Entrepreneurial Orientation as Growth Predictor of Small Enterprises Evidence from Tigray Regional State of Ethiopia

Abstract

The primary objective of this study was to examine how and to what extent entrepreneurial orientation affect growth of small enterprises, following the resource based view on determinants of growth as theoretical frameworks. The research was conducted in the text of LDCs by taking one regional state of Ethiopia (i.e. Tigray). The study intends to address two basic questions: (1) To what extent are EO dimensions of proactiveness, innovativeness, and risks taking get demonstrated by small enterprise owners? (2) How and to what extent does entrepreneurial orientation influence growth of small enterprises? In order to address these questions, a mixed explanatory cross-sectional research design was crafted that is inclined towards quantitative approach. Data were collected from both primary and secondary sources through a standardized questionnaire, key informant interview (KII), direct observation, and documentary analysis.  A combination of purposive, systematic, and simple random sampling techniques was employed to choose appropriate samples. Accordingly, primary data were collected from 333small enterprises operating in five urban towns of Tigray. These were selected out of 2765 small firms operating in the target areas. In this research descriptive statistics, statistical difference tests, and regression analysis were applied for the purpose of data analysis, with the help of Stata version 12 software. It was found that majority of the SEs (54%) in the study area demonstrate moderate entrepreneurial orientation and entrepreneurial orientationhas highly significant positive influence on growth of small enterprises (p < 0.01). This suggests that an entrepreneurial orientation is one of the key determinants to attain above average returns and sustained competitive advantage and growth by taking risks to introduce new and innovative products/services and proactively responding to changing market competition.Moreover, the study confirms the uni-dimensionality of entrepreneurial orientation that suggests that the three components of entrepreneurial orientation (innovativeness, proactiveness, and risk taking) are of equally important to explain the growth of small enterprises. Hence, the researcher suggests the use of summed index of the three dimensions in future studies instead of mean score of individual dimension.

Key words: Entrepreneurial orientation, Growth, Small Enterprises, Tigray-Ethiopia