Market Orientation in Small and Medium Enterprises: Determinants and Implications for Enterprise Development (Evidence from Addis Ababa, Ethiopia)

Abstract

Market orientation has attracted considerable attention in academics and from industry practitioners in the last three or so decades and pretty many studies have been conducted in this area. Except few, such studies have been conducted in large firms and in developed countries. Such research is either missing in least developed countries such as Ethiopia and emerging countries and on small and medium firms or little (if any) with limited coverage and significance. The Ethiopian small and medium enterprises sector has not been adequately studied empirically in this regard. These reasons gave the rationale to conduct the current research. Thus, the study aimed at investigating the determinants of and benefits of market orientation in small and medium enterprises in Addis Ababa City in terms of firm performance. Descriptive and cause-effect designs were used to achieve the objectives of the study. Data were collected using standardized instrument and measurements from 200 randomly selected respondents drawn from manufacturing small and medium enterprises. Statistical tools and econometric models were employed to undertake quantitative analysis. Descriptive findings of the study indicated that the sample enterprises were slightly market oriented. Besides, the study revealed that market orientation is affected by operators’ characteristics and enterprise features. The study also showed that market orientation and its constructs have strong and significant relationships with the indicators of enterprises’ performance. Indeed, market orientation has significant and positive effect on enterprises’ sales growth, long term focus and profit emphasis. In conclusion, the study has immense implications in terms of adding insights to the existing body of literature because it tested some hypotheses held in the literature and generated confirmatory results, and for managerial practices of small and medium enterprises. It also has implications for responsible government offices to reorient their business development services and training supports provided to small enterprises so as to make them more market oriented.

Keywords: market orientation, small and medium enterprises, firm performance, Ethiopia

DOI: 10.7176/DCS/9-7-01

Publication date:July 31^st 2019