Entrepreneurial orientation and its impact on firm growth amongst SMEs in South Africa

  • Released On
    Tuesday, 03 October 2017
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/ppm.15(3).2017.14
  • Article Info
    Volume 15 2017, Issue #3, pp. 166-178
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Entrepreneurial orientation (EO) has been widely touted as a fundamental ingredient for enhancing firm growth. Consequently, this aimed at examining the impact of EO and its dimensional variables (innovativeness, risk-taking, and proactiveness) on SME growth (employment, sales, and asset growth). Using information from 285 SMEs, the results obtained indicated that while EO had a significant positive association with SME growth (employment and sales growth), most SMEs show a moderate level of EO. Also, following the EO dimensions, the findings established the emergence of proactive innovation (a combination of proactiveness and innovativeness) which showed a significant positive association on sales growth. Risk-taking was the only factor that showed a significant influence on employment and asset growth. This study also showed that controlling for the effect of firm age on growth significantly reduced the error of predicting sales growth by 2.3%. This study culminates with recommendations on enhancing EO amongst SMEs in South Africa.

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    • Figure 1. Structural Equation Model (SEM) Path Diagram between Firm Growth and EO index
    • Table 1. Descriptive statistics for EO dimension items and EO Index
    • Table 2. Correlation matrix for EO dimension construct and EO Index
    • Table 3. Regression Analysis of EO dimension constructs and Firm growth
    • Table 4. Goodness of fit for SEM model
    • Table 5. SEM associations between Firm growth and EO index