Linking Entrepreneurial Orientation and Innovation Intensity: Moderating Role of Environmental Turbulence

Abstract

This research aims to investigate the impact of entrepreneurial orientation dimensions on a firm’s innovation intensity along with the moderation of environmental turbulence. The dimensions of entrepreneurial orientation include autonomy, pro-activeness, risk attitude, innovation readiness and competitive aggressiveness, hence the study includes five direct hypotheses and five moderated hypotheses. The data was gathered through an online questionnaire. The sample size of the study was 386 small and medium enterprises (SME) operating in Pakistan. The questionnaire was filled out by executive managers or executive directors of organizations as company representatives. Smart PLS was used to analyze the data. The measurement model was run to ensure validity and reliability. Moreover, the outer loadings, model fit and important statistics were assured. The structural model estimated the proposed relationships of the study. The findings of the study suggested a positive impact of all the dimensions of entrepreneurial orientation on innovation while the moderation effect of environmental turbulence was found to be significant for all the relationships except innovation readiness. The study finally concluded that EO had a significant impact on innovation intensity. Based on the findings, it is recommended that SMEs should enhance entrepreneurial orientation in their respective organizations in order to intensify innovation. The practical objective of this research was to gain knowledge on entrepreneurial orientation and innovation intensity that is crucial for organizations in the contemporary business world. The study has certain implications for the development of organizations’ strategic orientation. SMEs in Pakistan have great potential and in terms of intensifying innovation in enterprises, it is important to focus on entrepreneurial orientation. Thus, SMEs have to be innovative, proactive, and ready to take risks which may ultimately help them improve their performance.