Entrepreneurship orientation and business discontinuance : a relationship analysis of total early-stage activities in the BRICS countries

Abstract

PURPOSE FOR THE STUDY : The links between entrepreneurial orientation (EO) and business discontinuance are seldom researched. This article analyses EO and business discontinuance rates in the countries of Brazil, Russia, India, China and South Africa (SA) of which the acronym is BRICS. The study aim is to establish whether innovative management of SMEs increase business survival rates. The BRICS formed in 2009-2010 but research comparing their SME sectors are sparse. Theoretically, EO underscored by innovation, high exportintensity and new technology take-up within early-stage entrepreneurship should lower business discontinuance. DESIGN/METHODOLOGY/APPROACH : Data for the variables studied were extracted from the Global Entrepreneurship Monitor (GEM) report and the study hypothesised that innovation, high export-intensity and new technology take-up rates are negatively correlated with business discontinuance rates. The hypotheses were tested using correlation analysis. Kruskal-Wallis and post hoc tests find significant overall variances and specific country-country variances. FINDINGS : While overall total early-stage entrepreneurship (TEA) is positively correlated with business discontinuance, the TEA variables scrutinised in the study are indeed mostly negatively correlated. These findings indicate that more generic small businesses are not good for accelerated economic growth because specific qualities in SMEs increase their survival and growth. Furthermore, innovation and new technology takeup are consistently positively correlated, implying that innovation cannot do without new technology. RECOMMENDATIONS/VALUE : EO within SME management practice must be nurtured by well-crafted entrepreneurial policy and implementation. Support to SMEs, in particular with technology and digitalisation, is required to boost their innovation and competitiveness. Policy support is required to boost SMEs enter global value chains. MANAGERIAL IMPLICATIONS : Entrepreneurs and SME managers must increase their EO and focus on being innovative, export-driven and to employ new technology. SMEs need these inputs to grow and survive. SME management must also find ways to invest in new technology in order to increase their innovation and competitiveness.