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
1.2 Statement
of the Problem
1.3 Objectives
of Study
1.5 Research Hypothesis
1.6 Significance
of Study
1.7 Scope of
the Study
1.8 Limitation
of the Study
1.9 Definition
of Terms
CHAPTER
TWO
LITERATURE
REVIEW AND THEORETICAL FRAMEWORK
2.1 What
is Entrepreneurial Orientation?
2.1.1 Entrepreneurship and Small Industry
Development
2.1.2 Entrepreneurial
Management Research
2.1.3 Attributes
of an Entrepreneur
2.1.4 Challenges
Faced By Entrepreneurs
2.2 Theoretical Framework
2.2.1 Summary
of Literature Review
CHAPTER
THREE
RESEARCH
METHODS
3.1 Research
Design
3.2 Population
of the Study
3.3 Sample
Size
3.4 Sampling
Method
3.5 Method
of Data Collection
3.6
Validity of Research Instrument
3.7 Reliability of Research
Instrument
3.8 Method
of Data Analysis
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation
4.2 Data Analysis
4.3 Hypothesis Testing
4.3.1
Testing of Hypothesis I
4.3.2 Test
of Hypothesis II
4.3.3 Test
of Hypothesis III
4.4 Discussion
of Findings
CHAPTER
FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.3 Recommendations
REFERENCES
APPENDIX: QUESTIONNAIRE
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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