The form of entrepreneurial orientation and innovation : a case study of Indonesian SMEs

Abstract

The varying business environments across countries, especially between developed and developing countries, make it hard to arrive at generalizations on the impact of Entrepreneurial Orientation (EO) on firms’ innovative performance. By expanding the previous theorizing on how EO affects firms’ innovation activities in hostile environments, we hypothesize that the relationship between EO and innovation is curvilinear. Our empirical study has evinced that the best innovative performance occurs at moderate level of EO. This means that to a certain degree, EO has a positive impact on innovation, but high levels of EO have a negative effect on innovation. Therefore, to achieve persistent innovation EO is not the only factor that must be cultivated by firms.