International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471 THE DETERMINANTS OF SMEs PERFORMANCE OPERATING IN FOOD AND BEVERAGE INDUSTRY IN ALGERIA Larabi Chouayb Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia. Malaysia. Tamma Elhachemi School of International Studies, Universiti Utara Malaysia, Malaysia. Abderrahmane Elkheloufi School of Business Management, Universiti Utara Malaysia. Malaysia. ABSTRACT Purpose – The purpose of this study is to examine the moderation influence of organizational trust (OT) between entrepreneurial orientation (EO) dimensions (innovativeness, proactiveness and risk-taking) and small and medium enterprises (SMEs) in the emerging economy and developing country. This paper is conducted in Algeria, choosing the food industry as a sector of this study. Design/methodology/approach – Data were collected from 210 of small and medium enterprises operating in the food industry located in Algeria, using questionnaire survey to collect data and to test six hypotheses exist in this research. The questionnaire were hand delivered to owner/manager of small and medium enterprises. Findings – The Results suggest that innovativeness, proactiveness and risk-taking have a positive and significant influence on small and medium enterprises. The results indicate also that organizational trust moderates the relationship between innovativeness, proactiveness, risk-taking and small and medium enterprises. Research limitations/implications – The findings of this study can be beneficial for owner and manager of small and medium enterprises as they give them insights on how entrepreneurial orientation dimensions affect positively the performance in the Algerian enterprises operating in the food industry. Such a relation suggests that entrepreneurial orientation adoption is crucial factor that can enhance the firm performance by applying innovativeness, proactiveness, and risk-taking notions. Originality/value – This paper among the pioneer studies in the review and the first study in Algeria- contributes to the knowledge by providing empirical evidence on the role of entrepreneurial orientation dimensions and organizational trust on the small and medium enterprises. Keyterms – entrepreneurial orientation (EO), organizational trust (OT), small and medium enterprises (SMEs), performance. 1- INTRODUCTION Literature showed abundance of papers in SMEs performance. The literature review of this study shows a review of performance and related concepts and the factors that influence the SMEs performance. This latter still confronts some problems in terms of satisfying the social and economic obligations. In other words, SMEs show a fragility to grow in size and unable to survive and succeed on a long-term scale, due to some problems pertaining to innovation and entrepreneurship (Dahbia 2016; Makri, 2016; Bouazza, Ardjouman, & Abada, 2015), weak proactiveness to new markets (Ferhati, 2018) and lack of entrepreneurial orientation (EO) spirit (Bouazza, Ardjouman, & Abada, 2015). Makhlouf (2018) indicates that most enterprises are afraid to take-risk and widen their markets and export their products abroad. Therefore, SMEs still suffer due to the absence of innovativeness, proactiveness and risk-taking factors that were not being widely examined in Algerian firms, and because of most Algerian SMEs lacking to make proactive and innovative activities to new markets (Ferhati, 2018). ISSN: 2005-4238 IJAST 453 Copyright ⓒ 2020 SERSC International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471 The following discusses the relationship between EO dimensions (innovativeness, proactiveness and risk-taking). Furthermore, the study shows the limitation studies concerning to organizational trust (OT) and its moderating influence between innovativeness, proactiveness, risk-taking and SMEs performance especially in the food and beverage industry in Algeria. 2- LITERATURE REVIEWS 2.1 Definition of performance and related terms Performance is a fundamental concept as it helps any organization to evaluate its growth and progress. However, past literatures assumed wrongly that performance, efficiency and effectiveness have the same meaning (Abbas, Azid & Besar, 2016), and the same thing can be observed with productivity. Researchers sometimes are confused between the term performance and productivity (Ricardo & Wade, 2001). According to Sundqvist, Backlund and Chronéer (2014), the terms efficiency and effectiveness are being used without clear definitions. Therefore, there is unclear definitions between all these concepts performance, efficiency, effectiveness, and productivity. Compared to performance; productivity, efficiency and effectiveness have different meanings even though some prior studies demonstrated that they are similar. According to Sillanpää, (2011), although performance is difficult to define, but it is for a certain does not mean effectiveness, efficiency or productivity. Performance as a concept is used to assess the efforts of individual or group of people (Corvellec, 1997). As a point of view, this definition mentioned “effort”, and this word should relate with objective, because assessing “the efforts” must be in regards to or compare to something. Therefore, the author should include the word “objective” in the definition for more clarification. Accordingly, performance usually relates to objectives and to what extend the results meet the objectives. All in all, Hornby (2000), has given a stronger definition of performance as an action or achievement considered in relation to how successful it is. “Action” or “achievement” as stated in the definition refers to the efforts, and this action “how successful” means how the results are achieved to the stated objectives. On the other hand, other terms are still ambiguous, especially with efficiency and effectiveness (Sundqvist, et al, 2014). Many practitioners and some authors consider them as synonyms (Zidane & Olsson, 2017). As a matter of fact, there is a confusion in considering these terms (efficiency and effectiveness) as synonyms (Hickey & Brosnan, 2012). Effectiveness and efficiency definitions are totally different from each other, because each of these terms has their own distinct and unique meaning, and they are used for different purposes (Mouzas, 2006). As a similarity, effectiveness and efficiency are both used to assess and measure the performance of organization (measurement tools). In fact, they are commonly being used to measure a firm’s performance (Robbins, 2000). According to Drucker (1977), Griffin (1987) and Anthony (1989), efficiency is often associated with performing activities or doing things right, whereas effectiveness is often related to proper selection of the activities or doing the right things, and the following table clarifies more the difference between these two concepts: ISSN: 2005-4238 IJAST 454 Copyright ⓒ 2020 SERSC International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471 Table 1: The difference between effectiveness and efficiency. Effectiveness Efficiency Effectiveness is “the extent to which the Efficiency is “doing things in the most objective has been achieved” (Samset, 2003) economical way for particular result” (Zidane & Olsson, 2017) Effectiveness asks if we are actually achieving Efficiency asks if the minimum resources are what we want to achieve (Zidane & Olsson, used in goal seeking (Zidane, Olsson & 2017) 2017) Effectiveness refers to an absolute level of Efficiency relates to “the optimal use of the outcome attainment (Pennings & Goodman, resources to achieve the desired output” 1977) (Chavan, 2009) Effectiveness is setting the “right targets to Efficiency means “the construction process uses achieve an overall goal” (Zidane & Olsson, a minimum of resources, time and cost to 2017) produce the specified result” (Zidane & Olsson,2017) From the above Table1, effectiveness and efficiency are two different concepts. In summary, effectiveness is related to what extent the desired objective has been achieved and efficiency is the ability to accomplish the result with minimum resources. As mentioned before, confusions among researchers are not only on the term performance with effectiveness and efficiency, but also on the usage of the term performance with productivity (Ricardo & Wade, 2001). Productivity is a different term in comparison to performance, effectiveness and efficiency. Productivity refers to the volume of work done in a specified amount of time (Abu-Jarad, Yusof & Nikbin, 2010). In this definition, “volume of work” refers to quantity or specific result (effectiveness), and “specific amount of time” refers to using particular resources wisely (efficiency). Parida and Kumar (2009) claimed that productivity is the combination of effectiveness and efficiency, or as Drucker‘s definition of effectiveness and efficiency is, doing things right and doing the right things. As a summary, productivity contains the composition of both effectiveness and efficiency (Rantanen, 1995). 2.2 Entrepreneurial orientation EO is widely established in the literature, thus, the researcher will only focus on the contextual and theoretical gap exists without touching the importance and definitions of this concept. Regardless to the context gap, EO has been mostly studied in countries with a mature economic condition such as United States (Gupta & Batra, 2015). However, limited studies can be noticed in emerging economies