How Entrepreneurial Orientation Contributes to Business Performance: Evidence from Southeast Europe

Abstract

The aim of this paper is to examine the role of entrepreneurial orientation as a multidimensional strategic capability and its effect on firm performance in Bosnia and Herzegovina. Grounded in a theoretical framework that conceptualizes entrepreneurial orientation as a dynamic construct composed of five dimensions - innovativeness, proactiveness, risk-taking, autonomy, and competitive aggressiveness, the research explores relationships between these dimensions and both financial and non-financial performance outcomes. Empirical data were collected using a structured and validated questionnaire administered to managers and owners of 73 enterprises of different sizes across various sectors. Data were analyzed using descriptive statistics, reliability tests, and multiple regression techniques using the SPSS software package. Findings show that the overall entrepreneurial orientation positively and significantly influences firm performance. At the dimension level, autonomy and competitive aggressiveness emerged as particularly important predictors: autonomy is most strongly associated with non-financial outcomes such as customer loyalty, reputation, and process flexibility, while competitive aggressiveness is most closely linked to improvements in financial indicators. Innovativeness, proactiveness, and risk-taking also contribute positively to performance, albeit with more modest incremental effects. The paper contributes theoretically by clarifying the relative role of entrepreneurial orientation dimensions in a transitional economy context and offers practical implications for managers and policymakers, particularly regarding leadership development, organizational design, and policies that foster an entrepreneurial climate to strengthen firm competitiveness.