Innovation and growth of small and medium enterprises: role of environmental dynamism and firm resources as moderating variables

March 23, 2014 Editor 0

Entrepreneurial orientation (EO) has become a central construct in entrepreneurship research, with most of extant literature highlighting a positive relationship between EO and firm growth. However, the notion that firms with higher EO show better growth has mixed support in research. Most studies on EO have examined three dimensions namely innovation, risk taking and pro-activeness in a uni-dimensional construct where these dimensions co-vary. Researchers have argued that this can be one of the reasons behind these inconsistent findings as EO should be considered as a multidimensional construct where the individual EO dimensions vary independently rather than co-varying. Within EO, researchers have highlighted the importance of innovation as the key dimension contributing to firm growth. Further studies indicate that simple EO-firm growth relationship is not enough as the context in which the firms operate play an important role. This study examines the influence of innovation and the moderating influence of environmental dynamism (exogenous) and resources (endogenous) on the innovation-firm growth relationship for small and medium enterprises (SMEs) in India. For this purpose, this study has examined the main-effect model two-way interaction using contingency approach and three-way interaction using configuration approach.
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Categories: Innovation

Tags: Economic theories, economics