Moderating effect of external enviroment on the relationship between corporate entrepreneurship, market orientation and performance of banks in UAE

Abstract

Business environment in the United Arab Emirates (UAE) is becoming dynamic and highly competitive. Banks are also facing severe challenges because the performance of the UAE’s economy largely depends on oil prices, and the sudden fall in global oil prices has resulted in lower spending by the government. This has an impact on the banking sector which has largely being involved in financing government projects. To cope with these challenges and achieve superior performance, banks need to be entrepreneurially inclined, and market-oriented. It is against this background that this study investigated the effects of corporate entrepreneurship and market orientation on performance of banks in the UAE. The study also examined the moderating role of external environment on the relationship between corporate entrepreneurship and performance, and between market orientation and performance. Data were collected from the domestic banks operating in the UAE and systematic random sampling was employed in selecting them from the sampling frame. A total of 556 self-reported questionnaires were emailed to the respondents and 199 were received, giving a response rate of 35.8 percent. However, only 170 responses were usable for the final analysis. Findings revealed that corporate entrepreneurship and market orientation were positively and significantly related to organizational performance. Further analysis indicated that external environment did not moderate the relationship between corporate entrepreneurship, market orientation, and organizational performance. Thus, the findings show that corporate entrepreneurship, and market orientation could still positively and significantly related to higher performance, even in the face of competitive challenges. The study concluded with a discussion on the theoretical and managerial implications, the study limitations as well as suggestions for future research.