Contingent Impacts of Entrepreneurial Competencies and Proactive Sales Orientation on Organizational Improvisation and New Venture Performance Relationships: A Study Across Malaysian Ethnic Entrepreneurs

Abstract

Organizational improvisation will enable organizations to respond flexibly and resiliently to unexpected environmental changes, while in contrast, Organizational improvisation enables organizations to react flexibly and resiliently to unexpected environmental changes, with its impact on venture performance dependent on supporting factors such as entrepreneurial competencies and a proactive sales orientation. Accordingly, this study seeks to determine the impact of organizational improvisation on new venture performance with entrepreneurial competencies and proactive sales orientation as moderators. The data were collected from 750 ethnic entrepreneurs operating in Malaysian retail small and medium-sized enterprises (SMEs) through a quota sampling approach and analyzed using modeling techniques. The findings show organizational improvisation plays a critical role in performance of new ventures among Chinese, Malay and Indian owned retail SMEs in Malaysia. Moreover, a significant moderating role of entrepreneurial competencies was found for the organizational improvisation and new venture performance relationship among all samples of ethnic retail SMEs. However, to be a key moderator for only Chinese and Malay retail SMEs, but not for Indian retail SMEs. This implies that the level of resources (i.e., entrepreneurial competencies and proactive sales orientation) available to the organization also impacts new venture performance. Organizations with more resources at their disposal may be able to improvise more effectively and perform better than those with fewer resources. Therefore, entrepreneurs and managers need to consider these contingencies when developing strategies for new venture performance and organizational improvisation.

Plain Language Summary

Contingent Impacts of Entrepreneurial Competencies and Proactive Sales Orientation on Organizational Improvisation and New Venture Performance Relationships: A Study across Malaysian Ethnic Entrepreneurs

Keywords

entrepreneurial competencies proactive sales orientation organizational improvisation new venture performance Malaysian ethnic entrepreneurs

Introduction

According to Hamzeh et al. (2019), improvisation is an organizational capability that entails departing from established procedures and plans to effectively respond to unforeseen or emerging demands. According to Trotter et al. (2013) and Chung et al. (2024), an organization’s ability to manage complexity, ambiguity, and dynamic environments depends on its ability to adapt. Various responsibilities and interruptions are frequently a part of improvisational methods. Improvisational activities are widely used in a variety of fields as a way to augment basic planning procedures in emergency situations, despite the conventional approach of avoiding improvisation in the workplace (Hamzeh et al., 2019). In the current corporate landscape, increased competition, resource scarcity, and a more complex and uncertain business environment have made organizational improvisation even more important, according to entrepreneurship literature (Li & Yu, 2024). It is thought to be a crucial trait for small business owners to have in order to successfully navigate a dynamic marketplace (Charoensukmongkol, 2022). In order to maximize their limited resources and get up and running quickly enough to compete with more established businesses, newly established businesses occasionally employ organizational improvisation (Fultz & Hmieleski, 2021).

Numerous studies pertaining to entrepreneurship have examined the performance of new companies (De Sordi et al., 2024; Yeniaras et al., 2021). Nonetheless, a number of factors have been identified as influencing the success of new businesses (Bruton et al., 2018; Burke et al., 2010; Jin et al., 2017). Even though organizational improvisation is a strong predictor of new venture success, more research is still needed to fully understand how and when new businesses might benefit from its performance advantages (Yeniaras et al., 2021). Accordingly, despite the significance of “Improvisation” in entrepreneurship, there is limited understanding of how emerging businesses can apply organizational improvisation. High-potential, venture-backed startups with substantial resources are the subject of most entrepreneurship studies. Organizational improvisation is sometimes lacking in new businesses (Fultz & Hmieleski, 2021). Research on improvisation has might significantly enhance our understanding of how innovative businesses can thrive (Chetty et al., 2024; Chung et al., 2024). Despite this, new possibilities are often only implicitly acknowledged in these works. As a result, we have a limited understanding of how new enterprises discover and capitalize on opportunities, as well as the impact these opportunities have on their performance. Because most new ventures operate under severe resource restrictions (Aldrich et al., 2020; Yang et al., 2020), the current study focuses on how and under what conditions new start-ups might find and exploit new possibilities.

The current study suggests that among new ventures, the roles of organizational improvisation in discovering possibilities are particularly essential. We present a perspective that views the improvisational behavior of start-ups as common in entrepreneurship research but still a very new concept. Specifically, we propose and test a model that suggests Organizational improvisation positively influences performance of new ventures, specifically when pro-active sales orientation and entrepreneurial competencies moderate. They are the critical mechanisms for resource recombination for emerging businesses. The resource recombination is part of organizational improvisation. To solve issues or seek possibilities, improvisation relies on current resources (Chetty et al., 2024; Fultz & Hmieleski, 2021) and produces new resource combinations (Ciborra, 1996). In improvisation, the existing resources are recombined because it is hard to acquire new resources (Fultz & Hmieleski, 2021) for new businesses. Importantly, resource recombination can improve the performance of new ventures. Entrepreneurs possessing robust commercial acumen and competencies are more inclined strategy. This enables them to more effectively foresee market fluctuations, identify changes, cultivate enduring customer relationships, and establish solid partnerships with others (De Sordi et al., 2024; Pitkänen et al., 2014). Consequently, the cultivation of entrepreneurial competencies alongside a proactive sales orientation may significantly amplify the influence of organizational improvisation on the performance of new ventures. At the same time, limited additional variables have been examined as moderators in the relationship between organizational improvisation and new venture performance, such as entrepreneurial self-efficacy (Hmieleski & Corbett, 2008). Nonetheless, the roles of competencies and sales orientation have not previously been examined as moderating factors that could amplify the impact of organizational improvisation on the performance of new ventures.

Consequently, our model suggests that the integration of entrepreneurial competencies alongside a proactive sales orientation can significantly enhance the performance of new ventures. Previous research concerning the performance of nascent enterprises has examined the impact of the capabilities possessed by their founders (Cooper et al., 1994; Hmieleski & Cole, 2022). Zhao et al. (2013) assert that nascent enterprises are limited to the knowledge and skills possessed by their founding team. The capabilities and expertise of individuals, regarded as the most invaluable assets a company holds in its formative phases, can be characterized as the competencies of its founders (Feeser & Willard, 1990). Product design and sales are two important endeavors that emerging businesses can leverage with the resources and expertise of their founders. This is consistent with the company’s resource-based perspective (Do et al., 2022), which holds that a company’s competitive advantage stems from resources that are rare, valuable, and challenging to replicate or replace. A company’s assets, organizational procedures, skills, and knowledge are all considered its resources (Song et al., 2022). Capabilities represent intricate combinations of skills and knowledge that organizations leverage to optimize their resource utilization via their operational processes (Hulland et al., 2007). Across various organizations, distinct variations in their capabilities can be observed (Do et al., 2022). The impact of organizational improvisation on the performance of new ventures can be enhanced by two essential categories of founders’ skills: entrepreneurial competence and a proactive sales orientation among founders.

This study also highlights the need for venture new to undertake proactive sales. This is especially important where the successful sales of a newly developed product leads to a commercial success for the venture in the long run. Proactive selling is critical for emerging businesses because it requires a lot of effort and can be a critical factor in determining the success of a venture. The effectiveness of the nature of such sales is effective in terms of how it leads to further sales over time. Further research is needed on how a new company’s proactive sales approach relates to its survivability and future success. Many proactive sales strategies seem to prioritize expanding the client base and penetrating new markets. But not every transaction result in more sales or deeper penetration of the market. Winning over new customers becomes simpler over time if the demands of previous customers are met and the references you gain are useful for recruiting future consumers (Pitkänen et al., 2014).

The ramifications of our findings for research on new companies are expected to be significant. While previous research has emphasized the impact of organizational improvisation to improve performance (Chetty et al., 2024; Hughes et al., 2018), we focus on the function of entrepreneurial competencies and proactive sales orientation in enhancing the impact of improvisation to improve performance. Under the contingent impacts of entrepreneurial competencies and proactive sales orientation, our research finds that organizational improvisation has a direct relationship with new venture performance. Furthermore, it is becoming increasingly clear that organizational improvisation does not always result in favorable or negative effects (Hmieleski & Corbett, 2008). By positioning entrepreneurial competencies and proactive sales orientation as important contingencies that affect the relationship between improvisation and new venture performance, we also contribute to a growing research stream that explores the contingent roles of entrepreneurial competencies and proactive sales orientation in enhancing the impact of improvisation on new venture performance (Fisher & Barrett, 2019).

This study further contributes to the expanding understanding of entrepreneurial competencies and proactive sales orientation within organizations. Existing literature on entrepreneurship encompasses research regarding entrepreneurial competencies and proactive sales orientation. Nevertheless, the examination of both variables has been confined to the context of well-established enterprises exclusively. The primary impetus for conducting this research lies in examining the nuanced effects of resource combinations, specifically entrepreneurial competencies and a proactive sales orientation, on the influence of organizational improvisation on the performance of new ventures. The Resource-Based View (RBV) holds that having valuable and distinctive resources helps businesses perform better (Barney, 1991). Using RBV as the underpinning theory (Chang, 2011), this paper argues that unique resource combinations, such as entrepreneurial competencies and proactive sales orientation, would bring superior performance of new ventures. Therefore, organizational improvisation alone will prove insufficient without the contingent roles of entrepreneurial competencies and a proactive sales orientation to attain superior performance for new ventures. Through the development and examination of a model that elucidates the connection between organizational improvisation and the performance of new ventures, we offer multiple contributions to the existing body of literature regarding new venture performance. Initially, by pinpointing two distinct resource combinations, which encompass entrepreneurial competencies and a proactive sales orientation as moderating factors, our research theoretically and empirically addresses the inconsistent results observed in previous studies regarding the connection between organizational improvisation and the performance of new ventures. In this context, we further contribute to the existing body of work on new venture performance by offering a novel examination of the often-overlooked practice of organizational improvisation.

Numerous studies and statistics have shown how important small and medium-sized businesses (SMEs) are to a country’s economic growth. SMEs make up 97.3% of Malaysia’s 662,939 registered establishments, or 645,163 businesses, making up a sizeable portion of the country’s business landscape (Singh & Hanafi, 2020). SME Corp. Malaysia’s most recent annual report states that SMEs made up 65% of all jobs in the nation and contributed 35.9% of Malaysia’s GDP in 2014. The success of Malaysian SMEs has been attributed to a number of factors. According to research, qualities like a reputation for integrity, excellent customer service, and diligence are crucial (Chong & Patwa, 2023). Additionally, government support is a key element for business success (Shamsuddin et al., 2020). Pulka et al. (2021) identified six important factors that contribute to the success of Malaysian SMEs: networking, product development, market focus, customer engagement, supportive management, and effective leadership. Ogujiuba et al. (2020) found that the characteristics of entrepreneurs, the traits of SMEs, and surrounding factors influence the growth and success of these businesses. Despite these successes, many SMEs face significant challenges that threaten their survival. While thorough studies or exact statistics are limited, estimates suggest that the failure rate for SMEs could reach as high as 60% (Aminova & Marchi, 2021).

According to a study by Hadjimichael (2024), SME failures are caused by both internal and external factors. Lack of management experience, inadequate functional skills, inadequate staff training, and unfavorable attitudes toward clients and their preferences are examples of internal issues. Poor supply chain and logistics systems, market saturation, regulatory obstacles, high distribution costs, competitive pressures, growing operating costs, and a lack of funding are examples of external challenges. Technical assistance and advisory support, including government-sponsored incentive programs, are usually always underexploited. Additionally, a lack of skilled and capable labor negatively impacts the quality, efficiency, and productivity of the manufacturing sector. Moreover, Malaysian ethnic entrepreneurs often face unique cultural (heritage and business performance) and structural (Government policy) challenges, as discussed by Tehseen and Anderson (2020). By explicitly highlighting the multicultural environment surrounding new ventures, the case study below shows how organizational improvisation influences new ventures’ performance in the Malaysian retail industry. The study further underscores the importance of organizational-based sales orientation for newly instituted business entities.

Literature Review

Organizational Improvisation

To be consistent with past research, we define organizational improvisation as the purposeful and spontaneous development and execution of new activities (Hmieleski & Corbett, 2008). To fully comprehend the improvisation process, it is necessary to pay attention to four key elements. Improvising with goals in mind means seeking to overcome challenges or take advantage of existing opportunities (Fultz & Hmieleski, 2021). Improvisation’s goal-oriented nature limits activities to achieving the desired objectives. Second, improvisation is triggered by the simultaneous occurrence of cognition and action. The most often cited quality of improvisation is that design and execution occur simultaneously (Tehseen et al., 2024a). This contrasts with methods or modes of activity in which design precedes implementation (Chetty et al., 2024). Third, improvisation involves a purposeful and somewhat organized “break” from existing structures and refers to an out-of-routine action that does not conform to set guidelines and plans or linearized action. It is manifested through the exclusion of routine methods and the introduction of a different, unplanned process. In contrast to routine or repeated behavior, the act of improvisation is characterized by its originality (Moorman & Miner, 1998). Improvisation may not always be the best way to go. It is becoming clear that performance gains or losses are linked to improvisation in a variety of contexts, although previous research has linked improvisation to positive results (Fultz & Hmieleski, 2021; Vera & Crossan, 2005). Following the “contingent perspective of the utility” (Kyriakopoulos, 2011) that is currently being developed on improvisation, we have found that entrepreneurial skills and a proactive sales approach serve as the critical moderating variables in the direct relationship between improvisation and firm performance.

Xiang et al. (2020) note that distinguishing organizational improvisation from other forms of resourcefulness, such as bricolage, effectuation, and trial-and-error learning, is crucial for determining its conceptual boundaries. As the concept and execution come together, there is often little time to get fresh materials; therefore, bricolage is the way to go when improvising. As a result, combinatorial reasoning is the foundation of spontaneous performances (Tehseen et al., 2024a). Bricolage, in contrast to improvisation, does not need a merging of ideas and actions, and it may also happen in isolation from improvisation (Chetty et al., 2024; Trotter et al., 2013). It is possible to causally organize improvisation to be utilized as a strategy for achieving certain business objectives or to successfully assess what is doable even though improvisation itself is an emergent process (Fultz & Hmieleski, 2021). For example, with improvisational learning, momentum keeps moving ahead, and there is no opportunity to go back to a prior point in time and start again (Hmieleski & Corbett, 2006).

Entrepreneurial Competencies

The concept of “competency” has been a longstanding subject of discussion within the realm of strategic management literature (Tehseen et al., 2024b). Entrepreneurial competencies include the basic attributes that contribute to the creation, survival and growth of emerging ventures. They comprise a wide range of elements covering individual attributes, motivational capacity, expertise in a particular business field, social position, ability, and self-image (Bird, 2019). Together, the said competencies reflect a knowledge base, skills, and cumulative experience that improves the chances of entrepreneurial success. Entrepreneurial competencies denote the capacity of a business owner or manager to fulfill responsibilities and tasks through the efficient utilization of resources, thereby enhancing performance (Al Mamun & Fazal, 2018; Pulka et al., 2021). The competencies associated with entrepreneurship are essential for small and medium enterprises, as they are intrinsically connected to their establishment, sustainability, and growth (Chomba & Nyang’au, 2019). According to Man et al. (2002), the competencies of entrepreneurs refer to the capacity of owners and managers of small and medium-sized enterprises to effectively fulfill their roles and responsibilities, ultimately resulting in success and enhanced performance. Consequently, entrepreneurial competencies are considered among the most vital assets for the development and prosperity of SMEs (Pulka et al., 2021).

In a similar vein, entrepreneurial competencies are characterized as the essential traits held by owners and managers, encompassing personal attributes, knowledge, skills, and motivations that facilitate the enhanced operation of SMEs (Mitchelmore & Rowley, 2010). Consequently, as articulated in the Resource-Based View, the competencies and capacity of owners and managers to acquire and cultivate resources within small and medium-sized enterprises are of paramount importance (Barney, 1991). The capacity of owners and managers of small and medium enterprises to generate value is contingent upon their competencies. Consequently, as highlighted in the existing literature, the entrepreneurial competencies possessed by owners and managers play a crucial role in enhancing the growth and overall performance of small and medium-sized enterprises (Al Mamun et al., 2019; Pulka et al., 2021). Entrepreneurial competencies are seen as essential traits of entrepreneurs (Osman & Rahim, 2014). People who start a business and increase its value by identifying opportunities and effectively using resources have a unique skill set (Bird, 1995). Productive entrepreneurs use their skills to help their firms grow. The competencies linked to entrepreneurship are closely related to business growth and long-term success (Bird, 2019; Tehseen et al., 2023).

Proactive Sales Orientation

A proactive sales focus is a key part of a company’s culture. It highlights the need to understand and address the needs of both current and potential clients (Brege & Kindström, 2020). This approach aims to provide value for customers and boost sales growth through insight and new ideas. By prioritizing a deep understanding of customer requirements, a proactive sales orientation fosters meaningful relationships and enhances overall business performance. Proactive behavior is a typical component of academic research, especially in fields such as marketing, entrepreneurship, and organizational behavior. Pitkänen et al. (2014) assert that a crucial element of entrepreneurship is proactive behavior. Furthermore, Zeithaml and Zeithaml (1984) suggested that sales and marketing take an entrepreneurial approach. Proactive sales activity is a powerful predictor of sales success, according to research (Pitt et al., 2002). When staff members take the initiative, service recovery customer ratings are higher and post-sale service performance is better (Challagalla et al., 2009). The unique challenge for an entrepreneurial firm is to be a market pioneer, which underscores the importance of sales orientation with a proactive approach. Selling a product for the first time plays a big role in the overall success of a company.

An entrepreneur can save a lot of headaches in dealing with consumers and entering the market for the first time by taking initiatives in identifying and assessing sales prospects, giving priority to sales operations, deciding to invest in testing, and researching and designing sales approaches. According to the Pitkänen et al. (2014) proactive strategic orientation anticipatory stance toward sales operations increases the likelihood and longevity of success of the first sale by a significant margin. Entrepreneurs who want to challenge the status quo in the new venture company are likely to be more proactive and include testing new sales tactics and developing strong sales arguments (Schulze et al., 2022). They are also more likely to scan and identify sales opportunities in the market (Gruber et al., 2008; Nath et al., 2010; Pitkänen et al., 2014). Therefore, using a proactive sales approach is essential for new firms because securing the first sale entails actively scanning and investigating potential sales prospects.

New Venture Performance

Businesses in their early stages of expansion are often referred to as new ventures. Its primary goal, as stated by Wagner and Zanger (2024), is to launch the product or service to the public and actively seek clients. To compare this variable to a firm’s major competitors, seven items were used, including growth metrics (such as employment growth and sales), financial metrics (such as gross profits, market share, and profit margin), and innovation metrics (such as product/service development speed; McDougall et al., 1994). In all, seven items were derived from Stam and Elfring (2008). There is cynicism about subjective performance indicators, although studies have shown that they are reliable (Barber et al., 2024) and that they correspond well with objective evaluations of new venture performance (Stam & Elfring, 2008). According to previous research, subjective assessments are more suited than objective ones for evaluating performance across sectors. Some examples of this study are Ledwith (2000), Youndt et al. (1996), and Lau et al. (2010). When scores are greater, the results are better. We used an average of the responses to learn about the new company’s performance.

Innovation and the creation of novel solutions to social and environmental issues are key components of new ventures, which are described as organizations created to leverage a repeatable and scalable economic model (Shepherd et al., 2021). Because it is believed that absolute measurements of performance (such as sales or net income) do not adequately convey the strategy, this study employed new venture performance, which focuses on performance in comparison to competitors. Wiklund and Shepherd (2003) employed a similar approach to evaluate performance in comparison to competitors, aligning with RBV’s theoretical focus. Since the companies in question are privately held, precise financial information is generally not available. As a result, the respondents’ subjective evaluations of three performance-related question items were used to assess the firm’s performance (Barber et al., 2024; Figure 1).

Figure 1.

Conceptual model.

Impact of Organizational Improvisation on New Venture Performance

Organizational performance has always been the major emphasis of strategic management research (Gilley et al., 2004). Organizational success is evaluated in two ways: financially and operationally (Venkatraman & Ramanujam, 1986). A company’s capacity to achieve economic goals, including ROI, ROS, asset expansion, and market share gain, is evaluated based on financial performance (Joshi & Sharma, 2004). Measures including market share, customer happiness, product quality, and performance of new products are used to assess operational success (Vera & Crossan, 2004). In contrast to the strategy domain’s extensive research on business strategy (Porter, 1980), organizational structure and capabilities (Yeniaras & Unver, 2016), and strategic planning and planning flexibility (Sirén & Kohtamäki, 2016), the sparse literature on the topic of organizational improvisation and performance is striking. Various research on improvisation has used variables such as new product creation, export performance, and venture success at the employee, team, and organizational levels (Hmieleski & Corbett, 2006; Vera & Crossan, 2005). This is even the case despite scant research on the correlation between improvisation and business success. An inquiry helpful for conducted in this manner could be beneficial for upper management, as it may reveal how to modify their operations to achieve greater profitability, competitiveness, and a more favorable market position (Schulze et al., 2022).

Organizational improvisation is associated with both financial performance and the speed and accuracy with which a business responds to opportunities, markets, competitors, and customers (Crossan et al., 2005). Financial performance, strategic performance, and customer capital are all influenced by organizational improvisation. To sum up: We think there’s a connection between organizational improvisation and customer capital, strategic performance, financial performance, and increased responsiveness to competitive pressures. Customer capital includes things like a company’s goodwill, prestige, and the degree to which customers recommend and buy from the business. Several studies have shown that organizational improvisation significantly improves business performance (Adomako et al., 2018; Al Issa, 2021; Charoensukmongkol, 2022; Crossan et al., 2005; Yeniaras et al., 2021). As a result, the following is our hypothesis:

Hypothesis (H1): Organizational Improvisation positively impacts New Venture Performance among Malay entrepreneurs, Malaysian Chinese entrepreneurs, and Malaysian Indian entrepreneurs.

Moderating Impact of Entrepreneurial Competencies on Organizational Improvisation and New Venture Performance Relationship

According to Gruber et al. (2015), entrepreneurial competencies equip individuals with the required knowledge and ability to identify opportunities. These talents can be harnessed so that new businesses can offer distinctly unique and attractive product and services (Reese et al., 2021). Returning to the RBV, entrepreneurial competencies are major and inimitable resources that advance a firm’s sustainable competitive advantage by inducing capabilities (Do et al., 2022). Therefore, entrepreneurial skills might be tested as a moderator variable. Studies on innovation and firm performance have provided varying results (Rosenbusch et al., 2011). For example, some studies have established a correlation between innovation and competitive advantage (Distanont & Khongmalai, 2018). Other researches, have provided evidence of negative association between innovation and firm performance (Subramanian & Nilakanta, 1996). Previous studies could be led to conflicting results because earlier studies did not investigate moderators such as entrepreneurial competencies that could make the innovation and link with firm performance stronger. Variability in outcomes of innovation-performance relationship is also due to lack of understanding of the moderating effects of specific variables on the strength of their relationship (Rosenbusch et al. In different contexts, there has been demonstrated the positive and significant moderating impact of entrepreneurial competencies on performance of a firm.

Hypothesis (H2): Entrepreneurial competencies moderate the effect organizational improvisation has on new venture performance. This means that the impact of OI on NVP will be higher in case of high level of EC among Malay entrepreneurs, Malaysian Chinese entrepreneurs, and Malaysian Indian entrepreneurs.

Moderating Impact of Proactive Sales Orientation on Organizational Improvisation and New Venture Performance Relationship

For a firm to be successful, it must regularly participate in sales-oriented behavior to build rapport, demonstrate services and goods, and clinch the deal with the customer all at the same time (Al Mamun et al., 2019). According to the RBV, a company’s distinctive skill that may contribute to exceptional performance and maintain a competitive advantage is sales-oriented behavior (Do et al., 2022). Al Mamun et al. (2019) indicated that selling orientation is more likely to be used by managers to boost sales when the work environment is less encouraging. Proactive sales orientation has been identified by researchers as a key indicator of a company’s ability to achieve excellent success (Al Mamun et al., 2019; Jaramillo et al., 2007). Those companies that put a high value on sales-oriented abilities outperform their rivals. In the opinion of Churchill et al. (1985), selling qualities are the most essential component in corporate success. Then Wachner et al. (2009) found that a proactive sales orientation boosts performance. Furthermore, sales performance is highly and favorably associated with selling abilities. However, very few researchers have demonstrated that proactive sales orientation has a favorable and significant moderating impact on venture performance in various situations (Y. Gao et al., 2018; Hussain et al., 2017). Proactive firms gain significant advantages from early market entry, allowing them to secure a competitive edge, enhance returns and profitability, and achieve greater brand recognition compared to their primary rivals (Ferreira & Coelho, 2020).

In emerging markets like China, new enterprises adopt proactive strategies to assess their environment for opportunities that are advantageous (Do et al., 2022). Identifying new possibilities is particularly crucial for nascent enterprises in developing markets, as proactiveness enables them to capitalize on emerging opportunities, ultimately leading to improved performance (Donbesuur et al., 2022). Moreover, proactive enterprises often achieve superior market returns and industry success by launching innovative products and services ahead of their competition. A proactive sales orientation is essential for developing new processes and creating value (Wales et al., 2020). Therefore, promoting a proactive approach and a strong PSO can greatly help firms succeed in changing markets. This study proposed the following hypothesis based on theory and existing literature: Hypothesis (H3): Proactive Sales Orientation (PSO) affects how Organizational Improvisation (OI) influences New Venture Performance (NVP). This means that the effect of OI on NVP will be greater when PSO is high among Malay entrepreneurs, Malaysian Chinese entrepreneurs, and Malaysian Indian entrepreneurs.

Research Methodology

To carry out research among the target participants, standardized questionnaires were employed. Table 1 presents all the variables, associated metrics and their respective sources. For ensuring contextualization of measurement instruments, a pilot testing was done with professionals of varying ethnicities in the small and medium-size retail business in Malaysia (Tehseen et al., 2023). Data collection encompassed various cities in West Malaysia through a mix of quota sampling and snowball sampling (Robinson, 2014). Snowball sampling was first used and was based on the professional and social media networks available to identify ethnic entrepreneurs in SME retail businesses (T. A. Williams & Shepherd, 2016). They were, in turn, requested to identify others in the study’s population. However, regarding sample size, this method was growing inefficient (Kumar, 2011). Therefore, quota sampling that is a non-probability approach but more organized was implemented to handle and diversify the more substantial sample that appears to have 750 respondents.

Table 1.

Item Measures and Source.

Variables	Items	Factor loadings	α	CR	AVE	Sources
Organizational improvisation (OI)	OI1: We improvise solutions to problems.	0.689	.740	0.824	0.504	Hmieleski and Corbett (2006), Fultz and Hmieleski (2021)
	OI 2: We figure out actions as we go along.	0.726
	OI 3: We deal with unanticipated events on the spot.	0.702
	OI 4: We respond problems.	0.722
	OI 5: We develop and execute novel strategies/approaches for our work in the moment.	0.637
Entrepreneurial competencies (EC)	EC1: I identify goods or services that customers want.	0.798	.778	0.803	0.521	Man et al. (2008)
	EC2: I develop long-term trusting relationships with others.	0.837
	EC3: I negotiate with others.	0.776
	EC4: I recognize and work on my own shortcomings.	0.784
New venture performance (NVP)			.827	0.872	0.515	Stam and Elfring (2008), Fultz and Hmieleski (2021)
	Growth
	NVP1: Sales growth.	0.595
	NVP2: Employment growth.	0.619
	Financial
	NVP3: Market share	0.748
	NVP4: Gross profits.	0.728
	NVP5: Net profit margin	0.763
	Innovation
	NVP6: Innovation in products and services.	0.772
	NVP7: Speed in developing new products and services.	0.692
Proactive sales orientation (SO)	To achieve our first successful sale, we invested a lot of time and energy into…SO1: The actual sales of products/services to the potential customers.	0.847	.899	0.925	0.712	Pitkänen et al. (2014)
	SO2: The development of sales arguments for the product/service in question.	0.850
	SO3: Experimenting with selling tactics with the potential customers.	0.807
	SO4: Creating and identifying sales opportunities in the market.	0.845
	SO5: Spotting new, rising needs among potential customers.	0.868

Note.α = Cronbach’s alpha; AVE = average variance extracted; CR = construct reliability.

Finally, the dataset was inspected for outliers and tested for normality. Bootstrapping (5,000 resamples) was used to alleviate the multivariate normality assumption. Cook’s distance was calculated to check for influential outliers with a value of more than 1 being considered problematic (Stevens, 1992). The entire sample was retained by not deleting any cases (750 respondents). To examine the influence of multiple predictors concurrently, we employed Partial Least Squares Structural Equation Modeling (PLS-SEM; Miller et al., 2020). According to Hair et al. (2010), SEM is a strong analytical tool that allows for the estimation of causal relationships between latent constructs from the observed ones based upon the theory model, which normally develops a model with complications in the interdependencies. SEM is most suitable for making estimates of the relationships inter-latent variables as well as intra-latent variables referring to measurement error (Kline, 2011; Verma et al., 2019). Given the study’s aim to validate Hofstede’s cultural theory of entrepreneurial innovation across three ethnic groups in Malaysia, Covariance-Based SEM (CB-SEM) was selected as the best-fit approach. Confirmatory factor analysis and structural model assessment constituted the two-step process in this approach (Anderson & Gerbing, 1988). Data analysis was done using the SPSS Version 25 and AMOS Version 22 software.

When the measurement model was examined for validity and reliability, all model fit indices produced adequate to outstanding results, as shown in Table 1. To assess reliability and validity of the constructs, Cronbach Alpha (α), Composite reliability (CR), and Average Variance Extracted (AVE) were used. The factor loadings had to be more than 0.70. Only those items whose outer loadings were between 0.40 and 0.70 were considered for removal to increase CR or AVE values (Kock, 2019). Hair et al. (2014) suggested that composite reliability and AVE values should be above 0.70 and 0.50, respectively. The measurement model was confirmed to have a convergent validity since all factor loadings, CR, and AVE values were significantly higher than the prescribed cut-off thresholds (see Table 1).

Data was collected from the targeted respondents through quota sampling which ensured that there was equal representation of 250 respondents from each of the, three major ethnic groups, thus meeting the targeted sample of 750 respondents. This method was relevant in ensuring structured and balanced data collection. Prior studies of the same research context have embraced multiple non-probability sampling methods (Fontaine & Richardson, 2005). This method was chosen for its ability to make the data collection process structured and balanced. Previous studies in a similar research context have also used several non-probability sampling methods to ensure sample diversity (Fontaine & Richardson, 2005). The focus of this study was retail small and medium enterprises owned by ethnic Malaysian entrepreneurs. To identify eligible businesses, we used the classification criteria defined by the Small and Medium Industries Development Corporation (SMIDEC) of Malaysia. They have to meet the following criteria; (1) they should be new retail business owners, (2) actively managing the business in any state of West Malaysia, (3) the length of operation of the business should be at least 3 years, (4) be qualified as small enterprises (5–30 employees with annual sales turnover between RM 300,000 and RM 3 million), or (5) businesses qualified as medium enterprises (30–75 employees with annual turnover between RM 3 million and RM 20 million). In testing hypotheses related to new venture performance (NVP), this study adopted a set of control variables guided by prior studies on entrepreneurial outcomes (Hmieleski & Corbett, 2008). In particular, firm age, type of industry, and annual revenue were used as control variables. Firm age was determined by the number of years the business had been in operation, while revenue was measured by aggregating the business’s total receipts for the current fiscal year. We also considered firm formation rates—the number of ventures established—to adjust for potential biases stemming from assumptions that organizational age is directly linked to job satisfaction and performance.

Because several underlying variables demonstrated potential associations with NVP, it was necessary to control for their influence statistically, as recommended by Becker (2005). To identify the control variables that significantly affected both the outcome variable and the relationship between predictors and outcomes, we performed a One-Way ANOVA test using SPSS (see Table 2). Results from the analysis indicated that both age and education had a significant impact on the performance of new ventures. Therefore, these two variables were retained as control variables in the final analysis model. We used SPSS to perform a One-Way ANOVA test in order to identify the current study’s control variables that may affect the outcome variable and the effect of the predictor (see Table 2), because more than one independent variable in the understudy develops a considerable association, so the understudy variables should be controlled (Becker, 2005). The analysis showed that Age and education had a significant impact on NVP; therefore, these two variables were selected as control variables for further analysis.

Table 2.

One-Way ANOVA Test.

Demographics/ categories	Chinese one-way ANOVA test			Malay one-way ANOVA test			Indian one-way ANOVA test
Categories	Mean square	F	Sig.	Mean square	F	Sig.	Mean square	F	Sig.
Gender	0.431	1.915	0.014	0.630	2.790	0.001	0.233	1.434	0.013
Age	0.500	0.985	0.479	0.257	0.645	0.836	0.584	1.919	0.014
Education	2.373	2.612	0.000	0.844	2.622	0.007	2.037	2.064	0.000
Experience	1.108	1.485	0.092	0.800	0.854	0.617	0.901	1.113	0.253

The final sample consisted of 750 SMEs from Malaysia, with 250 respondents each from the Malay, Chinese, and Indian ethnic groups. A detailed demographic breakdown of the sample is provided in Table 3. To assess the adequacy of the sample size, G*Power 3 software was used. Based on a medium effect size, the recommended minimum sample size for the proposed research model is 119 participants to achieve a statistical power of 0.95 (Hair et al., 2017). Given that the study managed to collect data from 250 participants from each ethnic group, the model is statistically stronger and more generalizable. In trying to establish the potential for common method bias, Harman’s single-factor test was used. The results showed that no single factor accounted for most of the variance, which confirmed the absence of a common method bias in the dataset. Specifically, the total variance explained by the first principal component was 27.22% for the Chinese group, 22.53% for the Indian group, and 25.46% for the Malay group, all well below 50% (Tehseen et al., 2017). These findings support the validity of the data and the reliability of the analyses that follow.

Table 3.

Descriptive Statistics.

Demographics/ categories	Chinese			Malay			Indian
Categories	FQ	PE	S.E	FQ	PE	S.E	FQ	PE	S.E
Gender			0.031			0.032			0.030
Female	150	60.0		117	46.8		80	32.0
Male	100	40.0		133	53.2		170	68.0
Age			0.045			0.039			0.049
20–30	85	34.0		57	22.8		112	44.8
31–40	118	47.2		152	60.8		95	38.0
41–50	47	18.8		41	16.4		40	16.0
>50							3	1.2
Education			0.064			0.055			0.053
Bachelor	61	24.4		83	33.2		105	42.0
Masters	112	44.8		106	42.4		96	38.4
MS	55	22.0		51	20.4		40	16.0
PhD	10	4.0		7	2.8		9	3.6
Any other	12	4.8		3	1.2
Experience			0.056			0.061			0.057
<1	9	3.6		20	8.0		16	6.4
1–3	49	19.6		50	20.0		92	36.8
4–6	74	29.6		78	31.2		81	32.4
>6	118	47.2		102	40.8		61	24.4

Note. FQV= frequency; PE = percent; S.E = standard errors.

The models were later re-estimated using the data for each of the ethnic groups, Chinese, Malay, and Indian, separately to ascertain the reliability of the regression results. That is, it was possible to see whether the same relationships were repeated in the different ethnic contexts. Finally, in estimating the model parameters, robust standard errors were generated using the sandwich (Huber-White) estimation, which ensures heteroscedasticity-corrected standard errors. This technique is especially important since it does not impose any stringent distributional assumptions and provides asymptotically consistent estimates to the standard errors (Wang et al., 2013). Given a large sample size in our study, the use of the robust covariance estimation is well justified and well-served (Maas & Hox, 2004). The analysis examined the impact of key predictors—organizational improvisation, entrepreneurial abilities, and proactive sales orientation—on the performance of new ventures (NVP). The robustness of our findings across the ethnic subgroups is presented in Table 4, confirming the stability and reliability of the estimated relationships.

Table 4.

Parameter Estimates with Robust Standard Errors.

					95% confidence interval						95% confidence interval						95% confidence interval
Parameter	β	Robust std. Error	t	Sig.	Lower bound	Upper bound	β	Robust std. error	t	Sig.	Lower bound	Upper bound	β	Robust Std. Error	t	Sig.	Lower bound	Upper bound
OI->NVP	.314	0.082	3.842	0.000	0.153	0.474	.274	0.062	4.411	0.000	0.151	0.396	.181	0.059	3.061	0.002	0.064	0.297
EC->NVP	.701	0.069	10.182	0.000	0.565	0.836	.487	0.045	10.718	0.000	0.397	0.576	.008	0.052	0.153	0.878	−0.094	0.109
SO->NVP	−.045	0.043	−1.032	0.303	−0.130	0.040	−.104	0.049	−2.115	0.035	−0.202	−0.007	.576	0.721	0.058	12.415	0.000	0.607

Note. OI = organizational improvisation; EC = entrepreneurial competencies; NVP = new venture performance; SO = Proactive sales orientation.

Empirical Results

The validity and reliability of the constructs were tested using a holistic appraisal of the measuring methodology. Using the maximum likelihood estimation approach, Confirmatory Factor Analysis (CFA) was conducted to assess the concept validity (Brown, 2015). The measuring scales displayed a good level of reliability with Cronbach’s alpha values ranging from .740 to .899, demonstrating internal consistency (Taber, 2018). Factor loadings, Composite Reliability (CR), and Average Variance Extracted (AVE) were used to evaluate convergent and discriminant validity alongside Cronbach’s alpha. First, factor loadings above 0.70 were statistically significant using the criteria set by Henseler et al. (2009). Followed the advice of Hair et al. (2014), and retained items with loadings, which ranged between 0.40 and 0.70 provided their removal did not result in an improvement of the CR or AVE values. The convergent validity of the measurement model was confirmed as all factor loadings, CR and AVE values were above the permissible levels (Table 5). In addition, discriminant validity was proved using the Fornell-Larcker criteria which require that the square root of the AVE for each construct to be greater than its correlations with other constructs. See Table 6 for the findings that prove the suggested measurement methodology is reliable and has good construct validity.

Table 5.

Measurement Model.

Constructs	Age	Education	NVP	OI	EC	SO
Age	1
Education	0.039	1
NVP	−0.007	0.110^**
OI	−0.043	0.179^**	0.538^**	1
EC	−0.079^*	0.099^**	0.735^**	0.502^**	1
SO	−0.045	0.131^**	0.328^**	0.520^**	0.399^**	1

Note. OI = organizational improvisation; EC = entrepreneurial competencies; NVP = new venture performance; SO = Proactive sales orientation.

correlation is significant at the .05 level.

correlation is significant at the .01 level (2-tailed);

Table 6.

The Analysis of Fit Indices.

Measurement models	NFI	IFI	TLI	CFI	GFI	AGFI	CMIN/df	RMSEA
Threshold values	>0.9	>0.9	>0.9	>0.95	>0.95	>0.8	<3	0.05–0.1
Configural invariance (baseline model)	0.788	0.826	0.799	0.825	0.757	0.719	4.615	0.057
Metric invariance	0.986	0.991	0.965	0.991	0.991	0.951	2.71	0.034

Our evaluation of the conceptual framework was based on a variety of goodness-of-fit metrics, as suggested by Byrne (2001). All fit indices met or exceeded allowed levels, indicating that the suggested model gives an outstanding match to the data, according to the structural model analysis. Several indices were used to evaluate the model’s fit: CMIN/df, GFI, AGFI, IFI, NFI, CFI, and RMSEA (Root Mean Square Error of Approximation). Given the impact of large samples on chi-square statistics, it is permissible to have a CMIN/df value below 5.00, as stated in the recommendations of C. Gao et al. (2020). Assuming an RMSEA of 0.08 or less, the known literature states that model fits with GFI, NFI, and CFI values of 0.95 or above are good. The results of the study that compared entrepreneurial innovativeness with cultural values provide strong evidence that the proposed model well describes the data. The fit statistics for the structural model are as follows: NFI = 0.98, IFI = 0.99, TLI = 0.96, CFI = 0.99, GFI = 0.99, AGFI = 0.95, CMIN/df = 2.71, and RMSEA = 0.034, as given in Table 6. The suggested structural model is supported by these values, which indicate its robustness and validity.

Main Analysis

As illustrated in Figure 2, organizational improvisation (OI) shows a positive and statistically significant relationship with new venture performance (NVP) across all three ethnic groups: Chinese (β = .239, p < .001), Malay (β = .276, p < .001), and Indian (β = .116, p < .05). These findings provide strong support for Hypothesis 1 (H1) across the Chinese, Malay, and Indian samples. Furthermore, the moderating role of entrepreneurial competencies (EC) on the relationship between OI and NVP was also found to be positive and significant in all three groups: Chinese (β = .139, p < .001), Malay (β = .068, p < .05), and Indian (β = .169, p < .05). These results confirm that Hypothesis 2 (H2) is supported across all ethnic subgroups. Regarding the moderating effect of pro-active sales orientation, SO has positive and significant effects in the Chinese (β = .439, p < .05) and Malay (β = .174, p < .01) sub samples. However, the moderating effect was statistically insignificant in the Indian sample (β = .066, p = .282), implying no support for H3 in this group. As summarized in Table 7, H2 was supported for all three ethnic groups, while H3 was supported only for the Chinese and Malays. The third hypothesis (H3), which held for the first data sample (where the sales orientation is proactive), was not supported by the Indian sample.

Figure 2.

Path analysis for Chinese, Malay and Indian samples.

Table 7.

Hypotheses Result.

		Chinese				Malay				Indian
Hypotheses	Relation among constructs	β	S.E.	C.R.	p	β	S.E.	C.R.	p	β	S.E.	C.R.	p
	Control variable
	Age	.031	0.042	3.403	.000	.028	0.030	0.926	.350	−.056	0.032	−3.119	.002
	Education	.024	0.033	0.718	.473	.064	0.049	4.43	.000	.055	0.036	2.712	.008
	Direct effect
H1	OI->NVP	.239	0.059	4.029	***	.276	0.055	5.046	***	.116	0.053	2.182	.029*
	Indirect effect
H2	OI × EC–>NVP	.139	0.040	3.442	***	.068	0.044	4.518	.029*	.169	0.057	2.986	.003**
H3	OI × SO–>NVP	.422	0.053	4.033	.024*	.174	0.053	7.394	.003**	.066	0.062	1.075	.282^NS

Note. NS = not significant; OI = organizational improvisation; EC = entrepreneurial competencies; NVP = new venture performance; SO = proactive sales orientation.

p < .05. **p < .01. ***p < .001.

Multigroup Analysis

Organizational improvisation has empirical evidence from this study to significantly enhance the success of new ventures among ethnic groups in Malaysia. Organizational improvisation is seen to positively affect business growth of Chinese-Malay, Chinese-Indian and Malay-Indian entrepreneurial ventures. The interaction effects of entrepreneurial abilities and proactive sales orientation, on the other hand, were found to have positively and significantly moderated the relationship between organizational improvisation and new venture success among Chinese-Malay, Chinese-Indian, and Malay-Indian entrepreneurs. Such moderating effects indicate that entrepreneurial competencies and a proactive sales mindset escalate the effects of improvisational capabilities on business performance in multicultural contexts. The PLS-Multi-Group Analysis (PLS-MGA) further demonstrated that ethnicity has a significant moderating effect on the relationship between organizational improvisation and venture success. Specifically, a positive and significant effect was observed among the Malay-Indian and Chinese-Malay groups, while no significant effect was measured for the Chinese-Indian group. Finally, a small but statistically significant difference was established regarding a proactive sales orientation on organizational improvisation-new venture success relationship between Chinese-Malay and Chinese-Indian entrepreneurs. On the other hand, there existed insignificant variations among the Malay-Indians in this relationship. These findings are presented in Table 8.

Table 8.

Multigroup Analyses Result.

		Chinese-Malay		Chinese-Indian		Malay-Indian
Hypothesis	Relation among constructs	β	p	β	p	β	p
H1	OI->NVP	.250	.004**	.206	.006**	.212	.006**
H2	OI × EC–>NVP	.112	.011*	−.130	.008^NS	.118	.006**
H3	OI × SO–>NVP	.068	.006*	.067	.004**	.072	.606^NS

Note. OI = organizational improvisation; EC = entrepreneurial competencies; NVP = new venture performance; SO = proactive sales orientation; NS = not significant.

p < .05. **p < .01.

Discussion

Organizational improvisation is a crucial predictor of new venture performance in the case of all the three ethnic groups namely Chinese, Malay and Indian. Business professionals in all corners of the world will be reminded of the significance of individual strengths in deciding a company’s ability to succeed as a result of this critical study. The findings are in accord with the claims of Orugun et al. (2017) and Al Zarooni (2021) that notwithstanding the limitations imposed by a small firm’s size, a competitive advantage may be gained and maintained in SMEs attributable to organizational support. A similar emphasis lays on the CEO’s role in acquiring and developing information, skills, and talents influencing a new venture performance (Barber et al., 2024). Consistent with the current, finding that organizational improvisation has a significant direct impact on new venture performance, the results suggest that entrepreneurs should engage in skill development as the critical first step to new venture success.

Entrepreneurial competencies and a proactive sales orientation were also shown to be significant moderators on the relationship between organizational improvisation and new venture performance. From an RBV perspective, resources generate value when they are combined in ways that are rare, difficult to imitate, and strategically aligned. Improvisation on its own creates flexibility, but without the cognitive skills to evaluate options and the market orientation to commercialize ideas, its performance impact remains limited (Nath et al., 2010). According to the findings, entrepreneurs who possessed a higher level of the tested competencies performed better than those with a lower level in hostile and dynamic environments (as opposed to Stable Ones). Also known as the “turbulent and unstable business climate,” entrepreneurs with high entrepreneurial abilities appear to be better prepared than their less competent rivals. Small company owners may be able to mitigate the detrimental effects of a volatile and hostile business climate by displaying relevant abilities (Bag et al., 2024). Friedman and Carmeli (2022) found that CEOs have an important influence in deciding whether a corporation can withstand “turbulent” events.

Theoretical Implications

To better understand how entrepreneurial capability (EC), new venture performance (NVP), problem-solving orientation (PSO), and organizational innovation (OI) function as critical resources for SMEs in achieving a competitive advantage and enhancing organizational performance, this study is grounded in the RBV of the firm. By using RBV as the theoretical basis, the study views these internal capabilities as strategic resources that lead to a sustained superior performance in the highly dynamic and competitive Malaysian retail industry. Theoretical contributions are also significant as the study additionally extends RBV theory in the context of emerging markets in relation to such diverse entrepreneurial contexts and environments. Prior studies have looked at elements of innovation and capability development, but this research takes EC, NVP, PSO and OI into a framework and assessed the individual and interactive effects on firm performance. It also demonstrates the moderating roles of EC and PSO in strengthening the relationship between OI and NVP, thereby enriching the existing theoretical discourse on capability-based performance models in SMEs.

Secondly, the study broadens the knowledge base regarding the retail industry in Malaysia, which has received limited attention in existing academic research, by analyzing a large sample segregated by ethnicity. The developing country contexts help bridge this gap since much of the extant RBV researches have dealt with developed economies. By doing so, the findings contextualize the theory with background knowledge that makes the application of RBV theory more applicable and appropriate for use in different contexts worldwide. The research also validates the emergence of more data and interpretation in unison about the performance and growth of SMEs in the retail industry. Through its multidimensional analysis, it allows strategic exploration of complex interdependence of organizational capabilities. In particular, the study suggests the configuration of EC and PSO capabilities that better leverage OI for NVP in a holistic view of capability development in entrepreneurial firms. The study is, therefore, significant theoretically by broadening the RBV in a multicultural SME context and providing new insights regarding the leadership role of internal resources in enhancing performance. It not only contributes to academic literature but also lays out the groundwork for future research aimed at further exploring capability-based performance models in emerging market settings.

Managerial Implications

This study found that organizational improvisation, entrepreneurial competencies, and proactive sales orientation were the most essential internal resources that firms should inculcate before gearing up for further measures. For an SME to be successful in today’s highly competitive market, it must be handled aggressively to maximize earnings and build a positive reputation while also positioning itself to grow in the future. It is acceptable for future studies to emphasize the skills and resources of small and medium-sized enterprises (SMEs) in enhancing academic knowledge, given that they are a significant part of most economies.

Our research has several management implications, not only for Chinese, Malay, and Indian entrepreneurs, but also for practitioners doing business or considering interaction with clients in multicultural countries and communities, such as Malaysia (Fontaine & Richardson, 2005; Tehseen et al., 2023). According to our research, SME’s may use the results of this research to discover and teach the “correct things” to practicing and potential entrepreneurs. To help entrepreneurs better manage their businesses, educators and policymakers must consider the need to develop improvisation, entrepreneurial competencies, and proactive sales orientation programs that can help them become better managers themselves. Self-report data are all that is used in this study despite its important theoretical and practical implications for mental health care policy. All data, including the covariates and predictors (improvisation, entrepreneurial competencies, and proactive sales orientation) and outcome (new venture performance) measurements, were gathered through self-report (business environment). Even though some have criticized this method, it was judged essential due to the difficulty involved in assessing each of these characteristics independently. In addition, self-reporting is frequent in studies of managerial behavior, particularly that of entrepreneurs operating in small and medium-sized enterprises (Man et al., 2008). The technique has also been claimed to be valid for measuring entrepreneurial competencies (Hughes et al., 2018; Hussain et al., 2017). Having said that, future research should seek methods to obtain competence data from multiple informants to minimize the likelihood of response bias.

Limitations and Future Research Direction

Like most scholarly investigations, this study is subject to certain limitations whilst at the same time offering meaningful directions to future research. First, the use of a cross-sectional research design limits drawing firm conclusions about the causal relationships between the examined variables. Although a longitudinal research strategy would have been ideal for this study because it would have allowed us to better capture temporal dynamics and strengthen causal inferences, it was not feasible due to practical constraints, such as the difficulty of repeatedly surveying a diverse group of company founders and owners. However, we argue that the theoretical justification behind positioning of variables in the chosen conceptual framework is internally coherent. This is in addition to our post hoc robustness checks of testing alternative models. The results consistently hold true for hypothesized relationships thus establishing theoretical rationale for the arrangement of variables in our conceptual framework. Future studies should attempt to verify causality using longitudinal or quasi-experimental designs, such as controlled field trials (D. W. Williams et al., 2019).

Secondly, while the use of the heterogeneous sample in our study helps cross-contextually generalize the results in multiple entrepreneurial contexts, it offers less help to for contextualization. Future studies may attain more insights by using more targeted sampling strategies focusing on specific industries or geographic regions to better understand how organizational improvisation relates to new venture performance in varying operational contexts. Using larger and refined data sets coupled with stratified sampling may identify differences between different sectors of business. Also, future research can adopt experience sampling methods (ESM) or qualitative case studies to establish how improvisational enactments amount to lived experience for startup founders/teams (Fultz & Hmieleski, 2021). This approach may help to reveal contextual nuances and micro-dynamics that may be washed out in macro measures such as survey-based studies.

Thirdly, while our study focused on entrepreneurial competencies and sales orientation as key moderators of the relationship between organizational improvisation and venture performance, other potentially significant contingent variables not relevant to this study featured in the conceptual model. For instance, an organization’s absorptive capacity – its ability to identify, assimilate, and apply new knowledge, may lead to responsiveness to arising challenges, and a conversion of unanticipated opportunities into a competitive advantage (Hughes et al., 2018). Besides, the future studies could also consider the role of environmental turbulence, strategic flexibility, organizational culture, or leadership style as additional moderating or mediating mechanisms. Lastly, while improvisation is positively linked to such environments as dynamism and uncertainty, there could be limits to its efficacy. The concept of “too much of a good thing” (Pierce & Aguinis, 2013) posits that beyond a certain point, excessive improvisation may incur strategic inconsistency, operational inefficiency, or resource misallocation. Thus, future research should look at the optimal level and scope of improvisational behavior in entrepreneurial ventures in terms of deliberate, strategic improvisation and the ad hoc, reactive type of decision-making. How, when, and to what extent improvisation contributes to the Success of new ventures warrants a more nuanced understanding with significant implications to theory development and managerial practice. While this study provides some good theoretical contributions to knowledge of organizational improvisation and the way that it interfaces with the entrepreneurial capabilities with sales orientation, such limitations listed above ought to be taken care of in future research as they may come up with a more refined theoretical framework, which may be applicable to different entrepreneurial contexts.

Footnotes

Acknowledgements

Special thanks go to the study participants for trusting us and sharing their valuable experiences.

ORCID iDs

Syed Arslan Haider

Hisham Idrees

Ethical Considerations

The study was conducted in accordance with the Declaration of Helsinki, and approved by the Institutional Review Board (IRB) of the School of Economics and Management, Southwest Jiaotong University, Chengdu, Sichuan, China, approved this study (SEM-103-1773), dated, 11-03-2023. The study subjects gave their consent, and the principles specified in the Declaration of Helsinki were followed.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Data Availability Statement

The raw data that support the results of this study are available from the corresponding authors, on reasonable request*.

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