The Relationship Between Entrepreneurial Orientation and Firm Performance

Abstract

This study investigates the relationship between entrepreneurial orientation (EO) and firm performance by employing a mixed-methods approach that integrates quantitative survey data from 320 firms with qualitative insights from 30 executive interviews. Drawing on structural equation modeling (SEM), the results demonstrate that innovativeness, proactiveness, and risk-taking significantly enhance both financial performance (sales growth, ROA, ROE) and non-financial outcomes (innovation capacity, customer satisfaction, adaptability). Competitive aggressiveness also emerged as a significant contributor, while autonomy displayed weaker direct effects. The moderating role of industry turbulence was evident, as EO–performance linkages were stronger in dynamic industries, particularly technology, than in stable or regulated environments. Comparative analyses revealed that while larger firms benefit from resource advantages, SMEs with high EO achieved proportionally greater growth, highlighting EO’s strategic relevance for resource-constrained enterprises.Qualitative findings further emphasized the role of leadership and strategic agility in fostering EO, as well as the growing integration of sustainability and digitalization into entrepreneurial strategies. This underscores the evolving nature of EO as not only a driver of competitive advantage but also a mechanism for aligning with stakeholder expectations and long-term resilience. The study makes theoretical contributions by extending contingency perspectives on EO, while offering practical implications for managers to calibrate entrepreneurial strategies according to environmental conditions. Policymakers are also encouraged to promote EO-driven initiatives to strengthen national competitiveness, innovation, and sustainable growth.