Entrepreneurial orientation (EO) and human resources outsourcing (HRO): A “HERO” combination for SME performance

Small/medium enterprises (SMEs) constitute most firms in the United States; thus, the issues that impact their performance are significant for many stakeholders. A factor that enhances firm performance is a firm's adoption of an entrepreneurial orientation (EO). However, studies do not extensively examine the role of human resources, which are important for SMEs, in the EO/performance relationship. The current study extends the knowledge-based view (KBV) of the firm, which focuses on knowledge generation and application as a source of competitive advantage. Specifically, we examine the impact on SME performance of an EO's interactions with human resources outsourcing (HRO) and strategic human capital (HC). The results show that strategic HC moderates the relationship between EO and SME performance; further, the use of HRO is important for SMEs that have a competitive advantage based on HC. We also test the interactions of HC and EO, and provide theoretical and practical implications.