Entrepreneurial Orientation and Startup Growth: Mediation of Innovation Capability

Abstract

Entrepreneurial orientation has been widely recognized as a critical driver of startup success in dynamic and competitive markets. However, the mechanisms through which entrepreneurial orientation influences startup growth remain insufficiently explored. This study examines the effect of entrepreneurial orientation on startup growth, with innovation capability serving as a mediating variable. Using a quantitative research design, data were collected from 260 startup founders and managers operating in emerging business environments. Structural Equation Modeling (SEM) was employed to test the hypothesized relationships. The results reveal that entrepreneurial orientation has a significant positive effect on startup growth. Furthermore, innovation capability partially mediates this relationship, indicating that entrepreneurial firms grow faster when their strategic orientation is supported by strong innovation capabilities. The findings highlight that innovativeness, proactiveness, and risk-taking foster the development of new products, services, and processes, which in turn enhance firm growth. This study contributes to entrepreneurship literature by empirically validating the mediating role of innovation capability and extending the resource-based view in the context of startups. Practically, the findings emphasize the importance of nurturing innovative capabilities alongside entrepreneurial behaviors to achieve sustainable growth. The study concludes that entrepreneurial orientation alone is insufficient unless supported by continuous innovation.