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Entrepreneurial Orientation and Open Innovation Promote the Performance of Services SMEs: The Mediating Role of Cost Leadership

Author

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  • Mahendra Kumar Chelliah

    (Faculty of Accountancy and Management, Universiti Tunku Abdul Rahman, Kajang 43000, Selangor, Malaysia
    Faculty of Management, Multimedia University, Cyberjaya 63100, Selangor, Malaysia)

  • Kalisri Logeswaran Aravindan

    (Faculty of Management, Multimedia University, Cyberjaya 63100, Selangor, Malaysia)

  • Saravanan Muthaiyah

    (Faculty of Management, Multimedia University, Cyberjaya 63100, Selangor, Malaysia)

Abstract

In the 21st century, small and medium service firms face difficulty sustaining their performance. Additionally, the literature on entrepreneurial orientation (EO) in SMEs is scarce. Moreover, the role of cost leadership strategy as a mediator lacks researchers’ attention. Therefore, this research aims to examine the relationship between EO and SMEs performance with the mediating role of cost leadership strategy. Based on the contingency theory, a theoretical model has been drawn. A survey approach with a questionnaire technique has been adapted to achieve the study objectives. The data were collected from 283 service SMEs in three states of Malaysia. The Partial Least Square Structural Equation Modelling (PLS-SEM) technique was employed to analyze the empirical data. The study findings highlight that risk-taking and open innovation have no direct relationship with SMEs’ performance. However, through the mediation role of cost leadership, risk-taking and open innovation have a significant association with performance. Furthermore, the findings indicate that proactiveness, competitive aggressiveness, and autonomy have a positive and direct relationship with performance, whereas in the presence of cost leadership, competitive aggressiveness has a partial mediating effect. The empirical findings are helpful to policymakers, researchers, and practitioners.

Suggested Citation

  • Mahendra Kumar Chelliah & Kalisri Logeswaran Aravindan & Saravanan Muthaiyah, 2022. "Entrepreneurial Orientation and Open Innovation Promote the Performance of Services SMEs: The Mediating Role of Cost Leadership," Administrative Sciences, MDPI, vol. 13(1), pages 1-19, December.
    • Handle: RePEc:gam:jadmsc:v:13:y:2022:i:1:p:1-:d:1008825
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    References listed on IDEAS

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    2. Lumpkin, G. T. & Dess, Gregory G., 2001. "Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle," Journal of Business Venturing, Elsevier, vol. 16(5), pages 429-451, September.
    3. Muhammad Haseeb & Marcin Lis & Ilham Haouas & Leonardus WW Mihardjo, 2019. "The Mediating Role of Business Strategies between Management Control Systems Package and Firms Stability: Evidence from SMEs in Malaysia," Sustainability, MDPI, vol. 11(17), pages 1-20, August.
    4. Muhammad Mazhar & Muhammad Amir Nadeem & Haider Ali Abbasi & Umaima Tariq & Amin Jan & Rao Abdul Hannan Jaffar, 2022. "Reparation for Service Failure Through Service Recovery: An Assessment of Consumer Behaviour in an Online Shopping Context," Business Management and Strategy, Macrothink Institute, vol. 13(1), pages 64-87, June.
    5. Carl F. Falk & Jeremy C. Biesanz, 2016. "Two Cross-Platform Programs for Inferences and Interval Estimation About Indirect Effects in Mediational Models," SAGE Open, , vol. 6(1), pages 21582440156, January.
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