The Influence of Entrepreneurial Innovativeness on Firm Performance among Small and Medium-Sized Enterprises in Kenya

Abstract

Small and medium-sized enterprises (SMEs) play an important role in the world economy. They contribute substantially to income, output and employment. They dominate the world business stage. Empirical studies have identified the effects of Market Orientation (MO) and entrepreneurial orientation (EO) on firm performance; also on the moderating effect of MO on single EO constructs, yet studies have failed to identify the influence of Entrepreneurial Innovativeness on the relationship between corporate entrepreneurship dimensions and firm performance, especially in Kenya. Therefore, based on a study conducted to determine the moderating effect of MO on this relationship among mid-sized enterprises in Kenya this paper examines the effect of entrepreneurial innovativeness on firm performance and the moderating effect of MO in the relationship between entrepreneurial innovativeness and firm performance. The study was guided by the Resource Based View (RBV), Contingency Theory, theories of entrepreneurship and the marketing concept. It adopted explanatory research design using a survey of all the top 600 med-sized firms in Kenya between 2006 and 2013. Actual participating firms were 536 with responses obtained from 394 firms. Data was collected using a questionnaire and analyzed using descriptive statistics, Pearson’s bivariate correlation, multiple regression, and moderated regression analysis. Results revealed that entrepreneurial innovativeness has a direct positive relationship with performance of mid-sized firms. In addition, market orientation had no significant moderating effect on the relationship between entrepreneurial innovativeness and firm performance. From these results, the study recommends that firms should intensify initiatives to encourage better understanding of EO and MO in boosting firms’ competitive positions and superior performance.

Keywords: Entrepreneurial Innovativeness, Firm Performance, Kenya, Medium-Sized Enterprises, Small


Article Review Status: Published

Pages: 15-30 (Download PDF)

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