Investigation of the Contribution of Entrepreneurial Behavior to Firm Growth using PLS-SEM Approach
Downloads
The bottled water industry in Indonesia has experienced significant growth driven by increasing health awareness and demand for safe drinking water. Despite this growth, the industry is characterized by low entry barriers, leading to intense competition, product homogeneity, and price sensitivity. As a result, many firms can enter the market easily but struggle to sustain long-term growth. This study addresses the challenge of achieving sustainable firm growth in such a competitive environment. This research integrates Entrepreneurial Orientation (EO), Entrepreneurial Leadership (EL), and Strategic Innovation (SI) as key determinants of firm growth. EO reflects a firm’s innovativeness, proactiveness, and risk-taking behavior, while EL ensures effective execution and organizational alignment. SI acts as a transformational mechanism that translates entrepreneurial intent into measurable performance outcomes. A quantitative, explanatory, and cross-sectional approach was employed, with data collected from bottled water SMEs in South Sulawesi. The analysis used Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine direct, mediating, and moderating relationships among variables. The findings indicate that EO alone is insufficient to drive sustainable growth without being supported by SI. SI plays a crucial mediating role in converting entrepreneurial behavior into operational efficiency and market differentiation. Furthermore, EL strengthens the relationship between EO and SI by enhancing execution capability and organizational readiness although the influence is not that strong. The interaction among these variables provides a more comprehensive explanation of firm growth than direct effects alone.
Cillo, V., Messeni Petruzzelli, A., Ardito, L., & Del Giudice, M. (2019). Understanding sustainable innovation: A systematic literature review. Corporate Social Responsibility and Environmental Management, 26(5), 1012–1025. https://doi.org/10.1002/csr.1783
Covin, J. G., & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 75–87. https://doi.org/10.1002/smj.4250100107
Delmar, F., Davidsson, P., & Gartner, W. B. (2003). Arriving at the high-growth firm. Journal of Business Venturing, 18(2), 189–216. https://doi.org/10.1016/S0883-9026(02)00080-0
Grant, R. M. (2019). Contemporary strategy analysis (10th ed.). Wiley.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM) (2nd ed.). Sage Publications.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A primer on partial least squares structural equation modeling (PLS-SEM) (3rd ed.). Sage Publications.
IMARC Group. (2024). Indonesia bottled water market report.
Kock, N. (2015). Common method bias in PLS-SEM. International Journal of e-Collaboration, 11(4), 1–10.
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct. Academy of Management Review, 21(1), 135–172.
Markides, C. (1997). Strategic innovation. Sloan Management Review, 38(3), 9–23.
Mordor Intelligence. (2024). Indonesia bottled water market analysis.
Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879–903.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78–93.
Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761–787.
Renko, M., El Tarabishy, A., Carsrud, A. L., & Brännback, M. (2015). Understanding and measuring entrepreneurial leadership to predict future entrepreneurship. Journal of Small Business Management, 53(1), 54–74.
Rosenbusch, N., Rauch, A., & Bausch, A. (2013). The mediating role of entrepreneurial orientation in the task environment–performance relationship: A meta-analysis. Journal of Business Venturing, 28(4), 633–645.
Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319–1350.
The Jakarta Post. (2015). Bottled water industry growth in Indonesia.
Thornberry, N. (2006). Lead like an entrepreneur. McGraw-Hill.
Wiklund, J., & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses. Journal of Business Venturing, 18(5), 581–597.
Copyright (c) 2026 Mayang Azkiah, Sonny Rustiadi
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
