Small and Medium-Sized Enterprise's Entrepreneurial versus Market Orientation and the Creation of Tacit Knowledge

The ability to create tacit knowledge is important to the competitive advantage of firms in general but is critical to the survival and growth of small and medium-sized enterprises (SMEs). Consequently, SME strategic orientations that facilitate tacit knowledge creation, especially in hostile environments, are important factors that can enhance SME competitiveness. This paper shows that while an entrepreneurial orientation (EO) and environmental hostility are positively related to an SME's cultivation of tacit knowledge, market orientation (MO) is negatively related to SME's tacit knowledge. Additionally, we find that in benign environments, the relationship between an SME's MO and tacit knowledge becomes more strongly negative than in hostile environments.