The Influence of Entrepreneurship Orientation on Omani SMEs’ Performance

Abstract

Entrepreneurial orientation is one of the most crucial and reliable means of achieving a sustained competitive advantage in organizations. This is done through an ongoing process of highlighting new opportunities that arise now and then in a typical business environment. This study examines the impact of organizational culture (group, hierarchical, rational, and development) on entrepreneurial orientation (EO). The study also explores the effect of EO on organizational learning, innovation and firm performance, and the mediating role of both organizational learning and innovation and performance in the relationship between EO and firm performance. It applies to small and medium enterprises (SMEs) in an Omani context.

The study employs quantitative method to gather information and data which are imperative for any typical study of a firm’s performance. A questionnaire was distributed to gather data from 418 managers of SMEs in Oman. Structure Equation Modelling (SEM) was used to analyse the collected data. The findings of the study indicated that organizational culture is a key determinant of EO in SMEs. Further, only hierarchical, rational and development culture bear direct correlation to EO whereas group culture has almost no effect. The results also depicted how EO contributes positively to the performance, organizational learning and innovation of a firm. Learning organization and innovation performance were also seen to deeply influence a firm’s overall output. Finally, the results concluded that organizational learning and innovation performance play a mediating role in the relationship between EO and firm performance.

This study contributes to the current available theoretical knowledge pool and stresses the understanding and knowledge about the relationships that typically exist between the four different types of attributes, namely: organizational culture, EO, organizational learning, innovation performance and firm performance. The study also confirms the requirement of at least two mediators that further enhance the relationship between EO and firm performance, particularly in the context of small and medium enterprises in Oman.

In practical terms, this study examines the role of organizational culture on supporting EO in the context of SMEs belonging to Oman. The research also investigates how organizational learning and innovation performance enhance the impact of EO on SME performance. Additionally, this study will help the Omani SMEs in enhancing their performance by encouraging correct EO behaviours that support organizational learning practices, thereby improving innovation and performance. Further, it will help SMEs to improve their performance through the support of an outstanding organizational culture, thus enhancing EO and, in the process, encouraging managers and employees to follow a continuous learning approach. Therefore, existing good organizational culture that enhances EO by supporting organizational learning and innovation performance will further motivate SME managers to take calculated risks in planning and expanding their enterprises in a competitive business setup in order to achieve supremacy in the marketplace against competitors and at the same time grow in a sustained manner.