Academic journal article International Journal of Entrepreneurship

The Role of Entrepreneurial Orientation to Sme Performance in Bangladesh

Academic journal article International Journal of Entrepreneurship

The Role of Entrepreneurial Orientation to Sme Performance in Bangladesh

Article excerpt

INTRODUCTION

Small and Medium Enterprises (SMEs) have been considered as the cornerstone of the business environment in every country, a principal driver of economic development and progress (Qamruzzaman & Jianguo, 2018). Universally, 99 percent of businesses typically falls into the category of SMEs enterprise segment (Gilmore et al., 2013) and SMEs have facilitated the dynamics in the most business organizations in the emerging countries as it contributes to create new jobs and generate supplementary financial capital for businesses (Wang, 2016). Hasan & Almubarak (2016) stated that businesses could not function satisfactorily unless they obtain enough buttress from small businesses. Since, business firm's entrepreneurial activities are considered as their inner capabilities which may arguably enhance the firm's successfulness in the challenging market condition (Laukkanen et al., 2013); hence, it does require prioritized attention on the EO to examine their influence on SMEs performance. Till date, several research studies have demonstrated the significant role of EO in positively affecting business firm's performance (Laukkanen et al., 2013). According to Buli (2017), for maintaining better performance and longevity of the business firms, the incorporated significance and contributory role of EO has not been markedly investigated in the developing countries. Moreover, putting a particular emphasis on each dimension of the EO might be appropriate to gauge the contextual relationship that could vary in a specific condition (Lumpkin & Dess, 1996). Also, it will direct us to examine whether the formulated hypotheses in the past studies would sustain in the different cultural environment and support the previous findings. Therefore, this research study has taken data from the boutique and clothing related small business owners from a developing country: Bangladesh to determine the inter-relationship between SME firm performance and EO.

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

The expected degree of profitability from the current operational activities becomes relatively complex for which business organizations are required to look for new business opportunities; hence businesses can be benefitted by leveraging "Entrepreneurial Orientation" as their strategic moves (Wiklund & Shepherd, 2005). EO fuels in business performance by developing and shaping new idea-based knowledge which is essential for creating new competencies, re-designing existing competencies and promoting creative attitude within a business firm (Choi & Williams, 2016). Therefore, EO provides a strong basis for business firms to act and perform more entrepreneurially, followed by strategy-oriented actions and decisions. According to the conceptualization of Miller (1983), firms' EO can be explained by three-dimensional variables: risk-taking propensity, innovativeness, and proactivity (Matsuno et al., 2002). In recent years, some research studies have adopted two more dimensions: competitive aggressiveness and autonomy, that remained the well acknowledged dimensional aspects of EO (Lumpkin & Dess, 1996; Hughes & Morgan, 2007). Accordingly, this study assesses the effect of EO on SMEs' performance using EO's five-dimensional aspects.

Risk-taking tendency measures the inclination to invest the potential amount of resources to the opportunities which would possess a rational likelihood of both success and failure (Altinay & Wang, 2011). Firms with high risk-seeking tendency tend to obtain superior growth and profitability in the long run (Wang & Poutziouris, 2010).

Innovativeness represents a firms' propensity to involve into creative processes, experiments, and support novel ideas and these kinds of activities would create and facilitate new and innovative methods, opportunity recognition, processes and technologies (Runyan et al., 2006). Runyan et al. (2006) further stated that a small firm's owner might apply innovative techniques for enhancing their firm's performance. …

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