Entrepreneurial Orientation and SMEs: Governance as moderator of a firm’s short-term performance



The purpose of this research is to examine the influence of Governance in the relationship of Entrepreneurial Orientation (EO) and the Performance of SMEs in the short term. The authors conducted a statistical meta-analysis of the effect size of Governance on a firm’s EO and short-term performance relationship in 45 articles, which together represent 9,657 companies. The results indicate that the correlation between EO and Performance in small and medium-sized companies is significant (r = 0.35), and the degree of Governance of each country influences this relationship. Thus, Governance plays a relevant role by favoring a favorable scenario, which allows the development of entrepreneurship and organizational innovation. In this way, it is also suggested that the articulation of institutions and programs that facilitate access to financial and training resources constitute effective methods to promote a good performance of small and medium-sized enterprises. This work constitutes the first study to consider the implications of Governance in the relationship of Entrepreneurial Orientation and Performance of small and medium-sized companies.


Entrepreneurial Orientation, Meta analysis, Governance, Institutional Theory, SMEs


Acs, Z. J., & Preston, L. (1997). Small and medium-sized enterprises, technology, and globalization: Introduction to a special issue on small and medium-sized enterprises in the global economy. Small Business Economics, 9(1), 1-6.

Aidis, R., Estrin, S., & Mickiewicz, T. (2008). Institutions and entrepreneurship development in Russia: A comparative perspective. Journal of Business Venturing, 23(6), 656-672.

Ali, I., Tajddini, K., ur Rehman, K., Ali, J. F., & Ahmed, I. (2010). University student’s inclination of governance and its effects on entrepreneurial intentions: an empirical analysis. International Journal of Trade, Economics and Finance, 1(1), 36.

Andersén, J. (2010). A critical examination of the EO-performance relationship. International Journal of Entrepreneurial Behavior & Research,16(4), 309-328.

Anderson, B. S., & Eshima, Y. (2013). The influence of firm age and intangible resources on the relationship between entrepreneurial orientation and firm growth among Japanese SMEs. Journal of Business Venturing, 28(3), 413-429.

Andrade-Valbuena, N. A., Merigo-Lindahl, J. M., & Olavarrieta, S. (2018). Bibliometric analysis of entrepreneurial orientation. World Journal of Entrepreneurship, Management and Sustainable Development, 15(1),45-69. https://doi.org/10.1108/WJEMSD-08-2017-0048

Anokhin, S., & Schulze, W. S. (2009). Entrepreneurship, innovation, and corruption. Journal of Business Venturing, 24(5), 465-476.

Arend, R. J. (2013). Ethics-focused dynamic capabilities: A small business perspective. Small Business Economics, 41(1), 1-24.

Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Small vs. Young Firms across the World – Contribution to Employment, Job Creation, and Growth. Policy Research. World Bank Development Research Group, Working Paper 5631.

Baena, V. (2012). Market conditions driving international franchising in emerging markets. International Journal of Emerging Markets, 7(1), 49-71.

Baker, W. E., & Sinkula, J. M. (2009). The complementary effects of market orientation and entrepreneurial orientation on profitability in small businesses. Journal of small business management, 47(4), 443-464.

Bizri, R.M., Kojok, A., Dani, A., Mokahal, M., & Bakri, M. (2012). Barriers to entrepreneurial endeavors in a developing economy. World Journal of Social Sciences, 2(6), 79-100.

Bojica, A.M., del Mar Fuentes, M., & Gómez-Gras, J.M. (2011). Radical and incremental entrepreneurial orientation: The effect of knowledge acquisition. Journal of Management and Organization, 17(03), 326-343.

Bologna, J., & Ross, A. (2015). Corruption and entrepreneurship: Evidence from a random audit program. West Virginia University Department of Economics Working Papers Series, 15-05.

Boohene, R., Marfo-Yiadom, E., & Yeboah, M.A. (2012). An empirical analysis of the effect of entrepreneurial orientation on firm performance of auto artisans in the Cape Coast Metropolis. Developing Country Studies, 2(9), 77-86.

Boso, N., Story, V., & Cadogan J. (2013). Entrepreneurial orientation, market orientation, network ties, and performance: Study of entrepreneurial firms in a developing economy. Journal of Business Venturing 28(6) 708-727

Cai, L., Liu, Q., Deng, S., & Cao, D. (2014). Entrepreneurial orientation and external technology acquisition: an empirical test on performance of technology-based new ventures. Journal of Business Economics and Management, 15(3), 544-561.

Carrillat, F.A., Jaramillo, F., & Mulki, J.P. (2007). The validity of the SERVQUAL and SERVPERF scales: A meta-analytic view of 17 years of research across five continents. International Journal of Service Industry Management, 18(5), 472-490.

Chen, H.L., & Hsu, C.H. (2013). Entrepreneurial orientation and firm performance in non-profit service organizations: contingent effect of market orientation. The Service Industries Journal, 33(5), 445-466.

Chirico, F., Sirmon, D.G., Sciascia, S., & Mazzola, P. (2011). Resource orchestration in family firms: Investigating how entrepreneurial orientation, generational involvement, and participative strategy affect performance. Strategic Entrepreneurship Journal, 5(4), 307-326.

Chowdhury, F., Desai, S., Audretsch, D.B., Belitski, M. (2015). Erratum to: Does corruption matter for international entrepreneurship?. International Entrepreneurship and Management Journal, 11(4), 981-981.

Chowdhury, F., Terjesen, S., & Audretsch, D. (2015). Varieties of entrepreneurship: institutional drivers across entrepreneurial activity and country. European Journal of Law and Economics, 40(1), 121-148.

Chung-Wen, Y. (2008). The relationships among leadership styles, entrepreneurial orientation, and business performance. Managing Global Transitions, 6(3), 257-273.

Covin, J. G., & Miles, M. P. (1999). Corporate entrepreneurship and the pursuit of competitive advantage. Entrepreneurship Theory and Practice, 23(3) 47- 63.

Covin, J.G., & Slevin, D.P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 75–87.

Cruz, C., & Nordqvist, M. (2012). Entrepreneurial orientation in family firms: A generational perspective. Small Business Economics, 38(1), 33-49.

Davis, J.L., Greg Bell, R., Tyge Payne, G., & Kreiser, P.M. (2010). Entrepreneurial orientation and firm performance: The moderating role of managerial power. American Journal of Business, 25(2), 41-54.

De Clercq, D., Dimov, D., & Thongpapanl, N.T. (2010). The moderating impact of internal social exchange processes on the entrepreneurial orientation–performance relationship”. Journal of Business Venturing, 25(1), 87-103.

De Clercq, D., Lim, D.S., Oh, C.H. (2013). Individual-level resources and new business activity: The contingent role of institutional context. Entrepreneurship Theory and Practice, 37(2), 303-330.

Dutta, N., & Sobel, R. (2016). Does corruption ever help entrepreneurship?. Small Business Economics, 47(1), 179-199.

Engelen, A., Kube, H., Schmidt, S., & Flatten, T.C. (2014). Entrepreneurial orientation in turbulent environments: The moderating role of absorptive capacity. Research Policy, 43(8), 1353-1369.

Estrin, S., & Mickiewicz, T. (2011). Institutions and female entrepreneurship. Small Business Economics, 37(4), 397-415.

Fairoz, F.M., Hirobumi, T., & Tanaka, Y. (2010). Entrepreneurial orientation and business performance of small and medium scale enterprises of Hambantota District Sri Lanka. Asian Social Science, 6(3), 34-46.

Farzanegan, M.R. (2014). Can oil-rich countries encourage entrepreneurship?. Entrepreneurship & Regional Development, 26(9-10), 706-725.

Flynn, A., McKevitt, D., & Davis, P. (2015). The impact of size on small and medium-sized enterprise public sector tendering. International Small Business Journal,33(4), 443-461.

Frank, H., Kessler, A., & Fink, M. (2010). Entrepreneurial orientation and business performance-a replication study. Schmalenbach Business Review, 62(2), 175-198.

Grande J., Madsen E., & Borch O. (2011). The relationship between resources, entrepreneurial orientation and performance in farm-based ventures. Entrepreneurship and Regional Development, 23(3-4), 89-111.

Grosanu, A., Bota-Avram, C., Rachisan, P.R., Vesselinov, R., & Tiron-Tudor, A. (2015). The Influence of Country-Level Governance on Business Environment and Entrepreneurship: a Global Perspective. Amfiteatru Economic, 17(38), 60.

Gugler, K., Mueller, D.C., Peev, E., & Segalla, E. (2013). Institutional determinants of domestic and foreign subsidiaries’ performance. International Review of Law and Economics, 34, 88-96. https://doi.org/10.1016/j.irle.2013.01.003

Haggard, S., & Tiede, L. (2011). The rule of law and economic growth: where are we?. World Development, 39(5), 673-685.

Hayat, N., & Riaz, M.T. (2011). The influence of the SMEs top-level managers’ leadership styles and their entrepreneurial orientation on the business performance. Available at SSRN 1884069. http://dx.doi.org/10.2139/ssrn.1884069

Hung, K.P., & Chiang, Y.H. (2010). Open innovation proclivity, entrepreneurial orientation, and perceived firm performance. International Journal of Technology Management, 52(3/4), 257-274.

Jenkins, H., (2006). Small business champions for corporate social responsibility. Journal of Business Ethics, 67(3), 241-256.

Karmann, T., Mauer, R., Flatten, T.C., & Brettel, M. (2016). Entrepreneurial Orientation and Corruption. Journal of Business Ethics, 133(2), 223-234.

Kaufmann, D., Kraay, A., & Mastruzzi, M. (2011). The worldwide governance indicators: methodology and analytical issues. Hague Journal on the Rule of Law, 3(02), 220-246.

Khedhaouria, A., Gurau, C., & Torrès, O., (2015). Creativity, self-efficacy, and small-firm performance: the mediating role of entrepreneurial orientation. Small Business Economics, 44(3), 485-504.

Kollmann, T., & Stöckmann, C. (2014). Filling the entrepreneurial orientation–performance gap: The mediating effects of exploratory and exploitative innovations. Entrepreneurship Theory and Practice, 38(5), 1001-1026.

Kraus G., Rigtering C.J.P., Hughes M, & Hosman V. (2011). Entrepreneurial Orientation and the Business Performance of SMEs: a Quantitative Study from the Netherlands. Review of Managerial Science,6(2),161-182. http://doi.org/10.1007/s11846-011-0062-9

Kraus, S., (2013). The role of entrepreneurial orientation in service firms: empirical evidence from Austria. The Service Industries Journal, 33(5), 427-444.

Li, Y.H., Huang, J.W., & Tsai, M.T. (2009). Entrepreneurial orientation and firm performance: The role of knowledge creation process. Industrial Marketing Management, 38(4), 440-449.

Lindsay, V., Ashill, N., Roxas, B., & Victorio, A. (2014). Entrepreneurial orientation and performance of microenterprises in an emerging economy. Journal of Strategic Marketing, 22(7), 631-656.

Lipsey, M.W., & Wilson, D.B., (2001). Practical Meta-Analysis. Sage, Thousand Oaks, CA. en Carrillat, F. A., Jaramillo, F., y Mulki, J. P. (2007). The validity of the SERVQUAL and SERVPERF scales: A meta-analytic view of 17 years of research across five continents. International Journal of Service Industry Management, 18(5), 472-490.

Lonial, S. C., & Carter, R. E. (2015). The impact of organizational orientations on medium and small firm performance: A resource-based perspective. Journal of Small Business Management, 53(1), 94-113.

Lugovskaya, L., (2010). Predicting default of Russian SMEs on the basis of financial and non-financial variables. Journal of Financial Services Marketing, 14(4), 301-313.

Lumpkin, G.T., & Dess, G.G. (2001). Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle. Journal of Business Venturing, 16(5), 429-451.

Lumpkin, G.T., & Dess, G.G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135–172.

Madsen, E. L. (2007). The significance of sustained entrepreneurial orientation on performance of firms–A longitudinal analysis. Entrepreneurship and Regional Development, 19(2), 185-204.

Martins, I., Uribe, F., & Mesa, D. (2012). Contribución de la orientación emprendedora a la rentabilidad de las pymes: un análisis contingente considerando la función del entorno. Ecos de Economía, 16(35), 45-71.

Miller, D., (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770–791.

Mokhova, N., & Zinecker, M., (2013). Liquidity, probability of bankruptcy and the corporate life cycle: the evidence from Czech Republic. International Journal of Globalization and Small Business, 5(3), 189-208.

Mole, K., (2000). Gambling for growth or settling for survival: the dilemma of the small business adviser. Journal of Small Business and Enterprise Development, 7(4), 305-314.

Moscoso, F., Estrada, F., Diaz, N., & Andrade-Valbuena N. (2015). Obstacles to progress in R&D activities caused by Institutional and Regulatory Frameworks: the case of the Biotech Sector in Colombia. Research in World Economy, 6(4), p116.

Organization for Economic Cooperation and Development [OECD], (2005). OECD SME and Entrepreneurship Outlook: 2005. OECD Paris, page 17. https://stats.oecd.org/glossary/detail.asp?ID=3123

Pompe, P.P., & Bilderbeek, J. (2005). The prediction of bankruptcy of small-and medium-sized industrial firms. Journal of Business Venturing, 20(6), 847-868.

Rauch, A., Wiklund, J., Lumpkin, G.T., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761-787.

Rodrigues R. (2011). Entrepreneurial Orientation, Human Resources Information Management, and Firm Performance in SMEs. Canadian Journal of Administrative Sciences, 28(2) 143–153.

Rodríguez P., Fuentes M.D.M., & Rodríguez, L. (2014). Strategic capabilities and performance in women owned businesses in Mexico. Journal of Small Business Management, 52(3), 541-554.

Rosenberg, M.S., Adams, D.C., & Gurevitch, J. (2000). MetaWin: statistical software for meta-analysis. Sunderland: Sinauer Associates.

Roxas, B., & Chadee, D. (2013). Effects of formal institutions on the performance of the tourism sector in the Philippines: The mediating role of entrepreneurial orientation. Tourism Management, 37, 1-12.

Saeed, S., Yousafzai, S.Y., & Engelen, A. (2014). On cultural and macroeconomic contingencies of the entrepreneurial orientation–performance relationship”. Entrepreneurship Theory and Practice, 38(2), 255-290.

Schepers, J., Voordeckers, W., Steijvers, T., & Laveren, E. (2014). The entrepreneurial orientation–performance relationship in private family firms: the moderating role of socioemotional wealth. Small Business Economics, 43(1), 39-55.

Sciascia, S., Mazzola, P., & Chirico, F. (2013). Generational involvement in the top management team of family firms: Exploring nonlinear effects on entrepreneurial orientation. Entrepreneurship Theory and Practice, 37(1), 69-85.

Semrau, T., Ambos, T., & Kraus, S. (2016). Entrepreneurial orientation and SME performance across societal cultures: An international study. Journal of Business Research, 69(5), 1928-1932.

Stam, W., & Elfring, T. (2008). Entrepreneurial orientation and new venture performance: The moderating role of intra-and extraindustry social capital. Academy of Management Journal, 51(1), 97-111.

Tajeddini, K., (2015). Exploring the antecedents of effectiveness and efficiency. International Journal of Hospitality Management, 49, 125-135.

Tang, Z., & Tang, J. (2012). Entrepreneurial orientation and SME performance in China’s changing environment: The moderating effects of strategies. Asia Pacific Journal of Management, 29(2), 409-431.

Vallejos, E.Z., (2007). Restricciones del entorno a la competitividad empresarial de América Latina.Fundes.

Wang, H.K., & Yen, Y.F. (2012). An empirical exploration of corporate entrepreneurial orientation and performance in Taiwanese SMEs: A perspective of multidimensional construct. Total Quality Management y Business Excellence, 23(9-10), 1035-1044.

Westhead, P., Wright, M., & Ucbasaran, D., (2001). The internationalization of new and small firms: A resource-based view. Journal of Business Venturing, 16(4), 333-358.

World Bank. (2016). Worldwide Governance Indicators 2016. http://info.worldbank.org/governance/wgi/index.aspx#home, accessed 19 August 2016.

Zahra, S.A., Neilson, A.P., & Bogner, W.C. (1999). Corporate entrepreneurship, knowledge and competence development. Entrepreneurship Theory and Practice, 23(3), 169-189.

Zainudin, N. (2006). Liquidity-profitability trade-off: is it evident among Malaysian SMEs?. International Journal of Management Studies, 13(2), 107-118.