Exploring Curvilinear Relationship between Entrepreneurial Orientation and Firm Performance

Introduction – The vital role of entrepreneurial orientation (EO) on firm performance has been widely studied in developed countries. Most studies have found a positive linear relationship between EO and firm performance. However, the empirical findings are inconclusive. According to the recent literature, one possible reason for these inconsistent findings may be the nature of the relationship between EO and firm performance is not linear as assumed by many researchers. Objective – The objective of this study is to examine the relationship between EO and firm performance and specially to determine the best representation is whether linear or curvilinear. Methodology – This study utilizes a sample of 580 small medium enterprises (SME's) from two provinces in Sri Lanka and hierarchical regression analyses was employed for analyzing the relationships. Findings – Findings demonstrate a S-shape curvilinear relationship between EO and firm performance in the context of SME's in Sri Lanka. Type of paper – Empirical study