The Effect of Entrepreneurial Orientation on the Relationship between Opportunity Identification and Enterprise Growth of SMEs in Zambia


Bachelor Thesis, 2014
62 Pages, Grade: A

Excerpt

Contents

DEDICATION

ACKNOWLEDGEMENTS

ABSTRACT

LIST OF FIGURES

CHAPTER ONE
1. BACKGROUND TO THE RESEARCH
1.1 INTRODUCTION
1.2 RESEARCH BACKGROUND
1.3 PROBLEM STATEMENT
1.4. PURPOSE OF THE RESEARCH
1.5. RESEARCH QUESTION
1.5.1 SUB-RESEARCH QUESTIONS:
1.6 RESEARCH OBJECTIVE:
1.6.1 SUB-OBJECTIVES:
1.7 SIGNIFICANCE OF THE RESEARCH

CHAPTER TWO
2. LITERITURE REVIEW
2.1 Introduction
2.2 Definitions
2.2.1 Enterprise
2.2.2 Small and Medium-sized Enterprise overview
2.2.3 The Conundrum of SMEs definition
2.2.4 New EU commission SME definition
2.2.5 Zambia’s Definition and Classification of SMEs
2.2.6 Defining SMEs conceptually for research
2.2.7 Significance of SMEs in Zambia
2.2.8 Relevance of SMEs’ growth
2.2.9 Definition of the Key Concepts for this Research
2.3 ENTREPRENEURIAL ORIENTATION
2.3.1 Explaining EO and Dimensions of EO
2.3.2 Salient Dimensions Entrepreneurial Orientation (EO)
2.4 OPPORTUNITY IDENTIFCATION
2.4.1 Opportunity identification factors
2.5 BUSINESS GROWTH
2.5.1 Measuring Growth and Indicators to Growth
2.6 BARRIERS TO ENTERPRISE GROWTH
2.6.1 Entrepreneurial skills as Factor to Enterprise Growth
2.7 RELATIONSHIPS OF RESEARCH CONCEPTS
2.7.1 Opportunity Identification and Growth
2.7.2 Opportunity Identification and Entrepreneurial Orientation- IO and EO
2.7.3 Entrepreneurial Orientation and Firm Growth
2.7.4 Entrepreneurial Orientation, Opportunity Identification and Business Growth

CHAPTER THREE
3. CONCEPTUAL FRAME WORK
3.1 INTRODUCTION
3.2 KEY CONCEPTS
3.2.1 Enterprise Growth (EG)
3.2.2 Entrepreneurial Orientation (EO) and Opportunity Identification (OI)
3.3 The Conceptual Framework Model
3.3.1 HYPOTHESES DEVELOPMENT

CHPATER FOUR
4. RESEARCH METHODOLOGY
4.1 Introduction
4.2 Research Design
4.3 Research Approach
4.4 Research Population
4.5 Sample Size
4.6 Variables
4.6.1 Dependant Variable
4.6.1.1 The dependent variable in our research was Enterprise Growth (EG)
4.6.2 Independent Variables
4.6.2.1 Opportunity Identification (OI)
4.6.2.2 Entrepreneurial Orientation (EO)
4.7 Data Collection Techniques
4.7.1 Secondary data
4.7.2 Primary data
4.7.3 Data Collection Tool (Instrument)
4.8 Reliability and Validity

CHAPTER FIVE
5. DATA ANALYSIS
5.1 Growth
5.2 Opportunity Identification
5.3 Entrepreneurial Orientation
5.4 Hypothesis Testing

CHAPTER SIX
6. DISCUSSION, CONCLUSION, LIMITATIONS AND RECOMMENDATIONS
6.1 Discussions
6.2 Conclusion
6.3 Limitations
6.4 Recommendations

REFERENCES

APPENDIX

APPENDIX

APPENDIX

DEDICATION

I dedicate this piece of work to my grandmother (Nelly Mwansa) and my uncle (Kelly Makungu), for their support and inspiration throughout my studies.

ACKNOWLEDGEMENTS I thank the almighty God for His guidance, protection and inspiration. Without His endless mercy and care I would not have been what I am today and achieved what I have achieved at the present moment. My heart felt gratitude goes to Mrs. C Lesa, my supervisor, for being an excellent and committed mentor. Her assistance, tolerance and encouragement helped me to be where I am today. Mr. M. Chabala and Mr. P. Chongo who were my co-supervisors for their guidance and help. Mr. M. Chabala’s objective critics and thoughtful support is worthy thanking.

I feel indebted to Chishimba Gracious Ngosa, for being there as a pillar for moral, social and emotional support and friendship in the quest for knowledge, you are greatly appreciated.

ABSTRACT

The myth that entrepreneurs are born, no more holds good, rather it is well acknowledged now that entrepreneurs can be created and nurtured through addressing issues such as opportunity identification and entrepreneurial orientation which has to a high degree potential to increase enterprise growth of SMEs (Kerosi and Kayisime, 2013). This research evaluated the effect on entrepreneurial orientation on the relationship of opportunity identification and enterprise Growth. Data evaluated was collected through administering of questionnaires to 86 SMEs registered with the National Council for Construction (NCC). The outcome of this research has reviewed that there is a significant effect of Entrepreneurial Orientation (EO) on Opportunity Identification (OI) and Enterprise Growth (EG) relationship of SMEs in Zambia. This has been supported by Wiklund (2005) who retaliated the fact that empirically, research has found that there is an influence of EO on enterprise growth.

Key Words: Entrepreneurial Orientation (EO), Opportunity Identification (OI), Enterprise Growth (EG) and Small and Medium Enterprises (SMEs)

LIST OF FIGURES

Figure 1. Summary of dimensions of Entrepreneurial Orientation

Figure 2. Summarized model for the indicators of growth used in this research;

Figure 3. Conceptual framework

Figure 4. Internal Reliability output

Figure 5. Summary of Methodology

Figure 6. Mean of Growth

Figure 6. Percentage of Growth

Figure 7. Bar chart for growth

Figure 8. Factor Analysis for Opportunity Identification

Figure 8. Factor Analysis for Entrepreneurial Orientation

Figure 9. Scree Plot on Factor Analysis for EO

Figure 10. Correlations for EO dimensions

Figure 11. Mean for EO

CHAPTER ONE

1. BACKGROUND TO THE RESEARCH

1.1 INTRODUCTION

The myth that entrepreneurs are born, no more holds good, rather it is well acknowledged now that entrepreneurs can be created and nurtured through addressing issues such as opportunity identification and entrepreneurial orientation which has to a high degree potential to increase enterprise growth of SMEs (Kerosi and Kayisime, 2013).

Moreno (2008) observed an increased interest in the best way of explaining the phenomenon of enterprise growth, that there are diverse motives for this growing interest. As a result from the economic and social point of view, there is the fact that firms that grow more are the ones that generate more new jobs. Also, from the academic point of view, growth constitutes one of the least studied dimensions of performance within the field of management, as compared to other variables such as profitability.

An overall propensity in today’s business settings is the shortening of product and business model life cycles. As a result, the impending profit coming from established operations are not clear and enterprises need to constantly seek out new opportunities. Therefore, they may profit from adopting an ‘‘entrepreneurial strategic orientation’’ (EO). This involves a willingness to innovate to rejuvenate market offerings, take risks to try out new and uncertain products, services, and markets, and be more proactive than competitors toward new marketplace opportunities (Wiklund, 2005). When looking at the Strategic orientation of Small and Medium Enterprise, the firm’s strategic management and its success is centered at the entrepreneur’s skills, abilities perception and orientation this is so because Strategic Orientation of an SME is made up of Entrepreneurial Orientation (Covin, 2006, Chen, 2012). Shepherd (2005) hit back on the view that in this rapidly changing world, entrepreneurs need to continuously identify new business opportunities.

In this research the strategic orientation of an entrepreneur referred to the entrepreneurial orientation and the opportunity identification of an entrepreneur, while an entrepreneur is referred to as the owner or the custodian of the firm, this is so because most of (if not all) SMEs in Zambia are run by the owners themselves whose business skills, views, perceptions, capabilities and business orientation have a direct influence on the success that a firm makes. Therefore, it becomes so imperative for us to evaluate the entrepreneurial orientation of an entrepreneur and his/her ability to identify a business opportunity rather than looking at the external factors outside the entrepreneur’s locus of control.

Opportunity recognition has been quoted as a central and unique component of entrepreneurship (Fatima et al, 2011). Ramezanpour et al (2014) maintains that, at the heart of entrepreneurship is the recognition of opportunities or what is called in this research as opportunity identification (OI). Ramezanpour et al (2014) further explains that despite not having the universal definition of entrepreneurship, opportunity identification can be viewed as the central definition of this subject, and that without an opportunity there is no entrepreneurship. On the other hand, Moreno (2008) argues that at the center of firm’s high growth is the entrepreneur’s entrepreneurial behavior. Thus, growth tends to be considered as a logical consequence of innovative, proactive and risk-taking behavior on the part of the firm owner, as these are the part of dimensions which define an entrepreneurial orientation (EO) of a firm or an entrepreneur. According to Casillas (2010) in the literature on entrepreneurship, a firm’s entrepreneurial orientation (EO) is a well-defined idea that has been extensively discussed in the past few decades. Lumpkin and Dess (1996) established the conceptual basis for later research as revolving around three key factors of EO comprises five salient dimensions –innovativeness, risk-taking, proactiveness, competitive aggressiveness and autonomy. Wiklund (2005) suggested that some studies have found that firms with a more entrepreneurial orientation (EO) perform better. While others have failed to locate this positive relationship.

The relationship between the entrepreneurial orientation (EO) of the firm and its growth has been thoroughly investigated (Lumpkin & Dess, 1996). While the relationship between opportunity identification (OI) has been least scrutinized empirically though theoretical relationship exist. Therefore, this research was aimed at establishing the effect of Entrepreneurial Orientation (EO) on the relationship between Opportunity Identification (OI) and enterprise growth (EG) of SMEs. The research has evaluated the literature review of the relationship between opportunity identification (OI), entrepreneurial orientation (EO) and enterprise growth (EG) of SMEs in Zambia.

The outcome of this research has reviewed that there is a significant effect of Entrepreneurial Orientation (EO) on Opportunity Identification (OI) and Enterprise Growth (EG) relationship of SMEs in Zambia. Such that, in the first place the result showed no relation between Opportunity Identification and Enterprise Growth, and that in our Zambian SMEs there was a positive relationship on Entrepreneurial Orientation and Enterprise growth thereby making a significant impact on opportunity identification and business growth. This has been supported by (Wiklund, 2005) who retaliated the fact that empirical research has found that there is an influence of EO on enterprise growth.

1.2 RESEARCH BACKGROUND

In the last decade and half, there has been a growing interest in the discipline of entrepreneurship, firm creation, its growth and factors affecting this phenomenon. Mainly it is because of the fundamental role the small and medium enterprises (SMEs) play in the nation’s economic development. Undoubtedly most countries count on the SMEs to move their economies forward of which Zambia cannot be an exception. Small and Medium Enterprises (SMEs) can therefore be recognized has one of the major drivers of the Zambian economy (Chisala, 2008). To achieve this the SMEs need to grow their enterprises in a holistic and aggressive manner.

Zambia, as a nation has been struggling on how best it can address the factors that constrain SMEs from performing at frontier (Chisala, 2008). And in the recent years, there has been a course of researchers discussing the issues that are to do with finances, market competition, and technology transfer to SMEs and government policy modernization towards empowering SMEs which are the external factors of enterprise growth. Unfortunately there is a disinclined approach towards internal factors of enterprise growth that includes Entrepreneurial skills of an entrepreneur. However, number of factors have now encouraged both policy makers and academicians to start believing that improving skills in SMEs can lead to a marked improvement in their business growth (Cecilia, et al., 1997).

MCTI (2003) indicated severe deficiencies in skills relating to the following fundamental areas:
- Strategic management capacities i.e. the SMEs ability to manage entry into new markets.
- Functional management skills i.e. skills required in production, finance, purchasing and marketing to improve production of capital, quality control etc.
- Technical management skills i.e. the actual technical know how to achieve the required quality and quantity.

Cooney (2012) identified inner discipline, ability to take risk, innovative, change-oriented and persistence as entrepreneurship skills while Kerosi and Kayisime (2013) recognized ability to recognize opportunities, innovative and communication as the only entrepreneurial skills that affect business growth. An in-depth scholarly review of Wiklund (2005) work shows that ability to recognize an opportunity stands alone to make a factor called Opportunity Identification (OI) while the other skills make up Entrepreneurial Orientation (EO) of an entrepreneur and these skills (innovative, Risk taking, Proactive) are referred to as dimensions of entrepreneurial orientation which were identified by Miller (1983).

Despite the advent of entrepreneurial opportunity recognition as a core concept and independent research area within the entrepreneurship literature towards growth of SMEs (Wang, 2013), the effect of entrepreneurial orientation on the relationship of opportunity recognition and enterprise growth is paramount and cannot be viewed as a black box.

Therefore establishing the effect that Entrepreneurial Orientation has on the relationship between Opportunity Identification and Enterprise Growth is the intention for this research.

1.3 PROBLEM STATEMENT

The main bone of contention here is that there is a reluctantly growth of SMEs in Zambia , as MCTI (2003) revealed that the SMEs sector in Zambia has been stagnant due to a number of hurdles hampering its growth. Among these hurdles are; access to the marketing, access to technology, human resource or entrepreneurial skills to be specific, government policies, land and location and Access to financial support, as noted by BOZ (2013). However, MCTI (2003) attached this type of growth to lack of skills. On the other hand Maliwatu (2004) echoes that lack of entrepreneurial activities (skills) is the main problem, and that Zambia has no people to transform the resources that are already available. Picking ideas from Maliwatu (2004) analysis of Zambian Entrepreneurs we see issues to do with the entrepreneurs themselves such as utilizing the available opportunities (identifying Opportunity) and dealing with entrepreneurial skills (entrepreneurial orientation). Kunda (2004) says that there is very little written on how entrepreneurs identify business opportunities and exploit them in Zambia. He further emphasizes the fact that before one engages in a business one should have the ability to identify opportunities in order for one’s business to grow.

Therefore it becomes imperative to evaluate the relevant skills available to make entrepreneurs’ business to grow, which is the strategic orientation of an entrepreneur in the business. When looking at the Strategic orientation of Small and Medium Enterprise, the firm’s strategic management and its success is centered at the entrepreneur’s skills, abilities perception and orientation this is so because Strategic Orientation of an SME is made up of Entrepreneurial Orientation (Covin, 2006). Shepherd (2005) hit back on the view that in this rapidly changing world, entrepreneurs need to continuously identify new business opportunities.

Remarkably, evaluating Kunda (2004) work the subject of Entrepreneurial Orientation (EO) and Opportunity Identification (OI) in relation to enterprise growth has little been talked about by most researchers in the Zambian context. In addition, the relationship between Opportunity Identification (OI) and Enterprise Growth (EG) of SMEs has least (if not)been explored here in Zambia, much more the effect that elements such as innovativeness, risk taking, proactive, autonomy and aggressive competition (i.e. entrepreneurial orientation) has on the relationship between opportunity identification and growth of SMEs.

1.4. PURPOSE OF THE RESEARCH

The purpose of this research is to evaluate the moderating influence of Entrepreneurial Orientation (EO) on the relationships between Opportunity Identification (OI) and Enterprise Growth (EG).

1.5. RESEARCH QUESTION

What is the Effect of Entrepreneurial Orientation (EO) on the Relationship between Opportunity Identification (OI) and Enterprise Growth (EG)?

1.5.1 SUB-RESEARCH QUESTIONS:

- What is the Relationship between Opportunity Identification (OI) and Enterprise Growth (EG)?
- What is the Relationship between Opportunity Identification (OI) and Entrepreneurial Orientation (EO)?
- What is the Relationship between Entrepreneurial Orientation (EO) and Enterprise Growth (EG)?

1.6. RESEARCH OBJECTIVE:

To Evaluate the Effect of Entrepreneurial Orientation (EO) on the Relationship between Opportunity Identification (OI) and Enterprise Growth (EG).

1.6.1 SUB-OBJECTIVES:

- To Establish the Relationship between Opportunity Identification (OI) and Enterprise Growth (EG).
- To Establish the Relationship between Opportunity Identification (OI) and Entrepreneurial Orientation (EO).
- To Establish the Relationship between Entrepreneurial Orientation (EO) and Enterprise Growth (EG).

1.7. SIGNIFICANCE OF THE RESEARCH

This research makes three main contributions; firstly, it offers an in-depth literature analysis about the moderating role of entrepreneurial Orientation (EO) involvement of an entrepreneur on relationship of Opportunity Identification (OI) and Enterprise Growth (EG). This point is important because most previous empirical researches have only related entrepreneurial Orientation (EO) to Enterprise Growth (EG) or Opportunity Identification (OI) directly to Enterprise Growth (EG)., while theoretically arguments have been made to some extent on this relationships, this research comes with its new model. Secondly, This research was undertaken with expectations that it should make some constructive contributions towards influencing the government of Zambia in their policy formulation and decision making in coming up with programs that support the growth of SMEs in the view of an entrepreneur. Thirdly, the research will also act as the reference point for the SMEs and the would be SMEs in Zambia especially if published and placed in either in the University Library or the Entrepreneurship Center of the University for other researchers to refer to.

CHAPTER TWO

2. LITERITURE REVIEW

2.1 Introduction

This chapter discusses the literature review from different scholars. It first gives an overview of different understandings, concepts, definitions and relevance related to SMEs and SMEs’ growth. Later on, the chapter analyses the relationship between Opportunity Identification and Growth of SMEs when influenced by Entrepreneurial Orientation as elaborated by different scholars.

2.2 Definitions

This section gives the familiarization of concepts and ideas that are mostly predominant in this research.

2.2.1 Enterprise

The understanding of the term ‘enterprise’ is substitutional with the terms such as ‘business’, ‘company’ or ‘firm’ (Kashimoto, 2006). For the intent of this study, enterprise is possibly defined as any organized business activity involved in the production with main direction towards growth and profit making.

2.2.2 Small and Medium-sized Enterprise overview

SMEs in Zambia may be found in a wide array of business activities, ranging from a single artisan in shoe making in Chisokone Market with his produce being sold in the same market area to a metal fabrication firm which produces electric gates and window frames in Kalulushi for large construction as its customer base. Small and medium enterprises are a very heterogeneous sector of the economy, even if they are streamlined sectors such as construction and manufacturing they still possess a substantial challenge in defining them.

2.2.3 The Conundrum of SMEs definition

Scholars have repeatedly differed on the single definition of small enterprise and ultimately they have accepted the fact that there is no single uniformly acceptable definition of a small business (Storey, 1994). This is so because most definitions are governed by the interests of the perceiver, the particular sector in which the definition is to be applied and the reasons behind the definition. The sector might have diverse levels of capitalization, sales and employment. Thus, definitions that are objective in nature may consider size in terms of numbers of employees, sales, profitability, net worthy etc., at a sectorial level to mean that in some industries all firms may be regarded as small while in other industries there are no firms that are regarded as small ( Nkonoki, 2010).

Researchers such as McMahon et al (1993) referred to defining small businesses as a ‘vexing and enduring difficult’ and went on to point out that it is easier to describe small enterprises than defining the precise terms, because the attributes that separates small firms from large enterprises are a less tangible attributes that are a little rather difficult to measure.

Organization for Economic Co-operation and Development OECD (2004) retaliates the statistical definition by saying that it varies by country and is usually based on the number of employees, and value of sales and/ or value of assets. The EU and number of OECD, transition and developing countries set the upper limit of the number of employees in the SMEs between 200-250 with a few exceptions such as Japan (300 employees), USA (500 employees) and some selected African countries such as Zimbabwe and Tanzania (100 employees).

2.2.4 New EU commission SME definition

The EU commission changed the definition of SMEs in 2005 from the previous one that was adapted in 1996. The changes were mostly done because of general economic developments since 1996, and a growing awareness to the specific barriers confronting SMEs. The new SME definition is done for all business categories and also takes better account of different types of relationships between enterprises. The new definition also ensures that different support measures are awarded only to the ones that need them. Changes are also done because the businesses are now more innovative and technology plays a crucial role as well. (EU Commission, 8)

Table 1. Defining SMEs

Abbildung in dieser Leseprobe nicht enthalten

It is important to define SMEs this way, in implementing efficient measures and programs to support SMEs in every possible way that includes skills training and development.

2.2.5 Zambia’s Definition and Classification of SMEs

According to the Small Enterprises Act Number 29 of the laws of Zambia, there is only two categories of enterprise. These are Micro and Small enterprises, Medium Enterprise does not appear in the Act’s definition for small enterprises and there are no policies and incentives that are in place to support this group of enterprise.

GRZ (1996) defines ‘micro enterprise’ as any business enterprise:

- With amount of total investment, excluding land and buildings, does not exceed ten million kwacha that is K10, 000 in rebased currency.
- With amount of total annual turnover, does not exceed twenty million kwacha that is K20, 000 in rebased currency; and
- Employing up to 10 people.

‘Small enterprise’ on the other hand according to GRZ (1996) is any business enterprise: a. With amount of total investment, excluding land and building, does not exceed;

- In case of manufacturing and processing enterprise, fifty million kwacha (Kr 50,000) in plant and machinery, and
- In case of trade and service providing enterprise, ten million kwacha (Kr 10,000).
b. With annual turnover that does not exceed eighty million (Kr 80,000).
c. With up to thirty employees.

2.2.6 Defining SMEs conceptually for research

The way Zambia defines SMEs does not differ substantially with the way Tanzania, Malawi, Zambia, European commission, European Union and the OECD does. However, the difference appears in the threshold boundaries such as number of employees, annual turnovers and investment limit levels. Thus, the conceptual conclusion is that the definition is the same. Nevertheless, for the purpose of this research “Small and Medium Enterprise (SME)” definition is based on the EU definition.

2.2.7 Significance of SMEs in Zambia

SMEs are the engine of every nation’s economy as they occupy a prominent position in the development of many countries in the world be it least developed, developing and developed countries. Contributions of SMEs can be well noted in a number of perspectives including labor absorption, creation of entrepreneurial spirit and innovation, promotion of linkages and complementary role to large companies, wealth creation, among others. Schumpeter (1912) as cited by Chisala (2008) who accentuated the role of entrepreneurship, as a pinnacle cause of economic development, being this development achieved through innovation. Therefore, it is evident that SMEs have been considered to be very vital in any society as early as the beginning of the 20th century. Looking at the local level, SMEs seem to be perfect and an important piece for local development since they have a greater flexibility and ability to change and to respond quickly to changing market demand and supply situations (Chisala, 2008).

In Zambia, according to Chisala (2008) SMEs make up 95 percent of all firms yet most of them are sidelined as compared to large enterprises. Most large enterprises in Zambia are final goods producers which make them well valued since their products reach the final consumers directly. Furthermore, the number of employees by the SMEs also highlights the significance of SMEs in the economy. It is estimated that only 500,000 (12.5%) of the potential labor force of 4,000,000 Zambians are in formal employment. The remaining 3,500,000 (87.5 %) are engaged in informal employment (SMEs). There is also some evidence that SMEs have generated skills transfer among themselves more especially in the few available clusters such as in the garment sector (Chisala, 2008). The preponderance of SMEs is also transmuted into their contribution to the production worth in the manufacturing sector and the 11% GDP contribution by the manufacturing sector. Regrettably, due to meager information and data we cannot quantify the current value added created by SMEs, however, Mbuta (2007) as cited by Chisala (2008) indicated that in 1996, the SME sector produced value added amounting to K 85.7 billion (1994 prices) out of the total GDP of K 2,328.1 billion representing 3.7 percent. In addition he also approximated that the sector would put in 4.7 percent of the total GDP in the same year. In fact most of the SMEs in Zambia are in an informal sector such that it is difficult for relevant authorities such as Central Statistics Office to capture them. As a result, their contribution and also the national GDP may somewhat be under estimated (Chisala, 2008). This has in resulted in government losing the much needed revenue as most of the SMEs do not remit taxes to Zambia Revenue Authority by not registering their enterprise. Notwithstanding, the apparent case is that the government as a running policy to sensitize and encourage all enterprises of any size to get registered with PACRA.

Where exports are concerned, only a minimal number of SMEs do take part in the production of commercial goods and services and as such they have an insignificant contribution to the total exports of Zambia, actually most of them operate at a level of output that is too small to even sufficiently dissipate economies of scale. The MCTI (2003) survey reported that 2% of the total SMEs (of which 64 percent were engaged in manufacturing) exported their goods mainly to the neighboring countries. Nevertheless, SMEs have been depicted as ‘an army for ants’ for Zambia more especially after the liberalization and privatization of the economy.

2.2.8 Relevance of SMEs’ growth

BOZ (2012) highlighted that ‘the role that SMEs play in an economy cannot be over-emphasized’, as SMEs provide sustainable economic growth through job creation, development of entrepreneurial skills and the potential to contribute significantly to export earnings. Therefore, the growth individual SMEs is very vital in three ways;

- The nation is going to be provide with a sustainable economic growth through job creation.
- The manufacturing sector is going to be boosted to increase the current performance rating which is at 10.5% GDP contribution (ZAM, 2014).
- The individual SME will increase the investment levels and consequently move from being an SME to a large firm.

It is important to note the fact that SMEs are a fundamental part of the economic fabric in developing countries, and they play a crucial role in furthering growth, innovation and prosperity. Regrettably, they are strongly restricted in accessing the capital that they require to grow and expand.

2.2.9 Definition of the Key Concepts for this Research

2.2.9.1 Entrepreneurial Orientation (EO)

According to Covin (2010) refers to the top management’s strategy in relation to innovativeness, proactiveness, and risk taking. In addition he describes it as a driving force behind the organizational pursuit of entrepreneurial activities that has become a central focus of the entrepreneurship literature and the subject of more than 30 years of research i.e. counting back to the time when Miller (1983) first put it into literature.

2.2.9.2 Opportunity Identification (OI)

Ramezanpour, et al. (2014) however defined entrepreneurship as identification and exploitation of opportunities thereby conceptualizing the entrepreneurial process as proceeds of opportunity identification in achieving a new firm growth. Baron (2007) defined opportunity as a perceived means of generating economic value (i.e., profit) that previously has not been exploited and is not currently being exploited by others.

2.2.9.3 Enterprise Growth (EG)

Many scholars have acknowledged the fact that there are many diverse explanations of enterprise growth and ways of measuring this growth. Fatoki O & David G (2010) said that business growth is typically defined and measured, using absolute or relative changes in sales, assets, employment, productivity, profits and profit margins.

2.3. ENTREPRENEURIAL ORIENTATION

2.3.1. Explaining EO and Dimensions of EO

Expressing the dogma of Entrepreneurial Orientation (EO) Covin (2010) describes it as a driving force behind the organizational pursuit of entrepreneurial activities that has become a central focus of the entrepreneurship literature and the subject of more than 30 years of research i.e. counting back to the time when Miller (1983) first put it into literature. Hence referred to as the Entrepreneurial Orientation Guru. Yet (Lumpkin and Dess, 1996) referred entrepreneurial orientation to a firm’s strategic orientation, capturing specific entrepreneurial aspects of decision-making styles, methods, and practices. Covin (2010) cited Cools and Van den Broeck (2007/2008) whose evaluation of EO was as follows; “Entrepreneurial orientation (EO) refers to the top management’s strategy in relation to innovativeness, proactiveness, and risk taking”.

[...]

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Title
The Effect of Entrepreneurial Orientation on the Relationship between Opportunity Identification and Enterprise Growth of SMEs in Zambia
Grade
A
Author
Year
2014
Pages
62
Catalog Number
V304316
ISBN (eBook)
9783668051751
ISBN (Book)
9783668051768
File size
1376 KB
Language
English
Tags
assessment, effect, entrepreneurial, orientation, relationship, opportunity, identification, enterprise, growth, smes, zambia, Africa, Business, Thesis, Entrepreneurship, Business in Zambia, Musaana, Enock Musaana, Copperbelt university, Business growth, Economic growth
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Enock Joseph Musaana (Author), 2014, The Effect of Entrepreneurial Orientation on the Relationship between Opportunity Identification and Enterprise Growth of SMEs in Zambia, Munich, GRIN Verlag, https://www.grin.com/document/304316

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