LINKING ENTREPRENEURIAL ORIENTATION TO MSME PERFORMANCE IN THE CONTEXT OF MICRO, SMALL AND MEDIUM ENTERPRISES: THE MEDIATING ROLES OF INNOVATION AND CONTEXTUAL AMBIDEXTERITY

Abstract

Although in recent decades, entrepreneurial orientation has been widely explored, recent studies in knowledge and innovation management studies have focused on its effect on entrepreneurial orientation business outcomes tied to entrepreneurial orientation, yet the mechanisms through which it influences performance remain unclear.  There is a lack of consensus when it comes to explaining how entrepreneurial orientation is related to Micro, Micro, Small, and Medium Enterprises (MSME) performance.  This study explores the connection by looking at the mediating influence of innovation ambidexterity and contextual ambidexterity. Through a study on a sample of 52 MSME owners in Semarang City, Indonesia, and by using partial least squares structural equation modeling (PLS-SEM), we found that entrepreneurial orientation does indeed affect MSME performance indirectly. Innovation ambidexterity fully mediates the relationship between entrepreneurial orientation and MSME performance, whereas contextual ambidexterity does not mediate this effect. This research contributes significantly to the broader understanding of how MSME can thrive in rapid market fluctuations, offering valuable implications for both academics and practitioners in the realms of knowledge and innovation management.