**2. Theoretical framework**

#### **2.1. Entrepreneurial orientation**

First conceived by Miller [8], and later refined by Covin and Slevin [9, 10], entrepreneurial orientation (EO) is a firm's behavioural tendency, managerial philosophy, or decision-making practice that is characterised by innovativeness, proactiveness and a willingness to take risks. The focus is not on the person but on the process of undertake [11].

Contemporary studies in small business and entrepreneurship have often placed firm growth at the centre of their inquiry [12]. The EO-performance literature is extensive. While Wiklund and Shepherd [13] findings indicate a positive relationship between EO and failure, there is some scholarly tendency to assume that firms with more EO have superior performance [14]. Several empirical studies indicate a positive correlation between entrepreneurial orientation and organisational growth (e.g. [8, 10, 15–17]). Similarly, other studies also confirm that entrepreneurial orientation has a positive correlation with export's performance, enhancing business growth (e.g. [18, 19]). Clearly, this link seems to be one of the few "universal" ones in the management research. However, the strength of this positive association varies considerably across national contexts [20].

Entrepreneurial orientation has been characterised by certain constructs that represent organisation's behaviour. Starting from Miller's [8] definition, three dimensions were identified: innovativeness, proactiveness and risk-taking. Innovativeness is the predisposition to engage in creativity and experimentation through the introduction of new products/services as well as technological leadership in new processes. Risk-taking involves taking bold actions by venturing into the unknown and/or committing significant resources to ventures in uncertain environments. Proactiveness is an opportunity-seeking, forward-looking perspective characterised by the introduction of new products and services ahead of the competition and acting in anticipation of future demand [21]. Collectively, these dimensions can enhance firm's ability to recognise and exploit international market opportunities well ahead of its competitors [22].

EO influences firm performance when firms strategically acquire, develop and leverage resources for opportunity exploitation in order to gain competitive advantage. Therefore, EO should be associated with the concept of competitive strategy [23].

#### **2.2. Export performance**

that are more transparent. Therefore, firms need to be more customer-centric, especially since technology provides low-cost information and customer solutions and constantly re-evaluates

Firm survival is the lowest when firms are small; thus, the development of effective strategies is critical for the continuity of business [3]. According to the extant literature, increasing business competitive position, particularly SMEs, is of pivotal importance for the development and renewal of national economies [4]. At present, although SMEs are recognised as important contributors to modern economies, our understanding of how they thrive in an increasingly competitive environment and achieve growth is limited [5]. Thus, it is important

Our study is responsive to the call of Sousa et al. [6], which suggests that in the context of international markets, firms' survival and expansion, and consequent economic growth of many countries, are strongly dependent on a better understanding of the determinants that influence export performance. In fact, the factors that set off SME growth (including exporting) are still in need of research [7]. Therefore, the purpose of this chapter is to broaden the boundaries of entrepreneurship and strategic management literature and test the following hypotheses―*does entrepreneurial orientation positively influences small business export* 

Our research specifically focuses on SMEs excluding larger organisations. This focus allows us to draw detailed conclusions for this specific context. Therefore, building on the entrepreneurship literature, this empirical study assesses the influence of entrepreneurial orientation

The chapter is structured as follows. First, it reviews the relevant literature for entrepreneurial orientation and export performance before developing hypothesis. Second, it describes the research design of the empirical study. Thereafter, the study findings are presented, followed by the discussion of the research, which concludes with the limitations of the study and sug-

First conceived by Miller [8], and later refined by Covin and Slevin [9, 10], entrepreneurial orientation (EO) is a firm's behavioural tendency, managerial philosophy, or decision-making practice that is characterised by innovativeness, proactiveness and a willingness to take risks.

Contemporary studies in small business and entrepreneurship have often placed firm growth at the centre of their inquiry [12]. The EO-performance literature is extensive. While Wiklund and Shepherd [13] findings indicate a positive relationship between EO and failure, there is some scholarly tendency to assume that firms with more EO have superior performance [14].

The focus is not on the person but on the process of undertake [11].

their value propositions [2].

24 Entrepreneurship - Trends and Challenges

*performance?*

gestions for future research.

**2. Theoretical framework**

**2.1. Entrepreneurial orientation**

to understand the drivers of SME performance.

on export performance of Portuguese textile SMEs.

The use of efficient worldwide communications technology and transportation, the decrease in governments' protectionist policies and the decrease of geographically protected markets have made it possible, and necessary, for many firms to view their operating domains as global [22]. Moreover, small countries with constricted domestic markets depend on the success of small firms who can export successfully and grow to a scale beyond that which their home market could support [24].

Literature on export performance is extensive, but arguably, it has not yet achieved the consensus required to prescribe exporting strategies to small firm [24]. Exporting is an early phase in the internationalisation model established by Johanson and Vahlne [25, 26], grounded on the assumption that new exporters can gradually engage with foreign markets, depending their exploitation strategy on knowledge and other resources. This export research, however, was not pertinent for small exporters [24], since its unit of analysis was large firms.

In a recent literature review, Sousa et al. [6] concluded that, along with internal capabilities and competencies, the main determinants of export performance are firm size and international experience. Actually, internationalisation processes have been mainly studied with reference to multinational corporations and less for SMEs because smallness is usually considered as a problem, as these firms often have a disadvantage in resource access [27]. This, however, does not support small firm managers in search of a growth strategy through exporting.

Conversely, the number of small firms operating in international markets has increased and represents the majority of firms in most countries, and therefore, they play an important role in the economic growth of their countries. Therefore, the internationalisation process of SMEs has become a topic of academic and governmental attention [27].

creating and introducing new products and technologies, can generate higher economic performance and are seen as engines of economic growth [32]. Proactive companies can create first-movers advantage, target premium market segments, charge high prices and reach the market ahead of competitors [31]. The link between risk-taking and performance is less obvious. However, while good or effective strategies may lead to high performance, risky strategies leading to performance variation—because some projects fail while others succeed—may

Entrepreneurial Orientation and Firm Performance http://dx.doi.org/10.5772/intechopen.72009 27

The population of this empirical study has been drawn from Portuguese textile industry firms. Questionnaires were used as primary data sources and were carried out over the period of February 16 to April 30, 2016. The identification of companies was done through the Portugal's Textile Association (Associação Têxtil de Portugal) [33] database. Therefore, in this

A total of 247 complete and validated questionnaires accounting for 25% of the population were obtained. This response rate is considered quite satisfactory, given that the average of

We used the PLS-SEM path modelling to test our hypothesis, specifically the software SmartPLS 3.0 [35, 36]. We believe that the PLS-SEM path modelling is best suited to estimate our research model since (1) this study focuses on prediction and explanation of constructs variance (in our case 2); (2) our research model has a complex structure; (3) the relationship between entrepreneurial orientation and export performance can be measured directly and indirectly via competitive advantage; (4) this study uses first- and second-order reflective

This study uses well-validated scales from previous studies to operationalise the key con-

*Independent variables—*To assess EO, we adopted Covin and Slevin's [9] measurements for the

*Dependent variable—*Performance is a construct that is difficult to operationalise holistically since it may refer to different aspects of the organisational effectiveness [22]. Researchers face particular challenges when trying to fully understand SMEs. The majority of SMEs are

structs and adapted them to the particular context of our empirical setting.

three dimensions of innovativeness, proactiveness and risk-taking.

*H1: Entrepreneurial orientation is positively associated with export performance.*

study, we use a non-probabilistic and convenient sampling.

constructs and (5) the sample (n = 247) is somewhat small.

top management survey response rates is in the range of 15–20% [34].

be more profitable in the long term [14].

**4.1. Sample and data collection**

**4.2. Statistical analysis**

**4.3. Measures**

**4. Method**

The increase in research is due to various macro- and micro-level benefits associated with the export development. On the one hand, at the macro-level, superior export performance is an efficient vehicle for economic growth, employment creation and an overall improvement in the standards of living. On the other hand, there are numerous benefits at the firm level such as growth opportunities, higher market shares, superior margins and diversification of risk. Hence, export performance is one of the most researched construct in management [28].

Export activity is one of the most important instruments in the internationalisation of many SMEs. Export is a mean for penetrating international markets, entails the least risk and effort when comparing with other solutions like joint ventures or subsidiaries, and, together with the fact that SMEs that have limited resources and capabilities (economic or human resources, or international experience, managerial experiences in these areas, etc.), means that export is an important mechanism to initiate business internationalisation processes [29].

Motivational factors are among the most important dimensions to export readiness and can be divided into proactive/reactive motivators. Proactive motivators signify a firm's willingness to exploit a unique organisational competence or market opportunity, and reactive motivators can be a response to internal or external pressures [7].

In terms of geographic concentration versus diversification as internationalisation strategies for SMEs, Brouthers et al. [30] studied small firms exporting from Greece and the Caribbean region that are contextualised in mature, traditional and low-technology industries. The authors concluded that these firms should concentrate their internationalisation efforts and pursue a single export market strategy. On the other hand, this does not apply to the small New Zealand firms, where the most successful are R&D based and are operating across several overseas markets [24]. Of course, such dissimilarities in findings are perhaps due to different contexts and types of small firms.
