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Does the Relationship between Entrepreneurial Orientation and Subjective Financial Firm Performance Have an Inverted U-Shape? Evidence from Southeast European SMEs

Author

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  • Helena Šlogar

    (Faculty of International Business and Economics, Libertas International University, Trg John F. Kennedy 6B, 10000 Zagreb, Croatia)

  • Bojan Morić Milovanović

    (Faculty of International Business and Economics, Libertas International University, Trg John F. Kennedy 6B, 10000 Zagreb, Croatia)

  • Stella Hrvatin

    (Faculty of International Business and Economics, Libertas International University, Trg John F. Kennedy 6B, 10000 Zagreb, Croatia)

Abstract

Many academic studies have focused on exploring various interactions between entrepreneurial orientation (EO) and firm performance, where, in general, the findings confirmed their existence to be of positive character. However, many authors indicated a need to further test the possibilities concerning the nonlinearity between EO and firm performance. Moreover, since many research studies on this topic have been conducted in developed countries, there is still a need for such studies in developing countries, especially in the region of southeast Europe. Therefore, the purpose of this paper is to investigate the existence of nonlinearity between EO and subjective financial performance among SMEs in southeastern European countries. Data was collected from decisionmakers of the 963 SMEs operating in Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, and North Macedonia. Proposed hypotheses were tested using hierarchical linear regression analysis. Research results confirmed existence of the positive direct relationship EO has on financial performance, including the positive effects on sales growth and profit-to-sales ratio. On the other hand, results have not confirmed existence of nonlinearity effects that EO has on financial performance, sales growth, nor on the profit-to-sales ratio. In other words, the observed relationship does not exhibit inversed U-shape characteristics among southeast European SMEs.

Suggested Citation

  • Helena Šlogar & Bojan Morić Milovanović & Stella Hrvatin, 2023. "Does the Relationship between Entrepreneurial Orientation and Subjective Financial Firm Performance Have an Inverted U-Shape? Evidence from Southeast European SMEs," Administrative Sciences, MDPI, vol. 13(2), pages 1-16, January.
    • Handle: RePEc:gam:jadmsc:v:13:y:2023:i:2:p:26-:d:1038536
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    References listed on IDEAS

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    1. Zhongfeng Su & En Xie & Dong Wang, 2015. "Entrepreneurial Orientation, Managerial Networking, and New Venture Performance in China," Journal of Small Business Management, Taylor & Francis Journals, vol. 53(1), pages 228-248, January.
    2. Jelle Schepers & Wim Voordeckers & Tensie Steijvers & Eddy Laveren, 2014. "The entrepreneurial orientation–performance relationship in private family firms: the moderating role of socioemotional wealth," Small Business Economics, Springer, vol. 43(1), pages 39-55, June.
    3. Talis Putnins & Arnis Sauka, 2020. "Why does entrepreneurial orientation affect company performance?," Published Paper Series 2020-6, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    4. Wiklund, Johan & Shepherd, Dean, 2005. "Entrepreneurial orientation and small business performance: a configurational approach," Journal of Business Venturing, Elsevier, vol. 20(1), pages 71-91, January.
    5. Morgan, Todd & Anokhin, Sergey Alexander, 2020. "The joint impact of entrepreneurial orientation and market orientation in new product development: Studying firm and environmental contingencies," Journal of Business Research, Elsevier, vol. 113(C), pages 129-138.
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    2. Sami Özcan & Murat Serçemeli & Ali Kemal Çelik, 2024. "Analyzing the Effects of Covid-19 Pandemic on the Financial Performance of Turkish Listed Companies on Borsa Istanbul using the Entropy-based Grey Relational Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 109-124, September.

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