Governance, Entrepreneurial Orientation and Performance in Italian SMEs.

Abstract Aim of the paper The aim of the paper is to investigate the dynamic of the relationship between governance structure, entrepreneurial orientation (EO), and performance in Italian small and medium-enterprises (SMEs). Italian SMEs are characterized by governance structure in which ownership, board and top management often overlap. Several studies highlight how these features affect the strategy, the innovativeness, the risk-taking, and the financial and organizational performance. Governance structure appears to be a key factor in influencing the entrepreneurial orientation (EO) and consequently firm performance. The contribution to the literature Within the field of studies concerning the corporate governance of SMEs, the present work underlines the possibility to consider also the EO in the investigation of the existing relations between governance and performance of the enterprise. In the field of the literature on the entrepreneurship, this research supports the affirmation that the relationship between the EO and the performance is more complex than a simple direct relationship and underling the necessity to take into consideration also the effects produced by the inside characteristics of the enterprise. The methodology We used a survey data from 89 SMEs. For each company were measured dimensions of governance (GOV), entrepreneurial orientation (EO) and performance (PFR). Structural model with latent variables was applied; both the measurement model and structural model are simultaneously estimated by LISREL. For each hypothesis we calculated path coefficients and test statistical significance, and the resulting model’s goodness of fit indicated how model fit in the analysis. The results and implication The analysis of the results of the research highlight that the opening of the governance mechanisms to the extraneous subjects to both the family and the company, together with effective delegation processes of governance functions, constitutes a determinant key to the possible company results.