The effect of market orientation as a mediating variable in the relationship between entrepreneurial orientation and SMEs performance

Abstract

Purpose

This study aims to examine the effect of market orientation (MO) as a mediating variable in the relationship between entrepreneurial orientation (EO) and small and medium enterprises (SMEs)’ performance.

Design/methodology/approach

A total of 500 SMEs in the manufacturing industry of food and beverages were involved in this study with a response rate of 117. Data collection was conducted in all states of Peninsular Malaysia including the northern, central, southern and eastern regions.

Findings

The findings show that EO has a significant relationship with MO, and MO has a significant relationship with SME performance. MO will mediate the relationship between EO and SMEs’ performance.

Practical implications

The higher the EO implemented in a business, the more willing a company will be to implement MO. This analysis shows that highly entrepreneurial firms tend to be highly market orientated and this affects SMEs’ performance.

Originality/value

The results of this study show that the characteristic of entrepreneurial and MO practiced by SMEs in Malaysia has been significantly affected the SMEs’ performance. It indicates that EO offers a holistic and systematic model for supporting SMEs to build a well-maintained environment of MO and SMEs’ performance.

Citation

Amin, M., Thurasamy, R., Aldakhil, A.M. and Kaswuri, A.H.B. (2016), "The effect of market orientation as a mediating variable in the relationship between entrepreneurial orientation and SMEs performance", Nankai Business Review International, Vol. 7 No. 1, pp. 39-59. https://doi.org/10.1108/NBRI-08-2015-0019