The Inter-Relations between Entrepreneurial Orientation Components and Their Impact on the Performance of Croatian Small and Medium Enterprises

Association of entrepreneurial orientation with performance, viewed as both a unidimensional and multidimensional concept, has been widely researched, especially in the small and medium enterprises context. However, there is a gap in the literature related to how the components of entrepreneurial orientation are inter-related and how their intricacies drive small firm performance. Rather than looking into configurations between entrepreneurial orientation and various external factors, this article investigates the different configurations within the entrepreneurial orientation components and how they affect performance. This article builds on the work by Putniņš, T.J. and Sauka, A. “Why does entrepreneurial orientation affect company performance?” who used financial economics theory to explore the direct relationship between risk-taking and performance. They used innovativeness as a moderator and proactiveness as mediators of the relationship between risk-taking and performance. This article uses a configurational approach to investigate the effect of individual roles of each of entrepreneurial orientation’s dimensions and their interactions on small firm performance. Using survey data from 202 Croatian small and medium-sized firms, results reveal that entrepreneurial orientation and all of its three components are positively associated with small firm performance. Relationships between innovativeness and proactiveness with small firm performance are significant when controlling for risk-taking; therefore, they do not obtain this relationship through their association with risk-taking. Proactiveness does not have an indirect, positive relationship with small firm performance via risk-taking as a mediator. Innovativeness is a moderator that further strengthens the positive relationship between risk-taking and performance