Exploring the nexus of entrepreneurial orientation and market orientation on business performance and the role of innovation among the MSMES in Sri Lanka

Abstract

This paper is aimed to investigate the impact of entrepreneurial orientation (EO) and market orientation (MO) business performance (BP) and to explore the role of innovation (IN) to enhance the business performance of the micro small and medium enterprises (MSMEs) in Sri Lanka. The sample size of 441 owners/mangers of MSMEs. Survey methodology was implemented for this study. Hypotheses are tested using Smart PLS. Findings suggests that significant positive relationship exist between the relationship of EO and BP, MO and BP, EO-INBP, MO-IN-BP. Findings also reveal that innovation is complementary mediator on the relationship of EO and BP, and of MO and BP. This study focus on EO and MO. There are other variables under the strategic orientation and that need to be incorporated for further studies. EO and MO are important factors to determine the business performance of micro small and medium enterprises. When innovation is added between the relationship of EO and BP, and of MO and BP, innovation is mediating the relationships. Hence, MSMEs can focus on more the innovation and it will help them to enjoy the competitive advantage. The study of this nature has not been done in the Sri Lankan context with MSMEs in Sri Lanka. This study provides unique contribution to the existing literature.