Government institutional support and business performance in hybrid public organizations: the mediating roles of entrepreneurial governance and entrepreneurial orientation

This study examines whether government institutional support is associated with business performance directly and indirectly through entrepreneurial governance and entrepreneurial orientation in hybrid public financial organizations. Drawing primarily on the institution-based view, complemented by Agency Theory, the Resource-Based View, Resource Orchestration Theory, and Dynamic Capabilities, the study investigates the organizational mechanisms linking institutional support with organizational outcomes. Data were collected from 124 employees across three regional government-owned BPRs in Tasikmalaya Regency, Indonesia, and analyzed using partial least squares structural equation modeling (PLS-SEM) with an embedded two-stage hierarchical component model. The results show that government institutional support is positively and significantly associated with entrepreneurial governance. Entrepreneurial governance is positively associated with both entrepreneurial orientation and business performance, while entrepreneurial orientation is positively associated with business performance. In contrast, government institutional support has no significant direct association with entrepreneurial orientation or business performance. Mediation analysis shows significant indirect associations with business performance through entrepreneurial governance and through a serial pathway involving entrepreneurial governance and entrepreneurial orientation, whereas entrepreneurial orientation alone does not significantly mediate the association. These findings position entrepreneurial governance as a central organizational mechanism linking institutional support with entrepreneurial orientation and business performance in regional government-owned BPRs operating as hybrid public financial organizations.