Entrepreneurial Orientation in low- and medium-tech industries: The need for Absorptive Capacity to increase performance

•We study the relationship between Entrepreneurial Orientation (EO) and performance.•The relationship is explored in low- and medium-tech (LMT) industries.•Absorptive Capacity (ACAP) is a key factor determining the effectiveness of EO.•EO needs to be coupled with high levels of both Potential and Realized ACAP.•Our arguments were confirmed on a lagged dataset of 103 medium-sized Italian firms.

The implications of Entrepreneurial Orientation (EO) for firm performance in low- and medium-tech (LMT) industries are largely unexplored and seem to be limited. In this paper we seek to address this research gap studying how Absorptive Capacity can act as a key factor determining the effectiveness of EO in such a context. Specifically, we adopt the knowledge-based view of the firm and explore the moderating effects of Absorptive Capacity’s Potential and Realized dimensions on the EO–performance relationship in LMT industries. Our regression results based on a lagged dataset of 103 medium-sized firms based in Italy confirm our hypotheses that, in LMT industries, EO has a positive effect on firm performance when coupled with high levels of both Potential and Realized Absorptive Capacity.