Philippine E-Journals

The Effect of Entrepreneurial Orientation on the Profitability of Small Enterprises in Batangas City

Ara Espina

Discipline: Finance

 

Abstract:

The study sought to find the relationship between entrepreneurial orientation and firm profitability using the following measures: sales, sales growth, and gross profit. The study focused on the 150 small enterprises in Batangas City, Batangas, Philippines. Moreover, moderating variables of demographics, company profile, and environmental factors were also examined to see how they affect the entrepreneurial orientation – firm profitability link. Then, a multiple hierarchical regression analysis was done to measure and determine the relationship between entrepreneurial orientation and firm profitability as well as the effect of the moderating variables on the link between these two. It was found that entrepreneurial orientation has a positive relationship with firm profitability. So as a Batangueño entrepreneur becomes more entrepreneurial, the more profitable his business becomes. Moreover, age was found to be a positive moderator in the entrepreneurial orientation – firm profitability relationship. As an entrepreneur ages and as he becomes more entrepreneurial, his profits grow. Finally, environmental munificence and environmental hostility were also found to be moderators in the entrepreneurial orientation – firm profitability relationship. Entrepreneurial entrepreneurs are better off in a munificent environment. Furthermore, entrepreneurial entrepreneurs are better off in a benign (non-hostile) environment.