Entrepreneurial Orientation and Business Performance: An Assessment of Start-up Companies

  • Dr. Jagadish Brahma Goulap
Keywords: Entrepreneurial Orientation (EO), Business Performance (BP), Innovativeness, Proactiveness, Risk-Taking

Abstract

The purpose of the present research is to analyse from the core constructive influence of entrepreneurial orientation (EO) (risk taking, innovativeness, and pro-activeness) on the business performance (BP) of start - up enterprises. Various related literature aspects discussed for to embrace entrepreneurial orientation to increase business performance.  Profitability index, size, age, return on sales, technological advancement, profit and sales among others used to relate EO with BP. Linear regression models, descriptive statistics, Pearson’s correlation, Cronbach's Alpha for reliability test etc., among many used to relate statistically EO with BP. Sample of 53 start-up firms from Addis Ababa, Ethiopia, chosen for data interpretation. It is found out that there is a positive relationship exists between Entrepreneurial Orientation (EO) and Business performance (BP). This study wants to create awareness and knowledge among startup entrepreneurs to adopt entrepreneurship. In the global competitive and dynamic environment to outperform rivals, start-up companies expected to become entrepreneurial to meet long-term goals of superior performance by discovering new and better entrepreneurial opportunities. To focus more on entrepreneurial opportunity, attention be given on knowledge creation and understanding towards EO process, practices, and decisions making, which will help to have more competitive advantage for higher performances and as a whole develop countries economy.

Downloads

Download data is not yet available.

References

Azlin Shafinaz Arshad, Amran Rasli, Afiza Azura Arshad, & Zahariah Mohd Zain. (2014). The impact of entrepreneurial orientation on business performance: A study of technology-based SMEs in Malaysia. Procedia - Social and Behavioral Sciences, 130, 46–53.

Baird, I. S. & Thomas, W. (1990). What is risk anyway? Using and measuring risk in strategic management. In R. A. Bettis and H. Thomas (Eds.), Risk, strategy, and management, PP. 21-52, Greenwich, CT, JAI Press.

Balkenende, J. P. (2007). Minister-president Balkenendebij ‘Nederland innovatief’. Available at: http://www.minaz.nl/Actueel/Toespraken/2007/December/Minister_president_Balkenende_bij_Nederland_Innovatief.

Bateman, T. S. & Crant, J. M. (1993). The proactive component of organizational behavior: A measure and correlates. Journal of Organizational Behaviour, 14(2), 103-118.

Begley, T M. & Boyd, D P. (1987). Psychological characteristics associated with performance in entrepreneurial firms and smaller businesses. Journal of Business Venturing, 79-93.

Boohene, R., Marfo-Yiadom, E., & Yeboah, M. A. (2012). An empirical analysis of the effect of entrepreneurial orientation on firm performance of auto artisans in the Cape Coast Metropolis. Developing Country Studies, 2(9), 77-86.

Busenitz, L.W. & Barney, J. B. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision making. Journal of Business Venturing, 12, 9-30.

Canina, L., Palacios, D., & Devece, C. (2012). Management theories linking individual and organizational level analysis in entrepreneurship research. International Entrepreneurship and Management Journal, 8(3), 271–284.

Collins J. C. (2001) Good to great. New York: Harper Business.

Combs, A. W. (1986). Person-centered assumptions for counsellor education. Person Centered Review, 1, 72-82.

Coulthard, M. (2007). The role of entrepreneurial orientation on firm performance and the potential influence of relational dynamism, Working Paper, 1-12.

Covin, J. G. & Slevin, D. P. (1991). A Conceptual model of entrepreneurship as firm behaviour. Entrepreneurship Theory and Practice, 7-24.

Covin, J. G. & Slevin, P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 75–87.

Covin, J. G. & Slevin, D. P. (1986). The development and testing of an organizational-level entrepreneurship scale. Frontiers of Entrepreneurship Research, 628-639.

Covin, J. G. & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 75-87.

Covin, J. G., Green, K. M., & Slevin, D. P. (2006). Strategic process effects on the entrepreneurial orientation- sales growth rate relationships. Entrepreneurship Theory and Practice, 57-81.

Dalmeijer M. (2009). Nieuw belastingplan stimuleert ondernemerschap. Available at: http://www.ondernemenjuistnu.nl/2009/11/nieuw-belastingplan-stimuleert-ondernemerschap/.

Danny Miller & Peter H. Friesen. (1978). Archetypes of strategy formulation, Management Science, 24(9), 921–933.

Davidson, H. (1987). Offensive marketing: How to make your competitors followers. London: Penguin.

Dickson, P. R. & Giglierano, J. J. (1986). Missing the boat and sinking the boat: A conceptual model of entrepreneurial risk. Journal of Marketing, 50, 58-70.

Fauzul, M. F., Takenouchi, H., & Yukiko, T. (2010). Entrepreneurial orientation and Business performance of small and medium scale enterprises in Sri Lanka. Asian Social Science, 6(3), 34-46.

Fatoki , O. (2014). The entrepreneurial orientation of Micro Enterprises in the retail sector in South Africa. J Sociology SocAnth, 5(2), 125-129.

Fernández-Mesa, A., Alegre-Vidal, J., & Chiva-Gómez, R. (2012). Entrepreneurial orientation, organizational learning capability and innovative performance. Journal of Technology Management & Innovation, 7(2), 157–170.

George, B. A. (2006). Entrepreneurial orientation: A theoretical and empirical examination of the consequences of differing constructs representations. Entrepreneurship Research Conference. Bloomington. Indiana.

Hamilton, R. T. & Harper D. A. (1994). The entrepreneur in theory and practice. Journal of Economic Studies, 21(6), 3–18.

Herrera, L. & Sánchez-González, G. (2012). Firm size and innovation policy. International Small Business Journal, 31(2), 137–155. DOI: http://dx.doi.org/10.1177/0266242611405553

Hoq, M. Z. & Chauhan, A. A. (2011). Effects of organizational resources on organizational performance: An empirical study of SMEs. Interdisciplinary Journal of Contemporary Research in Business, 2(12), 373-385.

Javalgi, R. G. & Todd, P. R. (2011). Entrepreneurial orientation, management commitment, and human capital: The internationalization of SMEs in India. Journal of Business Research, 64, 1004–1010.

Ireland, R. D., Hitt, M. A., & Sirmon, D. G. (2003). A model of strategic entrepreneurship: The construct and its dimensions. Journal of Management, 963-989.

Karaoglu, K., Bayrakdaroglu, A., & San, F. B. (2013). The impact of corporate entrepreneurship on firms’ financial performance: Evidence from Istanbul Stock Exchange firms. International Business Research, 6(1), 163-175.

Kaya, H. & Agca, V. (2009). Entrepreneurial orientation and performance of Turkish manufacturing FDI firms: An empirical study. Available at: http://gdex.dk/ofdi/14%20Kaya%20Harun.pdf.

Knight, G. A. (1997). Cross-cultural reliability and validity of a scale to measure firm entrepreneurial orientation. Journal of Business Venturing. 213-225.

Kraus, S., Rigtering, J. P. C., Hughes, M., & Hosman, V. (2012). Entrepreneurial orientation and the business performance of SMEs: a quantitative study. Netherlands. Review of Management Science, 6, 161–182.

Kreiser, P. M., Marino L., & Weaver, K. M. (2002). Assessing the psychometric properties of the entrepreneurial orientation scale: A multi-country analysis. Entrepreneurship Theory and Practice, 131-146.

Lussier, R. N. (1995). A nonfinancial business success versus failure prediction model for young firms. Journal of Small Business Management, 33(1), 8−20.

Lumpkin, G. T. & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review. 135-172.

Lumpkin, G. T. & Dess, G. G. (2001). Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle. Journal of Business Venturing, 16(5), 429−451.

Matchaba-Hove, T. M. & Vambe, A. K. (2014). Entrepreneurial orientation and performance of small businesses in the retail sector in the Eastern Cape Province of South Africa. Journal of Marketing and Management, 5(2), 12-39

Mathew Hughes & Robert E. Morgan. (2007). Deconstructing the relationship between entrepreneurial orientation and business performance at the embryonic stage of firm growth. Industrial Marketing Management, 36, 651–661.

Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Journal of Management Science, 770-791.

Miller, D. & Friesen, P. H. (1982). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic Management Journal, 1-25.

Montes F. J. L, Moreno A. R., & Fernandez L. M. M. (2004). Assessing the organizational climate and contractual relationship for perceptions of suport for inovation. International Journal of Manpower, 25, 167–180.

Morris M. H., Kuratko D. F., & Covin J. G. (2008). Corporate entrepreneurship and innovation. (2nd ed.). Thomson Higher Education, Mason.

Murphy, G. B., Trailer, J. W., & Hill, R. C. (1996). Measuring performance in entrepreneurship research. Journal of Business Research, 15-23.

Muthee-Mwangi, M. M. A. & Ngugi, K. (2014). Influence of entrepreneurial orientation on growth of micro and small enterprises in Kerugoya, Kenya, European Journal of Business Management, 1(11), 417-438.

Poon, J. M. L., Ainuddin, R. A., & Junit, S. H. (2006). Effects of self-concept traits and entrepreneurial orientation on firm performance. International Small Business Journal, 24(1), 61–82.

Porter, M. E. (1985). Competitive advantage: creating and sustaining superior performance. New York: The Free Press.

Rauch, A., Wiklund, J. Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761–787.

Schindehutte, M., Morris, M. H. & Kocak, A. (2008). Understanding market driving behaviour: The role of entrepreneurship. Journal of Small Business Management, 46(1), 4-26.

Schumpeter, J. A. (1934). The theory of economic development. Cambridge, MA: Harvard University Press.

Slater M & Narver J. C. (2000). The positive effect of a market orientation on business profitability: A balanced replication. Journal of Business Research, 48, 69–73.

Stevenson H. H. & Jarillo-Mossi J. C. (1986). Preserving entrepreneurship as businesses grow. Journal of Business Strategy, 7(1), 10–23.

Swierczek F. W. & Ha T. T. (2003). Entrepreneurial orientation, uncertainty avoidance and firm performance: an analysis of Thai and Vietnamese SMEs. International Journal of Entrepreneurship Innovation I(1), 46–58.

Tajeddini, K. (2010). Effect of customer orientation and entrepreneurial orientation on innovativeness: Evidence from the hotel industry in Switzerland. Tourism Management, 31, 221-231.

Thorsten Semrau, Tina Ambos, & Sascha Kraus. (2016). Entrepreneurial orientation and SME performance across societal cultures: An international study. Journal of Business Research, 69, 1928–1932.

Uzochukwu O. C, Lilian O. O & Chidiebere O.M. (2015). Entrepreneurial development and job creation in selected local government areas in Enugu state, Nigeria. International Journal of Managerial Studies and Research 3(7), 41-53.

Venkatraman N. (1989a). Strategic orientation of business enterprises: The construct, dimensionality, and measurement. Journal of Management Science, 942-962.

Venkatraman N. & Ramanujam Vasudevan. (1986). Measurement of business performance in strategy research: A comparison of approaches. The Academy of Management Review, 11(4), 801-814.

Wales, W. J., Gupta, V. K., & Mousa, F. T. (2013). Empirical research on entrepreneurial orientation: An assessment and suggestions for future research. International Small Business Journal, 31(4), 357-383.

Wales, W. J., Wiklund, J., & McKelvie, A. (2015). What about new entry? Examining the theorized role of new entry in the entrepreneurial orientation–performance relationship. International Small Business Journal, 33(4), 351–373.

Walter A, Auer M, & Ritter T. (2006). The impact of network capabilities and entrepreneurial orientation on university spin-off performance. Journal of Business Venture, 21(4), 541–567.

Wang, C. L. (2008). Entrepreneurial orientation, learning orientation and firm performance. Entrepreneurship Theory and Practice, 32(4), 635-656.

Wiklund, J. (1999). The sustainability of the entrepreneurial orientation-performance relationship. Entrepreneurship Theory and Practice, 37-48.

Wiklund, J. & Shepherd, D. A. (2005). Entrepreneurial orientation and small business performance: A configurational approach. Journal of Business Venturing, 71-91.

Williams C. C, Round J, & Rodgers P. (2010). Explaining the off-the-book enterprise culture of Ukraine: reluctant or willing entrepreneurship?. International Journal of Entrepreneurship and Small Business, 10(2), 165–180.

Zahra S. (1991). Predictors and financial outcomes of corporate entrepreneurship: an exploratory study. J Bus Venture, 6(4), 259–286.

Zahra, S. A. & Covin, J. G. (1995). Contextual influences on the corporate entrepreneurship performance relationship: A longitudinal analysis. Journal of Business Venturing, 43-58.

Zahra, S. A. & Garvis, D. M. (2000). Entrepreneurship and firm performance: The moderating effect of international environmental hostility. Journal of Business Venturing, 15(5), 469−492.

Zaltman G, Duncan R, & Holbek J. (1973). Innovations and organizations. New York: Wiley.

Published
2020-04-30
How to Cite
Dr. Jagadish Brahma Goulap. (2020). Entrepreneurial Orientation and Business Performance: An Assessment of Start-up Companies. International Journal of Engineering and Management Research, 10(2), 151-163. https://doi.org/10.31033/ijemr.10.2.18