Entrepreneurial Orientation and Firm Performance: Evidence from Small and Micro-Enterprises in Kenya

Abstract

Entrepreneurial orientation is a significant determinant of firm performance. The multifaceted nature of EO prompted a need for a more insightful study to bring to fore the extent of effect it has on performance. Nonetheless, past research has shown that simply examining the effect of Entrepreneurial Orientation on firm performance provides an incomplete picture. To stimulate the relationship between Entrepreneurial Orientation and firm performance, there is need to control internal and external contingent factors. Using data from 333 Small and Micro-enterprises (SMEs) in Uasin-Gishu County in Kenya, the study showed that innovativeness (β₁= 0.632, p value = 0.000) and pro-activeness (β₂= 0.246, p value = 0.000) have positive effects on firm performance; however, risk-taking  negatively  effects  firm performance (β₃= -0.163, p value = 0.002). The study makes significant contributions to the understanding of the relationship between Entrepreneurial Orientation and performance of SMEs. This knowledge is invaluable to both SME owners and policy makers in designing and shaping firm and industry-level strategies that are appropriate for positive outcomes of entrepreneurship.

Keywords: Entrepreneurial orientation, Innovativeness, Pro-activeness, Risk-taking, Firm Performance