Direct and Indirect Influences of Environmental Hostility on Export Performance

mostly considered to moderate relationships rather than measured as a direct or indirect influence toward a specific outcome variable of interest. This study aims to contribute to knowledge that the firm’s export performance, as the outcome variable, is directly and indirectly influenced by environmental hostility with entrepreneurial orientation and dynamic capabilities along a single path. Design/Methodology/Approach – Grounded on the resource-based view and contingency approach in management, an explanatory sequential research design was used. Using the PLS-SEM technique, quantitative data was collected and analyzed from 108 medium-scale agro-processing firms in the Philippines. A series of interviews was done after to validate quantitative findings and to show the practical manifestation of the variables. Findings – The influence of environmental hostility on export performance is not straightforward, and an indirect, multi-step mediating effect is made through the firm’s entrepreneurial orientation and dynamic capabilities. Most importantly, the firm’s dynamic capabilities were seen to be the missing link between the EO-export performance relationship, as it gives the better understanding as to why EO alone cannot always influence above-average export performance. Dynamic capabilities are essentially needed along the firm’s chain of operations, making dynamic capabilities a major antecedent of export performance. Research Implications – EO is responsible for converting threatening and hostile environmental effects into beneficial outcomes, such as enhanced dynamic capabilities. However, dynamic capabilities are responsible for the effective execution of operations that positively influence an above-average export performance.