | |||||
EO→Risk-taking | |||||
EO→Culture | |||||
Culture→BP |
Original Sample | Sample Mean | Standard Deviation | T Statistics | p Value | |
---|---|---|---|---|---|
EO→BP | 0.637 | 0.640 | 0.073 | 8.777 | 0.000 |
EO→Innovation | 0.730 | 0.735 | 0.055 | 13.151 | 0.000 |
EO→Proactivity | 0.796 | 0.799 | 0.039 | 20.422 | 0.000 |
EO→Risk-taking | 0.892 | 0.895 | 0.021 | 41.522 | 0.000 |
EO→Culture | 0.624 | 0.625 | 0.073 | 8.508 | 0.000 |
Culture→BP | 0.396 | 0.402 | 0.121 | 3.279 | 0.000 |
IV—Mediator | Mediator—DV | Auto | Standard Deviation | Auto | Bootstrapped Confidence Interval | ||
---|---|---|---|---|---|---|---|
Path a | Path b | Indirect Effect | SE | t-value | 95% LL | 95% UL | |
M1 | 0.624 | 0.396 | 0.247104 | 0.074 | 3.33924324 | 0.102064 | 0.392144 |
H1 | EO has positive and significant effects on firm performance. | Confirmed |
H2 | There is a significant positive effect of entrepreneurial orientation on organizational culture | Confirmed: supported |
H3 | Organizational culture has positive and significant effects on business performance | Confirmed supported |
H4 | Organizational culture mediates the relationship between EO and business performance | Confirmed supported |
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Arabeche, Z.; Soudani, A.; Brahmi, M.; Aldieri, L.; Vinci, C.P.; Abdelli, M.E.A. Entrepreneurial Orientation, Organizational Culture and Business Performance in SMEs: Evidence from Emerging Economy. Sustainability 2022, 14, 5160. https://doi.org/10.3390/su14095160
Arabeche Z, Soudani A, Brahmi M, Aldieri L, Vinci CP, Abdelli MEA. Entrepreneurial Orientation, Organizational Culture and Business Performance in SMEs: Evidence from Emerging Economy. Sustainability. 2022; 14(9):5160. https://doi.org/10.3390/su14095160
Chicago/Turabian StyleArabeche, Zina, Ahlem Soudani, Mohsen Brahmi, Luigi Aldieri, Concetto Paolo Vinci, and Mohammed El Amine Abdelli. 2022. "Entrepreneurial Orientation, Organizational Culture and Business Performance in SMEs: Evidence from Emerging Economy" Sustainability 14, no. 9: 5160. https://doi.org/10.3390/su14095160