The Effect of Entrepreneurial Orientation on Business Performance of Small and Medium Scale Enterprises: A Study of Amhara Region of Ethiopia

Abstract

Entrepreneurial Orientation – Performance linkage researches have gained the attention of researchers for the last some decades. Many of previous studies show that Entrepreneurial Orientation (EO) as a strategic orientation is a key element for firm success, but few studies have reported an insignificant relationship. This study investigated the effect of overall entrepreneurial orientation on the performance of Small and Medium Enterprises (SMEs) in Amhara Region, Ethiopia. Data was collected through structured questionnaire from owners/managers of SMEs. A multivariate data analysis technique of Structural Equation Modelling (SEM) was employed to analyze the data. The finding indicates that overall EO significantly and positively affects the business performance of small and medium enterprises. The findings are expected to benefit for owner/managers of SMEs to be more entrepreneurial oriented to improve their business performance and in order to survive in the intensive competitive market environment. For governmental and nongovernmental organizations, it helps to design strategy to make SMEs more entrepreneurial. This study also provides an opportunity to expand the research on other sectors.