ENTREPRENEURIAL ORIENTATION AND ORGANIZATIONAL PERFORMANCE IN NIGERIA
ABSTRACT
This study investigated the role of entrepreneurial orientation and organizational performance in Nigeria. The study employed a descriptive and quantitative research design. The instrument for data collection was structured questionnaire and works on entrepreneurial orientation-Performance nexus. The data was analyzed using the Principal Component Analysis and multiple linear regression analysis. The results showed that five entrepreneurial orientation dimensions as identified in the literature were not exhibited by SMEs in the study area. The entrepreneurial orientation dimensions exhibited by SMEs in Abuja in order of importance were: autonomy, proactiveness, innovativeness, and risk-taking. The entrepreneurial dimension of competitive aggressiveness was not demonstrated by SMEs in Abuja. Innovativeness was the only entrepreneurial orientation dimension out of the five that exerted a positive and Original Research Article Duru et al.; AJEBA, 6(1): 1-21, 2018; Article no.AJEBA.39748 2 statistically significant relationship with the performance of SMEs. However, the other three dimensions of entrepreneurial orientation: proactiveness, risk-taking, and autonomy exerted a positive and insignificant relationship with the performance of SMEs. Therefore, the study, recommends that to add values to their firms, SMEs operators in Abuja need to be innovative in their entrepreneurial activities with emphasis on process and radical innovations. In addition, considering the enabling environment provided by the government for business, SMEs operators should strive and build capacities on the four entrepreneurial orientation dimensions demonstrated by them in this study. Furthermore, the government should organize training for SMEs operators in collaboration with development partners to ensure the adoption and effective implementation of innovativeness in FCT, Abuja.
TABLE OF CONTENTS
TITLE PAGE - - - - - - - ii
DECLARATION - - - - - - - - iii
CERTIFICATION - - - - - - - - iv
DEDICATION - - - - - - - - v
ACKNOWLEDGEMENTS - - - - - - vi
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study - - - - - 1
1.2 Statement of Problem - - - - - - 8
1.3 Objective of the Study - - - - - - 10
1.4 Research Questions- - - - - - - 11
1.5 Statement of the Hypothesis - - - - - 12
1.6 Significance of Study - - - - - - 13
1.7 Scope of the Study - - - - - - 14
1.8 Definition of Key Terms - - - - - 15
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction - - - - - - - - 18
2.2 Conceptual Framework - - - - - - 33
2.3 Theoretical Framework - - - - - - 45
2.4 Empirical Review - - - - - - - 50
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Design - - - - - - 56
3.2 Population of the Study - - - - - - 57
3.3 Sample Size - - - - - - - - 57
3.4Sampling Technique - - - - - - 58
3.5 Method of Data Collection - - - - - 58
3.6 Technique for Data Analysis - - - - - 59
3.7 Model Specification and Variable Definition - - 59
3.8 Measurement of Variables - - - - - 59
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation of Data - - - - - - 60
4.2 Discussion of Findings - - - - - - 79
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary - - - - - - - - 80
5.2 Conclusion - - - - - - - 80
5.3 Recommendations - - - - - - - 93
References - - - - - - - - 95
Appendix - - - - - - - - 98
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Many nations, particularly developing countries have recognized the value of small and medium size enterprises. Small and medium scale enterprises are seen as the engine of growth for any economy. They play an important role in economic growth, innovation, competitiveness and poverty alleviation. They have been characterized as dynamic, innovative, and efficient and their small and medium size allows for flexibility and quicker decision making. Entrepreneurship has become an important issue for policy. At one level, enterprise creation is recognized as important for employment growth and affecting structural change; at another, there is concern to encourage existing firms to become more entrepreneurial as a means of enhancing international competitiveness. In particular increasing attention has been paid to “entrepreneurial orientation” which is seen as a process reflected in recurring organizational performance rather than the actions of individuals possessing certain attributes or characteristics. Entrepreneurial Orientation (EO) is a significant factor for a firm‟s success (Wang, 2008).
Entrepreneurial orientation has been conceptualized as the process and decision making activities used by entrepreneurs that leads to entry and support of business activities. EO has been conceptualized as comprising three dimensions namely innovativeness, risk-taking and pro-activeness. These three components of entrepreneurship are argued by Miller to comprise a basic, unidimensional strategic orientation. Innovativeness involves seeking creative or unusual solution to problems and needs. This dimension includes product innovations, the development of new markets and new processes and technologies for performing organizational functions. The risk-taking dimension refers to the willingness of management to commit significant resources to opportunities in the face of uncertainty. Proactiveness refers to the ability to take the initiative, the ability to take the initiative whenever the situation demands. (Lumpkin and Dess, 2001; Kropp, Lindsay and Shoham, 2006).
Entrepreneurial orientations have contributed significantly to the development of the performance of small and medium enterprises. However, certain urging problems still constricts entrepreneurial orientations from contributing maximally to the performance of the small and medium scale enterprises. Different entrepreneurs tend to have different orientations and this affect how they manage their businesses and ultimately performance of such businesses. Also, the extent to which entrepreneurial orientation variables such as pro-activeness, risk-taking and innovativeness determines the performance or non performance of small businesses need to be empirically determined with a view to knowing their contributions to business performance. Promoting small and medium enterprises is one of the best strategies for achieving national development goals and competitiveness but there are a number of problems associated with small and medium enterprises ( and Van der Heyden, 2006; Hallberg, 2000).
This study focuses on the Entrepreneurial Orientation and Organizational performance in Nigeria. “Individuals have been starting businesses at a rate more than twice that of men globally” (GEM, 2003). This statement illustrates that there are more individuals-owned businesses in the world as compared to men-owned businesses. The Enterprises of Economic Cooperation and Development (OECD) established that, between 15 to 35 percent of businesses are mostly owned by individuals in developed countries. Some of these countries include America, Luxemburg and the United Kingdom with respectively 28, 27 and 16 percent of individuals involved in entrepreneurial activities. Likewise, a rapid increase in individuals entrepreneurs in developing countries in Africa, Latin America and Asia were examined by the OECD in 2004. Though it is stated that intentions are the best predictors of behaviour and that entrepreneurial intentions are the central point in understanding entrepreneurial process (Kruger, 2004); the question is: does entrepreneurial orientation lead to entrepreneurial intention without the influence of the social environment? Therefore this study, which is limited to the Entrepreneurial Orientation and Organizational performance in Nigeria, is aimed at investigating the moderating effect of social environment on the effect of entrepreneurial orientation and entrepreneurial intentions of the Nigerian Organizations. The expected role of individuals living in Nigeria, however, is beginning to change. Socially, economically, and politically individuals are growing more independent. Much of the change can be attributed to the fact that individuals are increasingly familiar with new concepts associated with modernization as Nigeria undergoes political, social and economic reforms. There is social equity, and individuals, including individuals, are at liberty to prosper. With increasing access to education and more equitable treatment in the workplace, individuals have grown measurably more independent (Dzisi, 2008). In present-day Nigeria, many individuals work outside the home, and others both manage and own businesses. Increasing flexibility within a male-dominated society coupled with economic necessity has allowed individuals to run and operate more local businesses, including salons, restaurants, and clothing shops (Dovi, 2006).
This research makes a contribution to existing literature and Nigeria’s development as it seeks to determine and document issues encountered by individuals entrepreneurs in Nigeria and suggests policies and strategies that might be implemented by the Nigerian government to illustrate the gravity of the problem. It also provides suggestions to Individual’s Associations in to providing better services to individuals. The research work focuses on Entrepreneurial Orientation and Organizational Performance in Nigeria.
1.2 Statement of the Problem
Research undertaken by Jalbert (2000) and Roomi and Parrott (2008) have indicated that most individuals have historically been and continue to be discriminated against in Pakistan unlike Nigeria. Likewise, the individuals in Nigeria experience such obstacles influencing them to become socially and financially independent by working or opening their own businesses for their benefit and wellbeing. However, without real prospects for financial independence, they cannot free themselves from these situations. For those who do manage to establish independent businesses in Nigeria, 80% remain at the micro level because of the inability to expand due to the lack of “properly coordinated support, cheap and long-term credit and insufficient access to new technologies”. Entrepreneurs are important to the Nigerian economy, and represent an incredible amount of untapped potential that could benefit the country as a whole. Currently, the potential is hidden in informal sectors such as local, small-scale farming, restaurant and beauty businesses, light manufacturing such as textiles and garments and arts and crafts. A major factor that contributes to the informal nature of most individual’s businesses in Nigeria is the lack of access to capital with which to start an enterprise (Dovi, 2006).
This research examines the obstacles faced by individuals in starting or continuing their business ventures because they do not have access to credit, have insufficient capital and little experience as they are in the informal sector.
1.3 Objectives of Study
The objective of the study is to gain an in-depth knowledge to the challenges faced by entrepreneurs in Nigeria with focus on access to loans, availability of resources and aid from support systems like individuals associations. This study will therefore try to:
1. Determine if there will be main and interaction effect of innovativeness and pro-activeness on organizational performance.
2. Determine if there is Risk-taking, innovativeness and pro-activeness jointly and independently predict organizational performance.
3. Examine the significant difference between risk-taking and organizational performance.
4. Determine if there will be a main and interaction effect of innovativeness and risk-taking on organizational performance.
1.5 Research Hypothesis
In light of the brief exposition on the influence of entrepreneurial orientation on the organizational performance, the following hypotheses were formulated:
1. There will be main and interaction effect of innovativeness and pro-activeness on organizational performance.
2. Risk-taking, innovativeness and pro-activeness will jointly and independently predict organizational performance.
3. There will be a significant difference between risk-taking and organizational performance.
4. There will be a main and interaction effect of innovativeness and risk-taking on organizational performance.
1.6 Significance of Study
This study will clarify the issues that act as challenges towards entrepreneurs in Nigeria. This study intends to examine these variables and determine the extent to which they contribute to the performance of Organizations in Nigeria focusing on the entrepreneurs in Ughelli metropolis. The study is significant for the following reasons:
1. To provide more valuable information for the policy makers towards entrepreneurship development of small and medium enterprises.
2. To increase the knowledge of people about the impact of entrepreneurial orientation on the business performance of small and medium enterprises.
3. More studies emphasizing entrepreneurship will help in enhancing small and medium enterprises performance toward achieving local and regional development.
1.7 Scope of the Study
The scope of the research will be restricted to five chapters and deals with the issues of entrepreneurial orientation and organizational performance in Nigeria using Ughelli North LGA as a case study.
1.8 Limitation of the Study
The following are the limitations of this study.
1. The Study is Limited by Time: The time given to the researcher to carryout this study is obliviously short, therefore make it difficult for the researcher to really go deep into this study.
2. Finance: The researcher is faced by financial constrain, and without finance little or nothing can be done.
3. Respondents: Like it is stated, limitations of the study some people do not respond when they are given questionnaire, some are reserved when it comes to giving vital information. Adequate and complete information on hardly gotten from respondent.
4. Data Collection: The source of data may not be enough for the research to carryout a proper study.
1.9 Definition of Terms
The terms used in the literature are clearly defined below and having these definitions provides the reader easy understanding of the study.
Microcredit: Microcredit is a financial facility whereby loans are given to small and medium entrepreneurs by private banks or institutions without collateral.
Informal and formal Sector: The informal sector of the industry comprises of individuals who are lowly literate and semi-skilled or mainly involved in the service, manufacturing and construction sectors.
The Formal sector involves skilled and highly literate individuals working in the service sectors such as governmental and non-governmental organizations (The Statesman Newswork, 2007).
Individual’s Association: It involves a group of people that have a common interest in individual’s development within a society.
Orientation: the act of Enlightenment, updating or being up to standard.
SMEs: Small and Medium Enterprises
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