The relationship between entrepreneurial orientation, competitive advantage and business performance among small businesses in Durban

Abstract

Small businesses form the backbone of any nation’s economy, especially where unemployment is extremely high. South Africa is one of the many countries that struggle with low economic growth resulting in low employment. This study investigates the relationship between entrepreneurial orientation, business performance and competitive advantage. South Africa’s small business sector is under pressure as evidence exists that the failure rate is well above 70 percent, and to an extent, up to 90 percent depending on various conditions.

This study was conducted in Durban, South Africa. The study sought to answer the two questions namely: a) Is there a significant relationship between entrepreneurial orientation and business performance? and b) Is there a mediating role of competitive advantage in the relationship between entrepreneurial orientation and business performance? These questions were targeted to small business owners or managers in Durban, South Africa. Therefore, 177 participants responded, and both questions were tested and yielded positive results. Data were collected by means of a questionnaire consisting of 24 items. Indeed, the finding was that there is a positive and significant relationship between entrepreneurial orientation and business performance, and that competitive advantage does mediate the relationship between business performance and entrepreneurial orientation.

Finally, many studies examined in this study support the findings of this research pointing out that a strong positive relationship exists between business performance and entrepreneurial orientation. Similarly, there seems to be an agreement that there is some relationship between competitive advantage, entrepreneurial orientation and business performance. However, the literature reviewed did not clarify if competitive advantage does actually mediate the relationship between entrepreneurial orientation and business performance whilst this study found that mediation does exist between the entrepreneurial orientation and business performance link. Hence, small businesses need to learn more about this relationship so to take advantage of possible synergies that may arise from it. Further, both the government of South Africa and the private sector should keep supporting small businesses by making use of research studies like this one and many more which are based on theory and practice.