Does strategic orientation fit all? The effects of strategic orientation on high versus low-performing SMEs

Abstract

This paper investigates the effects of a creating shared value (CSV) orientation as well as market and entrepreneurial orientation on small business performance. Small and medium-sized enterprises (SMEs) lack knowledge-based resources, because of limited business history, experience, and budgets. The effects of entrepreneurial orientation and CSV are examined from a resource-based view. Empirical evidence of the moderating effect of CSV and learning orientation on firm performance is lacking, especially in SMEs in South Korea. We collected 300 samples from SMEs, and analysed the data using quantile regression, which explores the effects of covariates at various quantile levels of a conditional distribution. This differs from previous studies on SMEs, which dealt with the conditional mean (ordinary least squares). The results confirm the significant and positive effects of CSV orientation on firm performance and that entrepreneurial orientation and the moderating effects of learning and CSV orientation are more effective for firms in the mid to upper quantiles in terms of performance. We also examined whether the effects of entrepreneurial and CSV orientation differ for firms with low and high performance using quantile regression. The results indicate that strategic orientations need to be different in low and high-performing businesses. The results address the heterogeneity of SME performance in strategic orientation analyses.