The Impact of Strategic Orientation on Performance of Retail SMEs by Structural Equation Model Evaluations

Overcoming challenging circumstances in a dynamic environment requires markets to have superior performance compared to their rivals. In order to achieve superior performance, this study analyzed two strategic orientation variables which might influence a retail firm performance - market orientation (MO) and entrepreneurial orientation (EO). It also examined the effect of Volatile Environment (VE) as a moderator for both direct affiliations towards the performance. Quantitative data were gathered from the 152 owner-managers of retail firms within the scope of Small and medium-sized enterprises (SMEs) in Malaysia. Dataset were processed for validity and reliability using SPSS and the multivariate regression performed using Smart PLS software. Four hypotheses were postulated and tested through structural equation model evaluations. The results indicated VE strongly moderated the relationship between MO and firm performance (FP). However, there was no significant moderating effect on the relationship between EO and performance. For direct effect relationship, the results revealed that MO had positive significant influence on FP. In contrast, EO had no significant effect on the retail firm performance.