An assessment of the relationship between entrepreneurial orientation and business performance in SMMEs in KwaZulu-Natal
Abstract
Small, Medium and Micro Enterprises (SMMEs) are the basis of the business environment and economic development's leading drivers. SMMEs create 60 to 70% of jobs globally. In South Africa, 95% of the business composition is made up of SMMEs. However, South African SMMEs create approximately 28% of jobs. Furthermore, up to 80% of SMMEs in South Africa fail within five years of their existence, a worse performance compared to any country in the world. The literature explored in this study established a substantial role of entrepreneurial orientation in positively affecting SMMEs business performance. However, in South Africa, there are no significant investigations of the role of entrepreneurial orientation in the performance of SMMEs. SMME entrepreneurial activities are regarded as their inner capabilities which may improve the SMME business performance in challenging market conditions. It is, therefore, important to prioritise attention to an examination of the relationship between entrepreneurial orientation and business performance of SMMEs. This study assessed the relationship between entrepreneurial orientation and business performance in SMMEs in the City of uMhlathuze in KwaZulu-Natal. The dimensions of entrepreneurial orientation were used individually to assess their relationships with the business performance of SMMEs. For this study, business performance was measured by business growth and business development. Additionally, participants chose options on a Likert scale between 1 to 5. SMMEs with an average of less than 3.0 were considered to have low entrepreneurial orientation, and SMMEs with an average of 3.0 and more were deemed to have a high entrepreneurial orientation. A study was conducted using a questionnaire that measured dimensions of entrepreneurial orientation. Data from 74 respondents was collected and analysed. The results indicated that the SMMEs in the City of uMhlathuze in KwaZulu-Natal have a high entrepreneurial orientation status at an average of 3.57. Risk-taking, autonomy, proactiveness and competitive aggressiveness had a positive but statistically insignificant relationship to business growth. In contrast, innovativeness had a negative relationship to business growth of SMMEs in the City of uMhlathuze in KwaZulu-Natal. Risk-taking had a more pronounced significant and positive relationship to business development than competitive aggressiveness. Innovativeness had a positive but statistically insignificant relationship to business development. In contrast, autonomy and proactiveness had a negative and statistically insignificant relationship to business development of SMMEs in the City of uMhlathuze in KwaZulu-Natal. The variation of the results was consistent with some of the studies in the past. However, entrepreneurial orientation is essential in any business setting, and there is a need for it to be fostered given the environment allows. The recommendations were founded on the conclusions to help SMMEs managers/owners, policymakers and researchers to create an environment that enables entrepreneurial orientation maturity within the SMMEs.