International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12
line decor
  
line decor

 Volume 8, Issue 7 (July 2021), Pages: 14-22

----------------------------------------------

 Original Research Paper

 Title: Role of entrepreneurial orientation in firm performance through project success; Moderating role of absorptive capacity in SMEs of KSA

 Author(s): Sami Salem Alzahrani *

 Affiliation(s):

 Department of Business Administration, Arab East College, Riyadh, Saudi Arabia

  Full Text - PDF          XML

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0002-2476-0069

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2021.07.003

 Abstract:

This study aimed to examine the impact of entrepreneurial orientation on firm performance through project success and moderating role of absorptive capacity. A deductive approach was used to test the model empirically. Primary data were collected at one point in time from employees of small and medium enterprises in the Kingdom of Saudi Arabia. 354 responses were used for final data analysis. The structure Equation Modeling (SEM) technique was used to analyze the hypothesized relationships by using the Smart PLS3. The findings indicate that entrepreneurial orientation has a significant impact on firm performance and project success also significantly mediates this relationship. Moreover, absorptive capacity moderates the entrepreneurial orientation impact on project success this relation becomes stronger in the presence of absorptive capacity. This study adds value to the literature and proves the mediating role of project success and moderating role of absorptive capacity. Practically, it highlights the importance of entrepreneurial activities for firm performance and project success. 

 © 2021 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Entrepreneurial orientation, Firm performance, Project success, Absorptive capacity, SMEs, KSA

 Article History: Received 16 October 2020, Received in revised form 24 January 2021, Accepted 16 March 2021

 Acknowledgment 

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

  Alzahrani SS (2021). Role of entrepreneurial orientation in firm performance through project success; Moderating role of absorptive capacity in SMEs of KSA. International Journal of Advanced and Applied Sciences, 8(7): 14-22

 Permanent Link to this page

 Figures

 Fig. 1 Fig. 2 Fig. 3 Fig. 4 Fig. 5 Fig. 6

 Tables

 Table 1 Table 2 Table 3 Table 4 

----------------------------------------------

 References (58)

  1. Abdulrab M, Alwaheeb MA, Al‐Mamary YH, Alshammari NG, Balhareth H, Soltane HB, and Saleem I (2020). Effect of entrepreneurial orientation and strategic orientations on financial and nonfinancial performance of small and medium enterprises in Saudi Arabia. Journal of Public Affairs, e2305. https://doi.org/10.1002/pa.2305   [Google Scholar]
  2. Al-Dhaafri HS, Al-Swidi AK, and Yusoff RZB (2016). The mediating role of total quality management between the entrepreneurial orientation and the organizational performance. The TQM Journal, 28(1): 89-111. https://doi.org/10.1108/TQM-03-2014-0033   [Google Scholar]
  3. Ali GA, Hilman H, and Gorondutse AH (2020). Effect of entrepreneurial orientation, market orientation and total quality management on performance. Benchmarking: An International Journal, 27(4): 1503-1531. https://doi.org/10.1108/BIJ-08-2019-0391   [Google Scholar]
  4. Anderson BS, Kreiser PM, Kuratko DF, Hornsby JS, and Eshima Y (2015). Reconceptualizing entrepreneurial orientation. Strategic Management Journal, 36(10): 1579-1596. https://doi.org/10.1002/smj.2298   [Google Scholar]
  5. Basco R, Calabrò A, and Campopiano G (2019). Transgenerational entrepreneurship around the world: Implications for family business research and practice. Journal of Family Business Strategy, 10(4): 100249. https://doi.org/10.1016/j.jfbs.2018.03.004   [Google Scholar]
  6. Cader HA and Norman DW (2006). Entrepreneurship education for the African informal sector. In: Fayolle A and Klandt H (Eds.), International entrepreneurship education: 277–295. Edward Elgar Publishing, Cheltenham, UK.   [Google Scholar]
  7. Cooke-Davies T (2002). The “real” success factors on projects. International Journal of Project Management, 20(3): 185-190. https://doi.org/10.1016/S0263-7863(01)00067-9   [Google Scholar]
  8. De Wit A (1988). Measurement of project success. International Journal of Project Management, 6(3): 164-170. https://doi.org/10.1016/0263-7863(88)90043-9   [Google Scholar]
  9. Engelbrecht AS, Heine G, and Mahembe B (2017). Integrity, ethical leadership, trust and work engagement. Leadership & Organization Development Journal, 38(3): 368-379. https://doi.org/10.1108/LODJ-11-2015-0237   [Google Scholar]
  10. Engelen A, Gupta V, Strenger L, and Brettel M (2015). Entrepreneurial orientation, firm performance, and the moderating role of transformational leadership behaviors. Journal of Management, 41(4): 1069-1097. https://doi.org/10.1177/0149206312455244   [Google Scholar]
  11. Erken H, Donselaar P, and Thurik R (2018). Total Factor productivity and the role of entrepreneurship. The Journal of Technology Transfer, 43: 1493–1521. https://doi.org/10.1007/s10961-016-9504-5   [Google Scholar]
  12. Filser M, Eggers F, Kraus S, and Málovics É (2014). The effect of financial resource availability on entrepreneurial orientation, customer orientation and firm performance in an international context: An empirical analysis from Austria and Hungary. Journal for East European Management Studies, 19: 7-30. https://doi.org/10.5771/0949-6181-2014-1-7   [Google Scholar]
  13. Fleming L (2001). Recombinant uncertainty in technological search. Management Science, 47(1): 117-132. https://doi.org/10.1287/mnsc.47.1.117.10671   [Google Scholar]
  14. Franke G and Sarstedt M (2019). Heuristics versus statistics in discriminant validity testing: A comparison of four procedures. Internet Research, 29(3): 430-447. https://doi.org/10.1108/IntR-12-2017-0515   [Google Scholar]
  15. Gefen DCMR (2002). Implementation team responsiveness and user evaluation of customer relationship management: A quasi-experimental design study of social exchange theory. Journal of Management Information Systems, 19(1): 47-69. https://doi.org/10.1080/07421222.2002.11045717   [Google Scholar]
  16. Gupta VK and Batra S (2016). Entrepreneurial orientation and firm performance in Indian SMEs: Universal and contingency perspectives. International Small Business Journal, 34(5): 660-682. https://doi.org/10.1177/0266242615577708   [Google Scholar]
  17. Hahn ED and Ang SH (2017). From the editors: New directions in the reporting of statistical results in the Journal of World Business. Journal of World Business, 52(2): 125-126. https://doi.org/10.1016/j.jwb.2016.12.003   [Google Scholar]
  18. Hair JF, Hult GTM, Ringle C, and Sarstedt M (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications, Thousand Oaks, USA. https://doi.org/10.15358/9783800653614   [Google Scholar]
  19. Hair JF, Risher JJ, Sarstedt M, and Ringle CM (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1): 2-24. https://doi.org/10.1108/EBR-11-2018-0203   [Google Scholar]
  20. Henseler J, Ringle CM, and Sarstedt M (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1): 115-135. https://doi.org/10.1007/s11747-014-0403-8   [Google Scholar]
  21. Hernandez-Perlines F (2018). Moderating effect of absorptive capacity on the entrepreneurial orientation of international performance of family businesses. Journal of Family Business Management, 8(1): 58-74. https://doi.org/10.1108/JFBM-10-2017-0035   [Google Scholar]
  22. Khan NU, Shuangjie L, Khan SZ, and Anwar M (2019). Entrepreneurial orientation, intellectual capital, IT capability, and performance. Human Systems Management, 38(3): 297-312. https://doi.org/10.3233/HSM-180393   [Google Scholar]
  23. Khan S, Bhatti SH, Zaman U, and Hussain M (2020). Breaking down the success barrier: The mediating role of absorptive capacity in linking entrepreneurial orientation to IT project success. Pakistan Journal of Commerce and Social Sciences, 14(2): 529-550.   [Google Scholar]
  24. Kim H, Hur D, and Schoenherr T (2015). When buyer‐driven knowledge transfer activities really work: A motivation–opportunity–ability perspective. Journal of Supply Chain Management, 51(3): 33-60. https://doi.org/10.1111/jscm.12077   [Google Scholar]
  25. Kraus S, Rigtering JC, Hughes M, and Hosman V (2012). Entrepreneurial orientation and the business performance of SMEs: A quantitative study from the Netherlands. Review of Managerial Science, 6(2): 161-182. https://doi.org/10.1007/s11846-011-0062-9   [Google Scholar]
  26. Kuura A, Blackburn RA, and Lundin RA (2014). Entrepreneurship and projects-Linking segregated communities. Scandinavian Journal of Management, 30(2): 214-230. https://doi.org/10.1016/j.scaman.2013.10.002   [Google Scholar]
  27. Le Meunier-Fitzhugh K and Piercy NF (2007). Does collaboration between sales and marketing affect business performance? Journal of Personal Selling & Sales Management, 27(3): 207-220. https://doi.org/10.2753/PSS0885-3134270301   [Google Scholar]
  28. Le Meunier-Fitzhugh K and Piercy NF (2009). Drivers of sales and marketing collaboration in business-to-business selling organizations. Journal of Marketing Management, 25(5-6): 611-633. https://doi.org/10.1362/026725709X461885   [Google Scholar]
  29. Le Meunier-Fitzhugh K, Massey GR, and Piercy NF (2011). The impact of aligned rewards and senior manager attitudes on conflict and collaboration between sales and marketing. Industrial Marketing Management, 40(7): 1161-1171. https://doi.org/10.1016/j.indmarman.2010.12.002   [Google Scholar]
  30. Lee YK, Kim SH, Seo MK, and Hight SK (2015). Market orientation and business performance: Evidence from franchising industry. International Journal of Hospitality Management, 44: 28-37. https://doi.org/10.1016/j.ijhm.2014.09.008   [Google Scholar]
  31. Lomberg C, Urbig D, Stöckmann C, Marino LD, and Dickson PH (2017). Entrepreneurial orientation: The dimensions’ shared effects in explaining firm performance. Entrepreneurship Theory and Practice, 41(6): 973-998. https://doi.org/10.1111/etap.12237   [Google Scholar]
  32. Martens ML and Carvalho MM (2016). The challenge of introducing sustainability into project management function: Multiple-case studies. Journal of Cleaner Production, 117: 29-40. https://doi.org/10.1016/j.jclepro.2015.12.039   [Google Scholar]
  33. Miller D and Friesen PH (1983). Strategy‐making and environment: The third link. Strategic Management Journal, 4(3): 221-235. https://doi.org/10.1002/smj.4250040304   [Google Scholar]
  34. Mishra CS and Zachary RK (2015). The theory of entrepreneurship. Entrepreneurship Research Journal, 5(4): 251-268. https://doi.org/10.1515/erj-2015-0042   [Google Scholar]
  35. Muhammad NMN and Ismail MKA (2009). Intellectual capital efficiency and firm’s performance: Study on Malaysian financial sectors. International Journal of Economics and Finance, 1(2): 206-212. https://doi.org/10.5539/ijef.v1n2p206   [Google Scholar]
  36. Neneh BN and Van ZJ (2017). Entrepreneurial orientation and its impact on firm growth amongst SMEs in South Africa. Problems and Perspectives in Management, 15(3): 166-178. https://doi.org/10.21511/ppm.15(3).2017.14   [Google Scholar]
  37. Okangi FP (2019). The impacts of entrepreneurial orientation on the profitability growth of construction firms in Tanzania. Journal of Global Entrepreneurship Research, 9(14): 1-23. https://doi.org/10.1186/s40497-018-0143-1   [Google Scholar]
  38. Patel PC, Kohtamäki M, Parida V, and Wincent J (2014). Entrepreneurial orientation‐as‐experimentation and firm performance: The enabling role of absorptive capacity. Strategic Management Journal, 36(11): 1739-1749. https://doi.org/10.1002/smj.2310   [Google Scholar]
  39. Popaitoon S and Siengthai S (2014). The moderating effect of human resource management practices on the relationship between knowledge absorptive capacity and project performance in project-oriented companies. International Journal of Project Management, 32(6): 908-920. https://doi.org/10.1016/j.ijproman.2013.12.002   [Google Scholar]
  40. Ramayah T, Cheah J, Chuah F, Ting H, and Memon MA (2018). Partial least squares structural equation modeling (PLS-SEM) using smartPLS 3.0: An updated guide and practical guide to statistical analysis. 2nd Edition, Pearson, Kuala Lumpur, Malaysia.   [Google Scholar]
  41. Rauch A, Wiklund J, Lumpkin GT, and Frese M (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3): 761-787. https://doi.org/10.1111/j.1540-6520.2009.00308.x   [Google Scholar]
  42. Setiawan H, Erdogan B, and Ogunlana O (2012). Corporate entrepreneurship for contracting companies: The current issues. In the 28th Annual Association of Researchers in Construction Management Conference, Edinburgh, UK: 817-827.   [Google Scholar]
  43. Shan P, Song M, and Ju X (2016). Entrepreneurial orientation and performance: Is innovation speed a missing link? Journal of Business Research, 69(2): 683-690. https://doi.org/10.1016/j.jbusres.2015.08.032   [Google Scholar]
  44. Shenhar AJ and Dvir D (2007). Reinventing project management: The diamond approach to successful growth and innovation. Harvard Business Review Press, Boston, USA.   [Google Scholar]
  45. Simon A, Bartle C, Stockport G, Smith B, Klobas JE, and Sohal A (2015). Business leaders’ views on the importance of strategic and dynamic capabilities for successful financial and non-financial business performance. International Journal of Productivity and Performance Management, 64(7): 908-931. https://doi.org/10.1108/IJPPM-05-2014-0078   [Google Scholar]
  46. Todorova G and Durisin B (2007). Absorptive capacity: Valuing a reconceptualization. Academy of Management Review, 32(3): 774-786. https://doi.org/10.5465/amr.2007.25275513   [Google Scholar]
  47. Tuan LT (2017). Knowledge sharing in public organizations: The roles of servant leadership and organizational citizenship behavior. International Journal of Public Administration, 40(4): 361-373. https://doi.org/10.1080/01900692.2015.1113550   [Google Scholar]
  48. Turner JR (2009). The handbook of project-based management: Leading strategic change in organizations. McGraw-Hill, New York, USA.   [Google Scholar]
  49. Venkataraman S (2019). The distinctive domain of entrepreneurship research. In: Katz JA and Corbett AC (Eds.), Seminal ideas for the next twenty-five years of advances (Advances in entrepreneurship, firm emergence and growth): 5-20. Volume 21, Emerald Publishing Limited, Bingley, UK. https://doi.org/10.1108/S1074-754020190000021009   [Google Scholar]
  50. Venkatraman N and Ramanujam V (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, 11(4): 801-814. https://doi.org/10.5465/amr.1986.4283976   [Google Scholar]
  51. Vezzoni G, Júnior ACP, Junior ALB, and da Silva SL (2013). Identification and analysis of critical success factors in projects. Revista De Gestao E Projetos, 4(1): 116-137. https://doi.org/10.5585/gep.v4i1.83   [Google Scholar]
  52. Wang CL (2008). Entrepreneurial orientation, learning orientation, and firm performance. Entrepreneurship Theory and Practice, 32(4): 635-657. https://doi.org/10.1111/j.1540-6520.2008.00246.x   [Google Scholar]
  53. Yoon H (2012). The performance effects of entrepreneurial orientation: Evidence from South Korean start-ups. International Journal of Arts and Commerce, 1(4): 248-254.   [Google Scholar]
  54. Zahra SA and George G (2002). Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 27(2): 185-203. https://doi.org/10.5465/amr.2002.6587995   [Google Scholar]
  55. Zaman U, Nadeem RD, and Nawaz S (2020). Cross-country evidence on project portfolio success in the Asia-Pacific region: Role of CEO transformational leadership, portfolio governance and strategic innovation orientation. Cogent Business and Management, 7(1): 1727681. https://doi.org/10.1080/23311975.2020.1727681   [Google Scholar]
  56. Zaman U, Nawaz S, Tariq S, and Humayoun AA (2019). Linking transformational leadership and “multi-dimensions” of project success. International Journal of Managing Projects in Business, 13(1): 103-127. https://doi.org/10.1108/IJMPB-10-2018-0210   [Google Scholar]
  57. Zhai YM, Sun WQ, Tsai SB, Wang Z, Zhao Y, and Chen Q (2018). An empirical study on entrepreneurial orientation, absorptive capacity, and SMEs’ innovation performance: A sustainable perspective. Sustainability, 10(2): 314. https://doi.org/10.3390/su10020314   [Google Scholar]
  58. Zulkifli RM and Rosli MM (2013). Entrepreneurial orientation and business success of Malay entrepreneurs: Religiosity as moderator. International Journal of Humanities and Social Science, 3(10): 264-275.   [Google Scholar]