Linking Entrepreneurial Orientation in The Lens of Contingency Theory

Small Medium Enterprises in short is SMEs are known to be as the pillar of a country’s growth and prosperity in terms of their contribution towards Gross Domestic Products (GDP) and employment opportunities. SMEs are categorized as an entrepreneurial firm. From here entrepreneurship has become an important area to foster a firm and country performance. Dynamic environment has resulted in changes towards the art of doing business whereby SMEs need to reorganize their approach to improve performance. Being an entrepreneurial firm, the performance of the firm is not solely relying on internal factors (Organizational) such as for example, structure, strategy, processes, and resources, within the firm but also need to include external forces (External) such as for example be the characteristics of markets, industry, and the environment. Lumpkin and Dess (1996) in a seminal paper have enlighten researchers on what are other factors that that could be included as internal and external. Purpose – The core aim of this paper is to examine literatures in the area of entrepreneurship hence to identify relevant theory to be linked with this type of phenomenon. From the investigation Contingency Theory whereby by definition this theory is showing a path for a SME to fit their internal and external factors with the firm’s entrepreneurial orientation and leads to a better performance of the firm. Having said as an entrepreneur firm will show behaviours of entrepreneurial orientation as their strategic orientation. This behaviour patterns will be influenced by internal and external factors. Since the environment of a SME is dynamic, it is not that easy to continuously change the behaviour of the firm. From this, firms tend to hold certain behaviours that in the end gives a favourable firm performance