Entrepreneurial Orientation and Small Business Performance : A Configurational Approach

Entrepreneurial orientation (EO) is considered as an indicator of firm performance. The literature relating to EO is reviewed and a hypothesis of a universal effect model is developed and tested to explain the relationship of EO to the performance of small business. The fact that the EO/performance relationship is more complicated than a universal effect model is examined and a proposal is made of the benefits of a configurational approach over and above a contingency model (two-way interactions) and the universal effect model. The research methodology is described regarding sampling, measures, and analysis. A sample of 413 independent Swedish small business managers was used from four sectors—knowledge-intensive manufacturing, labor-intensive manufacturing, professional services, and retail. Results indicate that relying only on EO main-effects-only relationships does not provide a complete picture of small business performance. A more complete picture is provided by appropriately aligning EO, access to capital, and environmental dynamism.(JSD)