Effect of Entrepreneurial Orientation on Business Performance A Study on Small Enterprises’ of Addis Ababa

Abstract

The focus of the study was to investigate the Effect of Entrepreneurial Orientation (EO) on Business Performance in Case of Small Enterprises in Addis Ababa. The study applied correlational research design to identify and evaluate the relationship between Entrepreneurial Orientation and Small Enterprise Business Performance. Both quantitative and qualitative research approaches were used to collect data through the utilization of a questionnaire in the form of Likert scale, open ended questionnaire and interviews. A total of 200 questionnaires were distributed to respondents and 180 of them were returned back. The finding of the study revealed that autonomy and innovativeness has high effect on the performance of small enterprise while the remaining (pro-activeness, competitive aggressiveness and risk taking) has a moderate role in impacting small enterprise performance. Results from Pearson Correlation Coefficient, there were strong significant correlation existed between SE Business Performance and innovativeness (r=.687**) and autonomy (r=. 671**) respectively. Other variables such as risk-taking(r=.431**) pro-activeness(r=.392**) and competitive aggressiveness(r=.469**) has Moderate correlation. From an open ended question determinate challenges that has adverse effect on entrepreneurial orientation were lack of access to capital, poor infrastructure, lack of experience, lack of working premises and lack of market linkage or access to market. Therefore, based on the finding, the researcher recommends, the government should solve the problems of lack of access to capital, poor infrastructure, lack of experience, lack of working premises and lack of market linkage or access to market and small enterprise owners and managers should give autonomy to their employees to enhance their innovative capacity.