Performance implications of entrepreneurial orientations and firm capabilities in small and medium enterprises: moderating roles of government support programs and business environment uncertainty

Performance of small and medium enterprises (SMEs) remains an issue of concern in entrepreneurship and management research. This is because SMEs play a critical role in supporting economic growth in both developed and developing countries. In Uganda, a developing country, agricultural SMEs here-forth agri-based SMEs play an important role in wealth creation and economic development. However, increasing global market competition has placed Ugandan SMEs at risk due to resource constraints. As such, their performance in a challenging business environment largely depends on their ability to develop unique capabilities and in being entrepreneurially oriented. This thesis aims to examine the impact of entrepreneurial orientation (EO) dimensions on firm performance in terms of both short term growth and long term survival of agri-based SMEs in a developing country context, Uganda. Despite an increasing number of studies EO research, findings are inconsistent and mixed. Some studies have found negative or non-significant results of EO on firm performance. Besides, there remains a paucity of EO research within the context of agri-based SMEs in a developing country. Furthermore, this thesis provides new insights into the boundary conditions of the EO dimensions–performance relationships for SMEs in developing countries. Therefore, another aim is to extend our current understanding of boundary conditions of EO dimensions by exploring the moderating roles of government support programs (GSP) and business environment uncertainty (BEU). Equally important, capabilities conceptualised as firm functional processes have been found to have a positive impact on firm performance of SMEs. Even though the role of various capabilities in enhancing the performance of SMEs has been extensively researched, there is scant evidence in the context of developing economies. Hence, another aim for this thesis is to examine the impact capabilities on the performance of agri-based SMEs in developing economy specifically Uganda. Additionally, this thesis attempts to explain boundary conditions of the capabilities–performance relationship for SMEs in developing countries. Therefore, the last aim is to provide more understanding of boundary conditions of capabilities by examining the moderating roles of GSP and BEU. To address the above research gaps, the following research questions are offered: (1) what is the impact of EO dimensions on short–term growth and long–term survival of agri-based SMEs in a developing country? (2) What is the impact of business capabilities (marketing, networking, financial and technological) on short–term growth and long–term survival of agri-based SMEs in a developing country? (3) Do government support programs moderate EO-performance and capabilities-performance relationships? (4) Does business environment uncertainty moderate EO-performance and capabilities-performance relationships? Following a quantitative approach and cross-sectional survey research design, these questions are empirically tested in agri-based SMEs in Uganda. The findings augment extant literature by showing how each dimension of EO impact firm performance when coupled with GSP and BEU, and support the stream of research that conceptualises EO as a multidimensional formative construct (do vary independently of each other). This underscores Lumpkin and Dess’s (1996) argument that the five dimensions of EO do not co-vary and their impact on performance can be viewed separately. Furthermore, the findings support the arguments that EO scales are applicable to both developed and developing country contexts. Similarly, the findings indicate that capabilities: marketing, networking and technological (with the exception of financial capabilities) positively and significantly improved both short term and long term survival of sampled agri-based SMEs in Uganda. The thesis also revealed new insights into moderating effects of GSP and BEU for EO-performance and capabilities-performance relationships. Moreover, this is the first capabilities and EO study to propose and operationalise GSP as a multidimensional construct: non-financial support (NFSP) and financial support (FSP) dimensions. By examining both NFSP and FSP, this thesis provides new insights into the role of GSP in SME performance. The findings provide foundational grounds for recommendations for agri-based SMEs management in strengthening their EO and capabilities, and useful for policy-makers to design relevant entrepreneurship and capabilities support programs for agri-based SMEs.