Resource organization and firm performance - How entrepreneurial orientation and management accounting influence the profitability of growing and non-growing SMEs

Purpose: The aim of this study is to examine how entrepreneurial orientation (EO) and the use of management accounting practices (MAPs) in decision making affects the profitability of SMEs, and also to analyze the extent to which EO and the use of MAPs affects profitability differently in growing and non-growing SMEs. Design/Methodology/Approach: The paper employs an empirical investigation which is based on a sample of 153 Swedish manufacturing SMEs. The data is analyzed by twoand three way interaction regressions. Findings: EO and MAPs have a positive effect on profitability in non-growing SMEs, but the combined effect of EO and MAPs has no additional effect. However, for growing SMEs, high usage of MAPs in decision making is a prerequisite for EO to influence profitability. Originality/Value: This study is the first to use the resource-based view to examine the relationship between two dimensions of resource organization and SME profitability. Entrepreneurial orientation (EO) is used as a proxy for how resources are organized in order to identify opportunities, and management accounting practices (MAPs) are used as a proxy for how efficiently resources are organized.