Business startup motives and growth expectations of micro and small-scale entrepreneurs in Southern Province of Sri Lanka: the mediating role of entrepreneurial orientation

Abstract

New venture creations are vital for the economic growth of any country because of its contribution to employment generation, employment generation, GDP, innovations and value additions. Though a large number of new venture creations occur every year in Sri Lanka, research findings highlighted that a smaller percentage was able to survive. Hence, the number of business establishments cannot be considered as a meaningful indicator of economic growth of the country and the high failure rate is a crucial issue. Past studies revealed that business startup motives effect on the business growth and Entrepreneurial Orientation (EO) plays a crucial role in directing the business towards success. Studies are lacking about the impact of business startup motives on the success and survival of newly established ventures and the mediating role of the EO on the relationship between start-up motives and new venture success. Therefore, the present study focused to reveal whether significant relationship exists between business startup motives and growth expectations; growth expectations between the necessity driven (NDEs) and opportunity driven entrepreneurs (ODEs); and whether EO plays a mediating role on the relationship between business startup motives and growth expectations. Independent Sample T test and Structural Equation Modeling were applied to test the hypotheses. Findings revealed that significant difference exists between the NDEs and ODEs in terms of proactiveness, competitive aggressiveness, and autonomy and no significant difference exists in growth expectations between the NDEs and ODEs. Entrepreneurial Orientation partially mediates the relationship between business startup motives and growth expectations.

Impact of Economic Crisis and Way Forward for the Survival of SMEs: A Sri Lankan Perspective

“…Simon-Moya et al, (2016) found that ventures which started based on market opportunity have better survival chances during times of crisis because these are associated with the concept of entrepreneurial orientation, with the dimensions of innovativeness, proactiveness, and willingness to take risks than those were started based on necessity motive. Sriyani et al, (2020) also argued that the EO plays a crucial role in directing the business toward success. Soininen et al, (2012) found that, during and after a crisis, SMEs with higher EO have better chances of survival.…”

Dynamic Capabilities and Innovative Orientation Towards Business Success in Turbulent Business Environments: The Experience of a Successful Woman Entrepreneur in Sri Lanka

“…Schumpeter, (1934) defined innovation as the combination of explicit and implicit production components. Covin & Slevin (1986) refer 'innovativeness' or 'innovative orientation' as the propensity to introduce novelties (cited by Sriyani, et al,2020). Innovativeness also defined as 'a firm's capacity to engage in innovation: that is, introduction of new processes, products, or ideas' (Rhee et al, 2010).…”