Entrepreneurial Orientation, Perceived Competitive Threat, and Competitive Strategy among SMEs in an Emerging-Economy Capital

Entrepreneurial business owners and managers take risks, innovate, and compete aggressively. We use logistic regression to investigate the impact of entrepreneurial orientation (EO) and perceived threat of new competition on three competitive strategies – cost reduction, marketing, and product innovation – adopted by SMEs in Metro Manila, Philippines. Our findings show entrepreneurial SMEs that perceive competitive threat to be more likely than non entrepreneurial and non-threatened SMEs to pursue all three competitive strategies. Market power and predatory players also impact competitive strategy. Our results underscore the importance of a stable and predictable business environment and institutions that foster healthy competition and encourage growth-oriented strategies and innovation among SMEs.

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