Moderating Effects of Entrepreneurial Orientation on Market Orientation-Performance Linkage : Evidence from Chinese Small Firms

Literature revealed that an appropriate alignment between firm strategic orientation and market positioning is critical because of its impact on firm performance. The alignment is especially crucial for small businesses as a result of their limited resource base. However, studies have not adequately accounted for the joint effect of entrepreneurial orientation (EO) and market orientation (MO) on firm performance in different institutional environments, such as transitional economies. In this study, we examine the moderating effect of EO on the linkage between MO and firm performance among small enterprises in China. We have found that MO, alone and in conjunction with certain EO dimensions, is positively related to firm performance. More specifically, innovativeness and proactiveness have positively moderated the relationship between MO and performance. We discuss managerial implications and offer suggestions for future research