(1) PROF. DR. MASOOD UL HASSAN (2) ASGHAR IQBAL (Ph.D Scholar) ENTREPRENEURIAL ORIENTATION AND SMEs’ FINANCIAL PERFORMANCE, TESTING THE ROLE OF KNOWLEDGE CREATION AND TOP MANAGEMENT TEAM CHARACTERISTICS: AN EMPIRICAL EVIDENCE FROM SOUTHERN PUNJAB, PAKISTAN Presenter SIBTA SHOAIB M.Phill Department of Commerce, Bahauddin Zakariya University, Multan Co-Authors (1) PROF. DR. MASOOD UL HASSAN (2) ASGHAR IQBAL (Ph.D Scholar) Department of Commerce Bahauddin Zakariy University, Multan

Introduction Small and medium fabric of enterprise defines the fabric of a country. It has been estimated that SMEs account for 90% enterprises in Pakistan which employ 80% of the non-agricultural labor forces. SMEs contributes 25% export of manufacturing goods. Furthermore 40% of GDP is the outcome of business efforts of SMEs(state of SMEs in Pakistan. SMEs in Pakistan have great potential to contribute considerably to economy. Nevertheless, to flourish and to survive with a competitive edge in turbulent business setting, it is necessary for SMEs to devise and execute their strategy by engaging in entrepreneurial actions To deal with these challenges previous research findings have suggested entrepreneurial orientation (EO) as a key ingredient for organizational success and have been found to lead to higher performance (Wiklund and Shepherd, 2005). It is further argued that firms that possess higher levels of entrepreneurial orientation will perform better than those with lower levels of entrepreneurial orientation (Davis, 2007; Rauch, 2009). The development of entrepreneurial orientation requires organizational members to engage in intensive knowledge activities (Gold, Malhotra, & Segars, 2001; Nonaka &Takeuchi, 1995; Nonaka, Toyama, & Konno, 2000).

Introduction Knowledge creation process allows firms to amplify knowledge embedded internally and transfer knowledge into operational activities to improve efficiency and create business value (Nonaka & Konno,1998; Nonaka & Takeuchi, 1995; Nonaka, Toyama, & Nagata, 2000). When new ventures develop and formulate entrepreneurial orientation, they can utilize the SECI spiral of knowledge creation to connect and arrange new and existing knowledge from many different individuals and leading It to firm performance (Gold, Malhotra, & Segars, 2001; Nonaka &Takeuchi, 1995; Nonaka, Toyama, & Konno, 2000). Additionally, prior research studies analysis achievement need, tolerance for ambiguity, risk taking and locus of control with respect to entrepreneurial characteristics and were identified as correlates of being or desiring to be an entrepreneur (Ahmed, 1985; Begley& Boyd, 1987; Bonnett & Furnham, 1991). Characteristics of the top management team (TMT), such as tolerance for ambiguity, risk taking propensity, internal locus of control and need for achievement, are believed to interact to influence firm performance. (Lumpkin& Dess.1996.)

Theoretical Framework Autonomy Risk taking innovativeness proactivness Competitive aggressiveness Top management team characteristics Internal locus of control Need for achievement Tolerance of ambiguity Risk taking propensity Knowledge Creation Internalization Socialization Externalization Combination Firm Performance Efficiency Profitability growth

Methodology The research opts the quantitative paradigm and its philosophical standing is positivism. This study opts deductive approach as deductive approach is most suitable for positivist paradigm. The study of the relevant variables identified has been carried out through survey methods. For this, the study developed a questionnaire to study the relationships. Close-ended questions has been used for this purpose. PLS-SEM has been used for analyzing the relationship among variables.

Findings

Findings

Recommendations SMEs can magnify and expand knowledge all the way through vibrant exchange between implicit and explicit knowledge. Managers can generate new knowledge by fostering a challenging environment that facilitate employees to share and swap implicit knowledge. Freedom & encouragement of employees for new ideas generation can enhance firm innovative behaviour, proactive performance and risk taking attitude Exploit knowledge created as a result of firm’s entrepreneurial behaviour to increase profitability, efficiency and growth.

Recommendations The results are consistent with the upper echelons theory which holds that top management characteristics influence performance through decision making as, they are running the enterprise and their vision toward business is of utmost importance New insights for SMEs’ managers, to strengthen entrepreneurial spirit and develop entrepreneurial behavior in creating their firms’ strategy to achieve a competitive advantage even though they face resource limitation. valuable underpinning for policy-makers to expand their strategy to sustain and enhance performance of SMEs sector by implementing entrepreneurial activities, knowledge creation process and developing particular top management characteristics