Nonlinear Effects of Entrepreneurial Orientation on Small Firm Performance: The Moderating Role of Resource Orchestration Capabilities

Abstract

This research examines the nature of the relationship between entrepreneurial orientation ( EO ) and small firm performance. The results from a sample of 258 Swedish small firms indicate an inverted U ‐shaped relationship between EO and small firm performance. Drawing upon resource orchestration theory, we theorize that information and communication technology capability and network capability help small firms overcome their resource‐related ‘liabilities of smallness’ and observe these capabilities to increase the optimal levels and performance‐related returns from EO . In the absence of these capabilities, returns to firm performance from increasing EO were observed to reach harmful levels. The study implications are discussed. Copyright © 2013 S trategic M anagement S ociety.