The nexus of environmental dynamism and dimensions of entrepreneurial orientation in small businesses

Abstract

The relatively low total early stage entrepreneurial activity and consequent unsatisfactory performance of small businesses in South Africa is a problem. The problem may not be unrelated to the business environment and the entrepreneurial disposition of small firms; and it is concerning. Acting on this concern, this study examines possible associations between environmental dynamism (ED) and the individual dimensions of entrepreneurial orientation (EO). The focus on EO dimensions as dependent variables is rare as EO is often conceptualised as a consolidated construct. The study used a quantitative methodological approach and relied on data obtained through a survey of 1031 randomly selected small firms. Descriptive and exploratory factor analysis (EFA) were conducted on the data, and partial-least-square structural equation modelling (PLS-SEM) was used to test the hypothesised relationships. The findings revealed that only four dimensions of EO were statistically recognisable by respondents to this study, contrary to the five dimensions propounded in theory. Nevertheless, positive associations were observed between environmental dynamism and each of the dimensions of EO albeit to varying degrees. This finding highlights the importance of a dynamic, opportunity-yielding environment that enhances entrepreneurial action especially among small businesses.