Abstract
Entrepreneurial orientation (EO) has been widely touted as a fundamental ingredient for enhancing firm growth. Consequently, this aimed at examining the impact of EO and its dimensional variables (innovativeness, risk-taking, and proactiveness) on SME growth (employment, sales, and asset growth). Using information from 285 SMEs, the results obtained indicated that while EO had a significant positive association with SME growth (employment and sales growth), most SMEs show a moderate level of EO. Also, following the EO dimensions, the findings established the emergence of proactive innovation (a combination of proactiveness and innovativeness) which showed a significant positive association on sales growth. Risk-taking was the only factor that showed a significant influence on employment and asset growth. This study also showed that controlling for the effect of firm age on growth significantly reduced the error of predicting sales growth by 2.3%. This study culminates with recommendations on enhancing EO amongst SMEs in South Africa.
Highlights
One key indicator of a strong and booming economy is the presence of a well-established small and medium-sized enterprises (SMEs) sector
Self-reported data was deemed viable in years, 28% from four to five years, and 17% greater this scenario owing to the fact that SME owners/ than 10 years. 50.5% of the respondents reported managers are usually reluctant in providing de- having between one to five employees (excluding tailed financial statements to researchers (Fatoki, themselves)
Regarding the Entrepreneurial orientation (EO) dimensional variables, SMEs show a moderate level of proactiveness and innovativeness and a weak propensity for risk-taking
Summary
One key indicator of a strong and booming economy is the presence of a well-established small and medium-sized enterprises (SMEs) sector. The SME sector has been widely recognised as an essential driver of economic growth, innovation, employment, and social integration in both developed and developing countries (Neneh & Smit, 2013). Many governments and policy makers all around the world are focusing on developing the SME sector so as to promote economic growth and development. In addition to the high failure, low survival, and low growth rates of SMEs, South Africa faces a high unemployment rate, currently estimated at 26.5% (Trading Economics, 2017). Fatoki and Garwe (2010) pointed out that without the growth and sustainability of SMEs in South Africa, the country risks economic stagnation. As such, promoting firm growth is very imperative as it will lead to sustainable job creation, which is critical to South Africa’s economic prosperity and growth
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