The Impact of Entrepreneurial Orientation Dimensions on the Performance of Industrial SMEs in Yemen: Evidence from a Conflict-Affected Economy

Abstract

This study examines the direct effect of entrepreneurial orientation (EO) dimensions on the performance of industrial small and medium-sized enterprises (SMEs) in the Republic of Yemen. Although entrepreneurial orientation has been widely recognized as a strategic determinant of firm performance, prior studies have reported inconsistent findings regarding the EO–performance relationship, particularly in developing and conflict-affected economies. Drawing on the Resource-Based View (RBV), this study conceptualizes EO as a strategic intangible resource that may contribute to superior organizational performance. The study focuses on five EO dimensions: innovativeness, risk-taking, proactiveness, autonomy, and competitive aggressiveness. A quantitative research design was adopted, and data were collected through a structured questionnaire administered to owners and managers of industrial SMEs operating in Yemen. A total of 402 valid responses were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings reveal that innovativeness and proactiveness do not have significant direct effects on SME performance. Risk-taking has a significant negative effect on performance, whereas autonomy and competitive aggressiveness have significant positive effects. These findings indicate that not all EO dimensions contribute equally to SME performance in unstable and resource-constrained environments. The study contributes to EO literature by extending the analysis of EO dimensions to an underexplored conflict-affected economy and provides practical implications for SME owners, policymakers, financial institutions, and development agencies seeking to strengthen industrial SME performance in Yemen.