Contextuality of Entrepreneurial Orientation and Business Performance: The Case of Women Entrepreneurs in Bangladesh

Abstract

The present study intends to contribute to the debate on whether and how the entrepreneurial orientation (EO) theory explains business performance by exploring its efficacy when applied to a constrained context such as a developing country. This debate revolves around the understanding of the nature of EO within a specific context and the degree to which EO, as compared to environmental characteristics, contributes to business performance. In particular, it analyses the influence of EO on the business performance of women entrepreneurs engaged in the handicraft business in Bangladesh, focussing on the effect the business and social environments exert on this relation. The results obtained from hierarchical multiple regression analyses suggest that the EO construct requires flexibility in its conceptualisation and that the implications EO has on performance need to be understood in the light of the context in which the theory is adopted. Concerning the nature of EO, we find that, first, a combination of EO dimensions (rather than them individually taken as per the original theory) explains business performance in a constrained context. In particular, women who show characteristics of innovativeness and pro-activeness (as one construct) seem to report high performances, as well as those showing behaviours more prone to taking risks. However, while barriers posed by the social environment (e.g., socio-cultural norms and customs) tend to impact performance negatively, barriers in the business environment positively relate to business performance. This suggests that further research is needed to investigate how the local constrained context mediates EO’s impact on performance. Our findings contribute to the research efforts directed to understanding the dimensionality of the EO construct when applied to a constrained context and pave the way to the quest for what role the external factors (namely, the social and business environment) play in explaining performance in such a context.