Nexus between entrepreneurial orientation and financial performance among Small and Medium Enterprises

Abstract

The study investigates the effect of entrepreneurial orientation on SMEs performance, mediated by competitor orientation. The role of competitor orientation in the relationship between entrepreneurial orientation and SME performance has not been adequately examined. The survey method was used to collect data from owners and managers of small and medium enterprises in Bauchi as respondents through the questionnaire. A simple random sampling technique was used to collect data from 215 respondents. The data was analyzed using the Analysis of Moment Structure (AMOS). The results show a significant positive relationship between the SMEs' innovation, risk-taking, and financial performance. Further, the results show that competitor orientation mediated the relationship between innovation, risk-taking, and financial performance. This study contributes to the literature in the domain of competitor orientation by focusing on the financial performance of SMEs. Recommendations were made that managers and owners of small and medium businesses should be able to understand and identify their competitors' short-term strengths and weaknesses and their long-term capabilities and strategies of their competitors. As such, they should respond rapidly to a competitive environment.