Performance Feedback, Entrepreneurial Orientation, and Competitive Strategy in Chinese Manufacturing SMEs

This study examines how entrepreneurial orientation (EO) conditions the link between performance feedback and competitive strategy. Using cross-sectional survey data from 341 Chinese manufacturing SMEs, it tests whether aspiration gaps steer firms toward cost-leadership or differentiation and whether decision-makers’ EO moderates these responses. Results indicate that when performance falls below aspirations, firms are less likely to adopt cost-leadership; when performance exceeds aspirations, they are more likely to choose differentiation. EO strengthens avoidance of cost-leadership under negative feedback and amplifies the shift toward differentiation under positive feedback. Conceptually, the study advances performance-feedback research by specifying decision-maker attributes as boundary conditions and by disaggregating EO into innovativeness, proactiveness, and risk taking. Methodologically, it treats cost-leadership and differentiation as concurrent strategic alternatives rather than a single continuum. Practically, the findings urge alignment between feedback signals, managerial EO profiles, and chosen strategies when revising strategic positions.