The contingent effect of entrepreneurial orientation on small business performance inhostile environments

Abstract

The aim of this study is to analyze the effect of entrepreneurial orientation (EO), perceived as the innovative, proactive and aggressive practices of the business entrepreneur, on the performance of small businesses operating in a hostile environment of economic decline, social turbulence and natural events. A contingency view is adopted in order to determine which EO variables best explain business performance. Data collected from 101 small craft business and analyzed with factor analysis, Pearson’s bivariate correlation and hierarchical regression, indicate that small business performance depends on product innovation and proactive behavior focused on protecting market share, along with a reduced emphasis on price-based competition due to the negative impact of competitive aggressiveness on performance.