The effects of entrepreneurial orientation, foreign market knowledge and dynamic capability on export performance of manufacturing SMEs in Malaysia

Small and medium enterprises (SMEs) make up the largest business sector in Malaysia. The Malaysian government has implemented various initiatives and measures with the aim of promoting the growth of Malaysian SMEs in the global arena. Although globalisation has created opportunities for SMEs to use export strategy when competing internationally, Malaysian SMEs still face difficulties when trying to survive in a rapidly changing market. This study intended to examine the effects of entrepreneurial orientation, dynamic capability, and foreign market knowledge on Malaysian SMEs’ export performance, taking into account the international opportunity recognition as a mediating variable. This quantitative study collected primary data via survey questionnaires. The study sample comprised of Malaysian export-oriented manufacturing SMEs, and 180 valid responses were received. SmartPLS 3.0 was applied to test the hypotheses. Findings show that the dimension of entrepreneurial orientation, namely market sensing capability is the strongest predictor of SMEs’ export performance. In addition, findings indicate that international opportunity recognition significantly mediates the relationship between entrepreneurial orientation, foreign market knowledge, and SMEs’ export performance. The empirical evidence contributes to a better understanding of the interplay between entrepreneurial orientation, dynamic capability, foreign market knowledge, international opportunity recognition, and SMEs’ export performance that could induce greater attention to this area. The findings can help SME managers to identify critical success factors that can help them improve their export performance. Furthermore, policymakers can take further steps to formulate new policies and action plans to enhance the competitiveness of Malaysian SMEs in the export sector.