*2.1. Dimensions of Entrepreneurial Orientation*

According to the research on entrepreneurial orientation by Okhomina [21] and Rauch and Frese [22] entrepreneurs are proactive, risk-taking, competitive, and innovative compared to non-entrepreneurs. In the literature, EO has been operationalized in various ways. Wiklund [23] described entrepreneurial orientation in general as:

" ... points to a number of actions that can be regarded as entrepreneurial, i.e., the development of new products and markets, proactive behavior, risk-taking, the start-up of new organizations and the growth of an existing organization".

Researchers tried to identify the dimensions of EO. According to Herani and Andersen [24], Lumpkin and Dess [25], Lumpkin and Erdogan [26], Weaver et al. [27], and Awang et al. [28] proactiveness, innovativeness, risk-taking, competitiveness, and autonomy are the most popular EO used by the researchers. Although there are different views on which dimensions are more relevant and whether EO is unidimensional or not, proactiveness, risk-taking, and innovativeness are accepted by scholars as the most important and relevant dimensions [29]. As reported by Weaver et al. [27], the four dimensions, i.e., autonomy, proactiveness, innovativeness, and risk-taking, have been adapted by numerous research scholars such as Covin and Slevin [30], Knight [31], Dess, Lumpkin, and Covin [32], and Dickson and Weaver [33]. Due to the competitive and independent nature of entrepreneurs, Lumpkin and Dess [2] introduced five important dimensions of EO competitive aggressiveness, proactiveness, risk-taking, innovativeness, and autonomy.

Moreover, some researchers view competitive aggressiveness and proactiveness are similar. For example, Okhomina [21] and Venkatraman [34] stated that "pro-activeness refers to the processes aimed at anticipating and acting on future needs by seeking new opportunities, introducing new products and brands ahead of the competition, and strategically eliminating operations that were in the mature or declining stages of the life cycle." Next, Kotler et al. [35] noticed that to continue success in business entrepreneurs search for new opportunities by introducing new brands and products in competitive markets.

Further, as reported by Okhomina [21], Schumpeter's [36] theory of "creative destruction" suitably describes the head-to-head rivalry between firms as an "incessant race to get and keep ahead of one another". In a highly competitive market, leading firms are aggressively being pursued by existing competitors and unforeseen challenges that seek new ways to outdo them in terms of satisfying customers [37]. Aggressively seeking new ways reflects both proactiveness and competitive aggressiveness. Covin and Slevin [30] also described proactiveness as competing aggressively with other firms [27]. For that reason, this present study excluded competitive aggressiveness from the five dimensions of entrepreneurial orientations identified by Lumpkin and Dess [2].

With regard to associations between the dimensions, some researchers considered EO as a unidimensional concept [30,38]. These researchers suggested combining these four dimensions. Other scholars argue that EO dimensions are independent of each other [2,39]. The argument behind this is that all these four dimensions are performed independently

and differently. Moreover, these researchers stated that in different situations SMEs may take risks in some situations, and in other situations cautious to take the risk. Some researchers provided empirical and theoretical support and shows that EO dimensions each other vary independently [2,40,41]. Based on the above discussion, this research used four EO dimensions: risk-taking, innovativeness, proactiveness, and autonomy.

Krauss et al. [42] also have identified achievement orientation as another orientation construct that affects business performance. In the present study, achievement orientation is included as another orientation factor along with four-other factors; autonomy, innovativeness, risk-taking, and proactiveness complying with the scholars discussed above.

#### *2.2. Relationships between Entrepreneurial Orientation and Business Performance*

Entrepreneurial orientations are always treated as an independent variable of firm performance. This is because performance is treated as a measure of firm success or achievement and is believed by research scholars [30,43] to be due to the strategic orientations (entrepreneurial orientation) of firms.

Previous researchers such as Covin and Slevin [44], Kreiser et al. [39], Lumpkin and Dess [2], Wiklund and Shepherd [45], and Lumpkin and Dess [25], examined the relationships between entrepreneurial orientation on firm performance and found that EO significantly improves business performance. Some other researchers such as Coulthard [46], Madsen [47], Keh et al. [6], Chow [48], and Jantunen et al. [49], identified a positive relationship between EO and business performance in the developed countries and the large-scale organizations. Whereas all research focused on the entrepreneurial orientation of established organizations, still there is a dearth of research on SMEs specifically Malay-based SMEs in Malaysia.

#### **3. Research Framework and Hypotheses**

Based on the previous literature and our research objective, this research proposed a conceptual framework in Figure 1. In this conceptual framework, EO is treated as the independent variable, and firms' performance is considered the dependent variable.

#### **Figure 1.** Conceptual Framework.

#### *3.1. Autonomy*

The word autonomy is related to the freedom of doing actions by a particular individual or group. It represents the independency of given boundaries as per the industry norms within which the concerned person or group has no restrictions from the organization [2]. Autonomy is not only meant as a sovereign act but also signifies the ability to exercise individuals' ideas and efforts to implement them [50]. According to Davis [51] autonomy is in two modes; autocratic and generative where both modes ensure independent actions but generative is process-oriented sharing ideas while autocratic is individualistic applying autonomy. There is an obvious relationship existed between autonomy and organizational performance. "The higher level of autonomy will produce higher organizational performance" quoted by Baba and Elumalai, [52] in conjunction with the various related studies throughout the world. In Ghana, it was found as one of the factors which hindered

organizational change [53] whereas in the case of Australia it is revealed that autonomy was rated as the most important factor to improve firm performance. From the study in the Asian region, Xu, [54] studied in China where he found that gross output was positively influenced by managerial autonomy, and in Japan [55] it is reported that among workers in the financial institution, whereby autonomy was one of the factors which motivated increase in employee knowledge which in turn contributed to increased organizational performance while the similar result was found in another study by Eriksson and Thunberg [56] amongst ICT based SMEs in Sri Lanka. It suggests that there was a positive relationship existed between autonomy and sales growth and employee growth where he pointed out autonomy had the highest strength in the relationship among other factors.

On the contrary, in the context of SMEs scenarios might be an anomaly as the owner of SMEs who is autonomous and likes to drive employees with his ideas and vision and is reluctant to delegate authority properly. In the same way, Kasumawardhani [57], an Indonesian researcher who studied SMEs in central Java, found no positive relationship between autonomy and organizational performance in Indonesia. Thereby, he suggests that offering autonomy can lead to job satisfaction for the employees but in some cases, autonomy might hamper the achievement of goals if the independent spirit and freedom of action of employees are not taken into account with the factors like leader's characteristics and stages of firm's development.
