The effects of entrepreneurial orientation on firm financial performance through dynamic capabilities in the hotel industry

Abstract

The purpose of this study was to investigate the effects of entrepreneurial orientation on firm financial performance through dynamic capabilities in hotel industry. Entrepreneurial orientation comprised of innovativeness, risk taking, and proactiveness whereas dynamic capabilities consisted of market responsiveness, organizational learning, coordination, and integration. Return on assets (ROA) was obtained from firm financial statement and a set of questions (profitability, market share, sales quantity, and return on asset) and it measured firm financial performance concerning. The unit of this study was at the firm level which focused on the CEOs or managers of the three to five stars hotels in Thailand. Two hundred and seven samples were obtained based on stratified random sampling and simple random sampling method. The population was divided into groups by region and then the simple random sampling was used. Data was analyzed based on descriptive statistics, Confirmatory Factor Analysis, and Structure Equation Modeling. Findings revealed 2 results from financial statement and the questionnaires. According to the firm financial performance obtained from financial statement showed that entrepreneurial orientation had no effect on firm financial performance while the performance from the questionnaires indicated that entrepreneurial orientation had positive relationship to firm financial performance. Considering the weight factor of entrepreneurial orientation, proactiveness had the largest factor loading of 0.761 and followed by innovativeness, and risk-taking about 0.744 and 0.501 respectively. In addition, the results indicated positive effects between the entrepreneurial orientation and dynamic capabilities, and presented positive effects between dynamic capabilities and firm financial performance, which supported the findings of the previous studies. Concerning dynamic capabilities, market responsiveness had the largest factor loading of 0.897 and followed by organizational learning, coordination, and integration at 0.841, 0.716, and 0.697 respectively. The results also showed that entrepreneurial orientation had positive relationship with firm financial performance through dynamic capabilities. It could be concluded that dynamic capabilities performed as full mediator between entrepreneurial orientation and firm financial performance.