Exploring the Interaction Effects of Governance and Entrepreneurial Orientation on SMEs Performance.

This paper investigates the interaction effects of governance mechanisms and entrepreneurial orientation (EO) on firm performance. Building on the literature on EO and governance of SMEs, we hypothesize that the governance variables, board composition, top management team, and EO can affect firm performance. Then we examine the interaction effects of these variables conjointly. We test our hypothesis on a final sample of 94 SMEs and we demonstrate that the analysis supports our general logic. We find that when the governance variables are combined with EO, the three way-interaction model explains the variance of the performance better than the main-effects model and better than the two-way interaction model.