Effect of Market Orientation on Performance of Small and Medium Enterprise (SMEs) in Kirkos Sub-City

Abstract

The aim of this study was to investigate the effect of market orientations on performance of SMEs in Kirkos Sub City, Addis Ababa. The conceptual framework was designed by treating market orientations as an independent variable and business performance as dependent variable. Market orientation was further expressed using specific dimensions such as customer orientation, competitor orientation, and inter-functional orientation. Explanatory survey design was used while a questionnaire was used to gather primary data. The study sample in terms of the respondents covered randomly selected SMEs in Kirkos Sub City and a sample of 139 was administered with the questionnaire and 70.5% response rate was achieved. The data collected was analyzed with the aid of descriptive statistical techniques such as mean score. More so, multiple linear regressions were used to establish the relationship between study variables using Statistical Package of Social Sciences Version 22. The result of regression indicates that all three predictor variables (customer orientation, competitor orientation, and inter-functional orientation) have statistically significant influence on business performance of SMEs in Kirkos Sub City. The adjusted R² of 0.585 indicates 58.5% of the variance in business performance measured in terms of growth and profitability can be predicted by market orientations. Therefore, the study concluded that market orientations have a positive and significant effect on business performance of SMEs in Kirkos Sub City. Therefore, the managers/owners of SMEs should improve their market orientation practices as a way of improving their business performance.

Keywords: Market orientations, customer orientation, competitor orientation, inter-functional orientation Business Performance, SMEs

DOI: 10.7176/DCS/12-7-01

Publication date:September 30^th 2022