Exploring the entrepreneurship-performance relationship: evidence from Greek SMEs

The purpose of this paper is to introduce a conceptual framework (research model) that investigates the linkages between “entrepreneurial orientation (EO)”, “entrepreneurial management (EM)”, “environmental factors (EF)”, “access to financial capital” and “firm performance”. In more detail, “EF” and “access to financial capital” are proposed as moderating factors in the “orientation-performance” relationship, while “EO” and “EM” are hypothesised to have a direct effect on “firm performance”. The proposed model includes factors that have never been collectively examined by the entrepreneurship literature before and is expected to enhance the empirical knowledge about the entrepreneurship-performance relationship in small and medium enterprises (SMEs), offering important practical guidelines to small and medium companies.

The present study is empirical, explanatory, deductive and quantitative. The examination of the proposed conceptual framework was made with the use of a newly developed questionnaire. The population of the study is the sum of Greek SMEs operating during the year 2012. The sample was selected using random sampling techniques: four sectors of the economy were selected (cluster sampling technique) and 760 companies were randomly selected from that sub-group (simple random sample technique). The questionnaire, consisting of 62 items (questions) used to measure the five research factors, was distributed to 333 Greek companies that agreed to participate in the study. After the completion of the research period (September-November 2011), 303 usable questionnaires were returned. Given the fact that the initial target sample was 760 companies the response rate is 39.86 per cent. The empirical data were analysed using the regression analysis and the “Structural Equation Modelling” technique.

Results indicate that “EF” and “access to financial capital” moderate the relationship between “EO” and “firm performance”, through “EM”. Moreover, results confirm a positive relationship between “EO” and “firm performance”, when “EO” is accompanied by “EM” and a direct relationship between “EM” and “firm performance”.

The main limitation of the study includes the relatively small sample size. Despite that, the sample size is considered appropriate for the statistical analysis conducted, while similar sample size has been used in other similar studies of the field (Gurbuz and Aykol, 2009; Lumpkin and Dess, 2001; Zahra and Garvis, 2000). Another limitation stemming from the implemented methodology is the use of self-report scales to measure the constructs of the proposed model.

This paper attempts to shed some light on those entrepreneurial actions that seem to influence performance. The study makes use of contingent variables and is conducted in SMEs within a European context. As it is obvious from the literature, thus far, there has been a limited amount of research conducted in small European firms examining the entrepreneurship-performance relationship.