Does international orientation intermediate in the relationship between entrepreneurial orientation and firm performance?

Abstract

Objective: This article aims to augment the literature on entrepreneurial business primarily by assessing how the synergies between international orientation (IO) and entrepreneurial orientation (EO) promote the overall performance of Portuguese exporting companies after controlling for the effect of several firm and country characteristics commonly cited in the literature. Research Design & Methods: The study considers the impact on overall firm performance of aggregated and individual dimensions of EO and IO using survey data collected from 341 companies through online questionnaires in 2015. We validated the proposed hypotheses using covariance-based structural equation modelling (CB-SEM). Findings: We found three main relationships: (1) the positive impact of EO on firm performance is greater than the influences through the IO pathway; (2) the effect of firm innovativeness is noticeably higher than the proactiveness and risk-taking components of EO; and (3) IO positively and significantly reinforces the relationship between EO and firm performance. Implications & Recommendations: Taken together, the results indicate that innovations to improve the international positioning of Portuguese exporters will make the greatest contribution to their overall performance. Thus, it is recommended that managers adopt governance structures that motivate and reward employees with novel ideas on how to foster penetration into new overseas markets. Contribution & Value Added: This study fills the gap in the literature by emphasising: (1) the importance of combining IO with EO to boost the overall performance of risk-averse Portuguese exporters, and (2) the differential effects of the several EO dimensions on IO and overall firm performance.