The entrepreneurial orientation - Performance relationship: A South African small business perspective

Abstract

The high failure rate among small businesses in South Africa has created an urgent need to identify strategies that will improve their levels of performance. The purpose of this study was to investigate the relationship between entrepreneurially orientated strategies implemented by small businesses in the Eastern Cape and the influence of these strategies on business performance. Entrepreneurial orientated strategies were assessed in terms of the five dimensions of entrepreneurial orientation, namely innovativeness, proactiveness, competitive aggressiveness, risk-taking and autonomy. Business performance was assessed in terms of profitability and growth. A measuring instrument was developed based on valid and reliable items. Statistical techniques including descriptive statistics, Pearson’s product moment correlations and structural equation modelling, were performed on data gathered from 317 small business enterprises. The results of this study showed that the more small businesses implement the strategies of proactive innovativeness, competitive aggressiveness, and autonomy, and the less risk-taking their strategies are, the more likely their businesses are to be successful.

Key words: Small business, Entrepreneurship, Entrepreneurial orientation