Entrepreneurial Orientation and Firm Performance: The Moderating Effect of Organizational Structure

Abstract

This study investigates the effect of entrepreneurial orientation of firms on their performance considering the moderating role of organization structure in firms of the Kaveh industrial city. The executive managers of these firms (approximately 250 people) have formed the statistical society of the study and stratified random sampling method has been employed for sampling. By using Cochran formula, 152 people were selected as sample size. The analysis of collected data was performed using hierarchical regression test and evaluation of structural equations model was done by using AMOS 20 software. Furthermore, the technical specifications of research questionnaire (index reliability, exploratory factor analysis, convergent validity and discriminant validity) were inspected by Smart PLS 2.0 software. Research results, on the one hand, confirm the positive and significant effect of entrepreneurial orientation on firm performance, and on the other hand, show that organization structure significantly moderates the relationship between entrepreneurial orientation and performance. The findings of current study can help the managers of selected companies to improve their firm performance and also to identify the weaknesses and strengths of their organizational structure design in order to encourage employees to engage in entrepreneurial activities.

Keywords: Entrepreneurial orientation, EO, firm performance, organization structure, entrepreneurial activities

JEL Classification: M13, P47, D21, D23