Entrepreneurial Orientation, Innovation and Performance of Value-system Actors

Simon Kamuri

doi:10.5296/jebi.v8i2.19227

Abstract

The purpose of this study was to explore entrepreneurial orientation as a cognitive construct attributable to individuals and its relationship with innovation and performance from an industry ecosystem perspective. The study adopted a mixed design approach involving exploration of the factors and a diagnosis of their hypothesized relationships. A mixed sampling of members of a leather industry association and the linked industry institutions was carried out with a 76% response rate achieved. Quantitative data was collected from key decision-makers as informants of firms in Kenya’s leather industry using a questionnaire for guided interviews. The Delphi Technique and a pilot study (Cronbach’s Alpha 0.700 – 0.772) were used to establish instrument reliability. Factor analysis was performed on the study variables using Principal Component Analysis before inferential analysis. Entrepreneurial orientation showed validity as a second-order latent construct comprising three cognitive dimensions, namely vision for growth, opportunity recognition and calculated risk-taking. Entrepreneurial orientation and its antecedents were established as determinants of performance of value-system actors in an industry (R2=0.422, F=13.417, p=0.000). It further showed that this relationship is partially mediated by innovation by the firms (Sobel test Z-value = 3.30449610, p=0.00095147). The study recommends extension of this research to other industries.

Highlights

1.1 Entrepreneurship and Kenya’s Leather IndustryEntrepreneurship plays a crucial social and economic development role notably in exploiting physical and knowledge resources, job creation, export growth and has received increasing attention globally and in Kenya (RoK, 2007; Nafukho & Muyia, 2010; Acs, Szerb & Autio, 2015)
By using dimensions that largely identified with individual characteristics of entrepreneurs, such as risk-taking, pro-activeness, innovativeness and opportunity recognition, researchers have acknowledged the individual nature of entrepreneurial orientation in determining firm or enterprise-level performance
Measures for innovation were adapted from Keeley et al (2013) while performance items were adapted from the work of various scholars (Santos & Barito, 2012; Ming & Yang, 2009; Al-Ansari, 2014; Stephan, Hart, & Drews, 2015)

Summary

Introduction

1.1 Entrepreneurship and Kenya’s Leather IndustryEntrepreneurship plays a crucial social and economic development role notably in exploiting physical and knowledge resources, job creation, export growth and has received increasing attention globally and in Kenya (RoK, 2007; Nafukho & Muyia, 2010; Acs, Szerb & Autio, 2015). In most studies entrepreneurial orientation is measured using individual attributes but presented as an enterprise characteristic. By using dimensions that largely identified with individual characteristics of entrepreneurs, such as risk-taking, pro-activeness, innovativeness and opportunity recognition, researchers have acknowledged the individual nature of entrepreneurial orientation in determining firm or enterprise-level performance. There has been suggestions and empirical evidence for entrepreneurial orientation as an individual, rather than firm-level trait (Rauch & Frese, 2007; Bolton & Lane, 2011). There is need for studies that firmly attribute entrepreneurial traits to the individual rather than the enterprise or other factors. Most entrepreneurial orientation studies have relied on a three-factor model presented by Miller (Rauch et al, 2009), and a five-factor model by Lumkin and Dess (1996). Innovation is often studied as a personality trait of “innovativeness” rather than an outcome (Rauch & Frese, 2007; Rauch et al, 2009)

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