ENTREPRENEURIAL MINDSET AND ORGANIZATIONAL SUCCESS IN SMALL AND MEDIUM SCALE ENTERPRISES

CHAPTER ONE

INTRODUCTION

1.1     Backgrounds of the Study

In the current increasingly dynamic and competitive business environment, how firms become successful and stay successful is certainly not by following the traditional ways of doing things; but now requires firms to be more entrepreneurial in their behaviors and activities (Mcgrath and McMillian, 2000). In their findings, many pioneering firms have gone out of business because of their failure to adapt to environmental changes and uncertainties. In support to this assertion, Zahra & Covin (1995) suggested that in a dynamic environment, organizations need to act entrepreneurially so as to be successful in the midst of the challenges in the environment. In the same vein, signs of threats and competitions are common features of a complex and dynamic environment, where only the entrepreneurial firms survive. (Covin and Slevin, 1992) therefore suggest that organization must be more entrepreneurial to succeed in business.

Many of the previous studies revealed that entrepreneurial mindset have positive and significant impact on organizational success (Zahra and Covin, 2005; Man, Lau & Chan, 2002). Man et al., (2002) contend that organizations where, entrepreneurial behaviors are high, such organization will achieve higher performance and growth irrespective of the business environment in which they operate. Also according to (Shane & Venkataramen, 2000) that entrepreneurial-mindset gives organizations competitive advantage in an existing or new market because it enable them to always discover, create, and exploit opportunities regularly, well ahead of their competitors. According to (Dhiwayo and Vuuren, 2007) entrepreneurial mindset relates to a set of personal or behavioral traits, values, perception, attitude, a pattern of thinking about business opportunity that is connected to the pursuing of opportunities in the market.

Organizational success is a must for the continuity of any firm so as to meet its needs and the interest of stakeholders (Imoisili, 1979). He submitted further, that managers have responsibility to carry-out managerial functions of strategizing and obtaining the necessary inputs which is put together to successfully execute operation. Organizational success is concerned with organizations members pulling their efforts towards achieving organizational goals which has so many potential benefits, including the following: economic of scale, increase profitability, sales increment and market share, hiring the best employees, increase prestige and employee satisfaction etc. (Maheshwari, 1980).

Over the past decade, a lot of work has been done highlighting the significance of entrepreneurial mindset (behaviors) as a means for solving organizational problems and the role of boasting successful performance of organizations(McGrath & McMillian; Maheshwari, 1980; Zahra & Covin, 2005 199; Kuratko et al, 1990; Man, Lau & Chan, 2002), yet the researchers has discovered that little or no significant study has been carried out to determine the extent to which entrepreneurial mindset (behaviors) influence organizational success of SMEs firms in Nigeria (Ariyo, 2008).

Similarly, previous studies tend to concentrates on SMEs in developed countries with very little studies in respect to developing countries such as Nigeria (Churchill & Muzyka, 1994; Luk, 1996).

Furthermore, previous studies focused on established corporate organizations and large scale organizations, leaving out SMEs which is considered to be a very powerful means of national development (Ariyo, 2008; Aremu & Adeyemi, 2011; Awe, 2008). It is against this backdrop that the researchers felt constrained to investigate the relationship between entrepreneurial-mindset and organizational success in River State.

1.2     Statement of the Problem.

Small and Medium Enterprise (SMEs) have continued to be acknowledged as the bedrock for national growth and development of most economies of the world (Ariyo, 2009). Conversely, the SMEs sub-sector in Nigeria has continued to increasingly experience very little success and high failure rate cause by several challenges in the business environment. He discussed further, that the SMEs sector has not lived up to its expectation, despite every effort by the Government and concerned stakeholders. Prior studies revealed that over the past decades, the Government of Nigeria has made many efforts in boosting this sector. It has established an institutional framework consisting of industry support agencies, formulations of supporting policies and assistance from financial institutions. These had led to the creation of several agencies: National Enterprises Development Programme (NEDEP), Small and Medium Enterprises Development Agency (SMEDAN), and presently the Bank of Industry (Ariyo, 2008; Aremu & Adeyemi, 2011; HPAC 1, 2002: Awe, 2008).

According to (Manbula, 2002) that SMEs are responsible for the inventions and creations of new products and services, process, techniques and markets resulting into economic development. However, the level of entrepreneurial mindset and competencies amongst entrepreneurs who engaged in Small and Medium Scale Enterprises in River State were not sufficiently clarified.

According to (Aremu & Adeyemi,2011 ; Awe, 2000)  are of the views that SMEs in the developing countries, faces two major challenges: Internal factor such as lack of entrepreneurial competencies, management skill, commitment, resources, strategies choice and External factors including: competitors, culture, technology, infrastructure, policies inconsistencies in Government and official bureaucracy. Against this back-drop, we are compel to study the relationship between entrepreneurial-mindset and organizational success in SMEs in Rivers State.

1.3     Operational Framework of Entrepreneurial Mindset and     Organizational           Success.

The operational framework will guide our understanding throughout this research.

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Source:          Dimensions: entrepreneurial mindset were Adopted from Covin and Slevin (1986). Measures of organization success were adopted from Murphy, Trailer and Hill (1996)

1.4     Aim and Objectives of the Study

The main purpose of this study is to examine the extent to which entrepreneurial mindset is associated to organizational success. The specific objectives of this study are:

1.       Seek to investigate if innovativeness has an association with organizational success in selected SME in Rivers State.

2.       Aimed at determining the extent of relationship between risk taking and organizational success in selected SME in Rivers State.

3.       To establish if a relationship exist between pro-activeness and organizational success in selected SME in Rivers State.

4.       Intends to determine the extent to which organizational culture moderate the relationship between entrepreneurial mindset and organizational success.

1.5     Research Questions           

From the research objective stated above, we formulated research questions for the study, which are as follows:

1.       What is the extent of association between innovativeness and customer satisfaction of SMEs in Rivers State.?

2.       Does innovativeness relate to market share of SMEs in Rivers State.?

3.       To what extent does pro-activeness relate to customer satisfaction of SMEs in Rivers State.?

4.       To what extent does pro-activeness relate to market share of SMEs in Rivers State?

5.       What is the extent of association between risk taking and customer satisfaction of SMEs in Rivers State.?

6.      To what extent does risk taking influence market share of SMEs in Rivers State?

7.       Does Organizational Culture moderation the association between entrepreneurial-mindset and organizational success of SMEs in Rivers State?

1.6     Research Hypotheses

In pursuance of the research objectives the following hypotheses are formulated for this study. They include:

Ho1There is no significant association between innovativeness and customer satisfaction of SMEs in Rivers State.

Ho2Innovativeness has no significant effect with market share of SMEs in Rivers State.

Ho3There is no significant relationship between pro-activeness and customer satisfaction of SMEs in Rivers State.

Ho­4:     Pro-activeness has no significant connection with market share of SMEs in Rivers State.

Ho­5There is no significant relationship between risk taking and customer satisfactions of SMEs in Rivers State.

Ho­6There is no significant association between risk taking and market share of SMEs in Rivers State.

Ho7: The culture of an organization does not significantly moderate the relationship between entrepreneurial mindset and organizational success.

1.7     Significance of the Study

There are two basic significance of this study: the practical significance and theoretical significance.

The Practical Significance:

1)       The findings of this study will enrich the major stakeholders in the SMEs sub-sector: entrepreneurs, business operators, managers and employees by enlightening their understanding concerning the roles and benefits of entrepreneurial mindset in the success of an organization. The result of the work shall enable the management of SME’s to comprehend the effects of entrepreneurial mindset on organizational success, particularly during period of economic uncertainty. Hence identify area where improvement can be done.

2)      This study will go a long way in providing understanding to the government and policy makers in the formulation of better policies relating to fostering and development of SMEs.

3)       Employees: The study benefits employees by showing how to act and the directions out of unfavorable economic situation.

The Theoretical Significance

  1. This study will contribute significantly to the existing stock of knowledge in the entrepreneurship and management literatures, particularly in the Small and Medium Enterprises (SMEs) sector in Nigeria, since it provides reliable empirical results that can be useful to academic scholars and practitioners.

Beside the potential importance that will be gained, this study will be a challenge to further research by any scholar who will have interest on the study under review because of its finding and recommendations.

1.8     Scope of the Study

Basically, the scope of this study comprised of three dimensions: content scope, geographical scope and the unit of analysis.

The Content scope: The theoretical area that will be covered in this study will be restricted to entrepreneurial mindset and organizational success, concepts of entrepreneurial dimensions and the measures of organizational success and also culture as moderating variable.

Geographical scope: The study will cover SME’s in Rivers State. The selected firms are located in several parts of Rivers State.       

Units of analysis: our unit of analysis is the Macro Level (organizational level).

1.9     Limitations of the Study.

Most of the potential limitations encountered while conducting this research includes:

1)      The content scope fails to cover all available dimensions and measures of entrepreneurial mindset and organizational success. Therefore, these limiting factors may affect the generalizations made in reference to SMEs in this study.

2)      This study may be limited by the sample size and its geographical spread. The entire population of SMEs in Rivers State was not studied, thus giving room for the possibility of sample errors.

3)       The time frame within which the study was required to be completed was another limiting factor.

In spite of this challenges, adequate care was taken in drawing the inferences from the survey and the result were easily concluded to meet the intension of the study.

1.10   Definition of Terms

Entrepreneurial: This term refers to the organizational behavior and processes that lead to seeking for a new ways or solutions to business problems in the market.

Entrepreneurial mindset: describes the attitude, behavior, perception, belief, ability by individual/managers/organizations to sense, act and mobilize in response to business threats or opportunities under favorable or turbulent situations.

Entrepreneur: is an individual who is involved in the creation of new idea and establish enterprises that add value along the transaction chain.

Manager: is an individual who uses organizational resources to achieve the set goals of the organization by planning, organizing, directing, controlling, coordinating, budgeting, and starting

Enterprise: is any identified idea that is translated into a planned, satisfactorily implemented, completed activity and accept the rewards for venturing.

Innovativeness: A characteristic found among entrepreneur involving new idea generation.

Organizational culture: This is the collection of values, policies, norms and believe and assumptions as practiced and observed and shared by members of an organization. (The way things are done within an organization)

Customer satisfaction: This is the consumer’s positive response about a products’ perceived performance in relation to the buyer’s expectation

Market Share: This is the total market sales that are earned by a particular firm or brand in a specific period of time with in an industry.

Pro-activeness: Refers to organizational decision making processes aimed acting before other competitors on future needs and demands

Risk-taking: Denotes a management decision-making process that accepts the willingness to undertake uncertainty, and seize opportunities in the market place by committing large resources with the expectation to achieve high returns.

Organizational success: This is defined as behaviors geared towards accomplishment, executions, carrying out and working on desired goals or outcome.

Effectiveness: The choice of doing the right thing in an organization.

Efficiency: The degree of rational use of resources (doing things in the right way).

1.11   Organization of the Study

The study is organized into five chapters.

Chapter one: Includes background of the study, problem statement, research purpose, research questions, research hypothesis, and significance of the study, scope of study, and limitation of study and definitions of terms.

Chapter two: Contains the review of literature.

Chapter three: Includes the research methodology.

Chapter four: Considers data presentation analysis, interpretation and discussion of findings.

Chapter five: Has summary, conclusion and recommendation of the study

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