Mediating or moderating? Innovative approach to the role of flexibility in the relationship between entrepreneurial orientation and firm growth under different market conditions

Abstract

This study aims to identify the roles played by firm flexibility (FLEX) in the relationship between entrepreneurial orientation (EO) and firm growth (FG) under different market conditions. In particular, it tests the mediating and moderating roles of FLEX, along with the moderating role of market conditions regarding FLEX. This is a longitudinal study that examines entrepreneurial behaviors during the pandemic crisis and afterwards. The sample represents small companies operating in the printing industry in Poland (150 surveyed during the crisis, and 145 afterward). The study uses structural equitation modeling. The results confirm the positive impact of EO on FG and show the positive impact of EO on FLEX regardless of market conditions. The role of FLEX varies along with changes in market conditions. Specifically, FLEX impacts FG and mediates the EO→FG relationship in a stable market, whereas it does not impact FG nor mediate the EO→FG relationship in a hostile market. Concurrently, FLEX moderates the EO→FG relationship in a hostile environment yet does not in a stable market. The significance of the differences in the strengths of the considered effects (moderation or mediation during the individual periods) are confirmed with a statistical test. This observation unveils that market conditions moderate the role of FLEX regarding the EO→FG relationship. With its findings, this study contributes to the literature on entrepreneurship and small and medium enterprises as well as FG.