The Essence of Entrepreneurial Orientation Dimensions in SMEs Sector: Utilizing The Analytic Hierarchy Process

Abstract

Three dimensions of entrepreneurial orientation in the context of small medium enterprises (SMEs) become an important issue for managers because of limited resources and capabilities to handle the rapid changing of customer preferences. Additionally, prior studies are still lacking to explore these dimensions using operation management tools. Therefore, the present study attemptsto determine the topmost priority of entrepreneurial orientation dimensions namely, innovative, proactive, and risk-taking. The authors collected data from managers or owners-managers of SMEs operating in Padang-Indonesia and Analytical Hieratical Process (AHP) was used to determine the priority scale of criteria and sub-criteria of entrepreneurial orientation aspects. Empirical findings reveal that innovation is as the topmost criteria, which is more important rather than proactive and risk-taking in doing the business operation.Also,“research and development of the new products”is as the topmost sub-criteria from the element of innovations. These findings also suggest that innovation is one the most important to be entrepreneurial firms. In line with these findings, the managers or owners-managers have become innovation as the first option to execute a business operation strategy, especially in the contexts of SMEs in a developing economy country like Indonesia.