Academic journal article Academy of Entrepreneurship Journal

Modelling the Relationship between Entrepreneurial Climate and Venture Performance: The Moderating Role of Entrepreneurial Competencies

Academic journal article Academy of Entrepreneurship Journal

Modelling the Relationship between Entrepreneurial Climate and Venture Performance: The Moderating Role of Entrepreneurial Competencies

Article excerpt

INTRODUCTION

Research interests in entrepreneurial climate perception are predicated on the acclaimed economic contributions of entrepreneurial ventures to the development of both developed and developing economies. The vagaries of the institutional (macro) environment of entrepreneurial ventures (defined by the entrepreneurial climate) play decisive role in determining the success of ventures by providing inputs (resources) as well as absorbing the output of businesses (Bhat & Khan, 2014). The growth of an economy centres on the extent of entrepreneurship development with a vibrant entrepreneurial climate that manifest in the creation of new jobs, entrepreneurial competitiveness, increase in the production of novel goods and services (Tubey, Nandwa, Omboto & Situma, 2015). No wonder several efforts embarked upon by policymakers to foster entrepreneurial activities through reforming the regulatory environment so as to reduce constraints to starting an enterprise, as well as instituting incentives and array of support measures (Liu, 2008; Singh, Garg & Deshmukh, 2010).

Entrepreneurial climate, in this context, is defined as the external (macro) environment in which entrepreneurial ventures are embedded with its make-up consisting of a set of tangible and intangible institutional factors that helps in shaping the performance of entrepreneurial ventures (Weaver, Liguori & Vozikis, 2011). The local entrepreneurial climate is therefore perceived to be the influential environment that envelops entrepreneurial ventures within a specified geographic boundary, the circumstances which have an overwhelming effect upon their success or failure (Weaver, Liguori & Vozikis, 2011). The dynamism of the entrepreneurial climate (coupled with the inherent uncertainty) is critical to the success of entrepreneurial ventures. This creates a decision-making challenge due to the dearth of knowledge concerning the firm's climate and consequently necessitating the need for continuous environmental scanning tor growth and sustenance (Ghosh & Bhowmick, 2014).

Entrepreneurs (especially those in SMEs) exercise gatekeeping role by employing internal resources of the enterprise to achieve venture success (Ahmad, Ramayah, Wilson & Kummerow, 2010). The authors reiterated that comprehending business success via the lens of entrepreneurial competencies is critical as it provides entrepreneurs with knowledge about the manner they should operate their business and inspires them to be aware of the impending positive or negative effects of their own behaviour. Entrepreneurs are capable of minimising the negative impact of business environment if they are willing to equip themselves with the appropriate competencies. Entrepreneurial competencies and their underlining characteristics such as skills, generic specific knowledge, traits, social roles and self-image are therefore perceived as often culminating into venture birth, growth and survival (Bird, 1995). Effective deployment of internal resources underscores the significance of skills, knowledge, behaviours and attitudes of the entrepreneur as essential ingredients of entrepreneurial competencies that influences business performance.

Extant literature lay emphasis on institutional view of local entrepreneurial climate (Roxas, Lindsay, Ashill & Victorio, 2006), how entrepreneurial climate effect firm performance (Bayarcelik & Ozsahin, 2014), uncertainty in the entrepreneurial climate (Gosh & Bhowmick, 2014), entrepreneur business climate perceptions (Weaver, Liguori & Vozikis, 2011) and predictors for the success and survival of entrepreneurs (Abd-Hamid, Azizan & Sorooshian, 2015). However, there is insufficient evidence linking the role of entrepreneurial competencies in managing the complexities of the entrepreneurial climate with apparent consequences for improving venture performance. The sub-optimal performance and survival of entrepreneurial ventures in the face of challenges occasioned by the uncertainties in the institutional environment could be attributed to inadequate display of requisite competencies. …

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