The Relationship between Organizational Culture and Small‐firm Performance: Entrepreneurial Orientation as Mediator

• Author: Anis Khedhaouria,Samiha Gharbi,Walid A. Nakara,Chaima Bahri
• Date: 01 June 2020
• DOI: http://doi.org/10.1111/emre.12383
• Published date: 01 June 2020

The Relationship between Organizational

Culture and Small-firm Performance:

Entrepreneurial Orientation as Mediator

ANIS KHEDHAOURIA,ASSOCIATE PROFESSOR

1

WALID A. NAKARA,ASSOCIATE PROFESSOR

1

SAMIHA GHARBI

2

and CHAIMA BAHRI ASSISTANT PROFESSOR

3

1

Montpellier Business School and Montpellier Research in Management, France2300 avenue des Moulins, 34185, Montpellier

Cedex 4

2

ISCAE-Université de la Manouba, Tunisia Campus, Universitaire de la Manouba La Manouba 2010

3

ESC-Université de la Manouba, Tunisia Campus, Universitaire de la Manouba La Manouba 2010

The importance of organizational culture to a small firm’s entrepreneurial orientation(EO) and performance has

been extensively investigated in the literature, but little attention has been paid to understanding the mechanisms

underlying theserelationships. In the present study, we mobilized thecompeting values framework (CVF)to examine

the relationships between keydimensions of organizationalculture (i.e., adhocracy, clan, hierarchy,and market) and

EO (i.e., innovativeness, risk-taking,and proactiveness)and their effects on the performance of small firms. Ourstudy

of 106 small Tunisian firms provides empiricalevidence for the mediating roleof EO, through which adhocracy and

market cultures influence small-firm performance by fostering innovative and proactive behaviors. We discuss the

implications of these findings for theory and practice.

Keywords: entrepreneurial orientation; small-firm performance; organizational culture; competing values

framework

Introduction

Small-firm performance is a research domain that has

been extensively inv estigated in the entrepre neurship

literature (Wiklund and Shepherd, 2005; Khedhaouria

et al., 2015; Deligianni et al., 2016; Semrau et al., 2016;

Tan g et al., 2017). There is a common consensus that

the performance of a firm is associated with its

entrepreneurial orientation (EO) (Miller, 1987, 2011). A

small firm’s EO is a business process that describes the

firm’s capability to anticipate market needs to maintain a

sustainable competitive advantage (Wiklund and

Shepherd, 2005; Wales et al., 2013), and it involves ‘the

entrepreneurial strategy-making processes that key

decision makers use to enact their firm’s organizational

purpose, sustain its vision, and create competitive

advantage(s)’(Rauch et al., 2009, p. 763).

Indeed, smallfirms aiming to entrepreneurially succeed

should have an EO to explore and exploit new business

opportunities in the market (Wiklund and Shepherd,

2005). They should engage in innovative actions, take

more risks and perform more proactive activities when

looking for new business opportunities (Wales

et al., 2013).

Although a small firm’s EO may help in exploring and

exploitingnew business opportunitiesthat may foster firm

performance, ithas been suggested that EO is a necessary

but not sufficient condition for firm performance (Cui

et al., 2018). Because a small firm’sEOistosomeextent

the product of its individual members’behavior and

orientations, it has been suggested that organizational

culture may be the driver of a small firm’sEOand

performance (Fayolle et al., 2010). The basic assumption

is that organizational culture may encourage creative

behaviors, which are key ingredients in opportunity

recognition dynamics (Dwyer et al., 2003). Previous

Correspondence: Anis Khedhaouria, Associate Professor, Montpellier

Business Schooland Montpellier Research in Management, France.2300

avenue des Moulins 34185 MONTPELLIER Cedex 4. E-mail a.

khedhaouria@montpellier-bs.com

European Management Review, Vol. 17, 515–528, (2020)

DOI: 10.1111/emre.12383

©2020 European Academy of Management