COVID-19 as an external enabler: The role of entrepreneurial self-efficacy and entrepreneurial orientation

We examine COVID-19 as an external enabling mechanism and propose the interplay between entrepreneurial self-efficacy (ESE) beliefs and entrepreneurial orientation (EO) may help explain why some small firms are enabled to exploit disequilibrating environmental changes. We predict that ESE's relationship with performance is mediated through its strategic posture, and the perceived impact of COVID moderates this relationship. We test our moderated-mediation model using data collected over multiple waves from a sample of 190 small business owners. While our findings suggest that an entrepreneur's self-efficacy may contribute to firm performance alone, it appears insufficient to mitigate the perceived negative consequences caused by the pandemic. However, ESE may play a pivotal role when channeled through the firm's strategic orientation. Our results suggest embracing an entrepreneurial orientation is appropriate for navigating stiff economic headwinds and unprecedented uncertainty. Still, the benefits of such a posture can be fully realized only when entrepreneurial self-efficacious managers lead the firm.