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ENTREPRENEURIAL ORIENTATION AND

PERFORMANCE OF WOMEN OWNED
ENTERPRISES IN SUB-SAHARAN AFRICAN
CONTEXT: CASE OF SOMALIA
Conference Paper December 2013

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ENTREPRENEURIAL ORIENTATION AND PERFORMANCE

OF WOMEN OWNED ENTERPRISES IN SUB-SAHARAN
AFRICAN CONTEXT: CASE OF SOMALIA
ALI YASSIN SHEIKH ALI, PhD candidate
College of Business studies
Sudan University of science and technology, Sudan
(+252-612225577, profali@hotmail.com)
Dr. Abdel Hafiez Ali, Associate Professor

Department of Business Administration

College of Economics & Administration
Qassim University, KSA
(hafiezali@yahoo.com)

ABSTRACT
Innovative and proactive firms that manage risk in rational way will be more successful by
capturing opportunities that rise in changing environment and develop new capacity to attain
better performance. All these characteristics are formed by entrepreneur orientation. The main
aim of this study is to examine the role of entrepreneurial orientation on performance of women
owned and managed enterprises in Somalia. Specifically, the study investigates the effect of 1)
innovation, 2) risk taking; and 3) Pro-activeness on business performance.
By using proportionate stratified random sampling, 314 women responded to the study. The data
was collected in May-June 2013 and was analyzed using SPSS version 16.0. The findings
indicate that innovation (= .173, t=3.004, p=.003), risk taking (=.186, t=3.066, p=.002) and
Pro-activeness (=.272, t=4.227, p=.000) were found to have statistically significant and
positive effect on firm performance. Future research scope and implications are further
discussed.
Keyword: Autonomy, innovation, pro-activeness, risk taking, competitive aggressiveness firm
performance

1. INTRODUCTION
Market trends and heightened competition in market place suggest that business firms , should
intensify their effort to meet changing needs of customer and offer degree of service quality that
satisfies by the customer along with to survive competitive environment magnified by major
transformations of globalization. Business firms are in search for strategies that give them
sustainable competitive advantage that is difficult to punch by competitors. Part of these
strategies is to have differentiated product and process along with to be inventive and to
anticipate potential technical and technological innovations (lee, Lim & Pathak, 2011).
Number academic and business member experts have tried to examine the extent of entrepreneur
behavior on business performance, Lumpkin and Dess (1996) described the process, practice and
decision making activity of entrepreneur as entrepreneur orientation.
Entrepreneur orientation is regarded being limited areas of entrepreneur researches that has
gained substantial concept and empirical attention as body of knowledge is mounting (Rauch et
al., 2004).
Most researches directed to entrepreneur orientation such miller (1983) , coving and silver
(1989), Lumpkin and Dess (1996) ,wiklund(1999), lee and chio (2000), Kreiser et al.,(2002),
investigated the impact of entrepreneur orientation with different dimensions on business
performance they found that entrepreneur orientation has positive relationship with business
performance. Entrepreneur orientation is positively correlated to business performance but varies
with variation of culture and personality traits (Rauch et al, 2004).
Most previous studies of entrepreneur orientation have been conducted in the developed nations
where its difficult to find a study that investigates the effect of entrepreneur orientation on
business performance in the infant industries in developing nations such as Sub-Saharan African
context.
Although the entrepreneurial orientation topic has fascinated increasing interest, the majority
publication in the field has men enterprises, According to our best knowledge not single study
focused in women entrepreneurs owned and running micro and small enterprises in Africa.
According to Ahmed (2011) Women, entrepreneurs are women who can play a significant role
in fostering economic and social development, particularly in the small business sector. While
Mordi and Okafor (2010) defines Women entrepreneurs are women who participate in total
entrepreneurial activities, and take the risks involved in combining resources in a unique way to
take opportunity identified in their immediate environment through production of goods and
services." The definition of women entrepreneurs in this study is adapted from Nawaz, (2010),
and it refers to women, who innovate, imitate or adopt a business activity."
In Somali community, women are traditionally seen as the backbone of the family, the primary
care giver looking after the household and children, while the man protects and provides for the
family and acts as its decision maker and representative in the community. (Ali, 2012) However,
the situation changed after the collapsed central government in mid 1990, Somali women
become more active in variety of places, including entrepreneurship. According to Abdel Hafiez
and Ali, A. Y. (2013) Somali Women-owned businesses are highly increasing in the

economies of almost all regions in the country; the hidden entrepreneurial potentials of women
have gradually been changing with the growing sensitivity to the role and economic status in the
societyp59.
This study will carry out to examine the entrepreneurial orientation dimensions relationship with
performance indicators among Somali women owned and managed micro and small enterprises
In Somalia.
2. LITERATURE AND HYPOTHESIS DEVELOPMENT
Different authors have adopted different definition so most uniform definition that currently is
used refers entrepreneur orientation as organizations strategic orientation that covers
entrepreneurs actions in decision making methods, process and practices.
Lumpkin and Dess (1996) defined as entrepreneurial orientation as process, practice and decision
making activity that lead to new entry.
Zara and Covin (1995) defined entrepreneurial orientation as potential means of refreshing and
stimulating existing company, this is done through means of innovation , risk taking and pro
activeness in competitive environment.
Most researches directed to entrepreneur orientation such miller (1983) , coving and silver
(1989), Lumpkin and Dess (1996) ,wiklund(1999), lee and chio (2000), Kreiser et al.,(2002),
investigated the impact of entrepreneur orientation with different dimensions on business
performance they found that entrepreneur orientation has positive relationship with business
performance. Entrepreneur orientation is positively correlated to business performance but varies
with variation of culture and personality traits (Rauch et al, 2004).

As shown in figure 1, the current study scoped three dimensions of entrepreneurial orientation
model by testing main constructs of EO: innovation, Proactiveness and Risk-taking of Women
owned and managed enterprises in Sub-Saharan African context.
2.1: INNOVATION AND FIRM PERFORMANCE
Innovation is defined as propensity to promote new idea, experimentation and creation of process
more over new way of doing business that firm catches earlier than competitor Wiklund (1988).
Innovation is reached through creation and generation of idea, R&D is important source of
innovation because it involves improving an existing product, develops new product and new
methods of product creation as well equipment needed to achieve improved or new production
process, although the importance of R&d cant be skipped then firm needs to regard large outlay
it incurs in R &D.
Some researchers argue that innovation depends on type of the product and service that company
deploys to market. They believe that innovation is intrinsically attached to entrepreneurship so
that entrepreneur can change product line as well as being technological leaderships (schillo,
2011).
Firms that embrace and manage innovation in a effective manner have superb performance than
those have less innovative entrepreneur Hafeez (2012), however innovation is more or less
correlated to firms performance thus:
H1: Innovation has positive influence on performance of women owned and managed
Micro and small enterprises in Somalia
2.2: PRO-ACTIVENESS AND FIRM PERFORMANCE
Pro-activeness involves taking responsibility and doing whatever it takes to ensure an
entrepreneurial venture produces successful outcome and it also involves insistence, flexibility
and readiness to assume responsibility for failure (Morris, 1998)
The relationship between organizational performance and Pro-activeness among firms at early
growth stages revealed a positive effect on business performance (Hughes & Morgan, 2007), and
this highest relationship between Pro-activeness and firm performance was observed when
compared with other EO dimensions (Kreiser, et.al., 2002 and Hughes & Morgan, 2007).
An investigating on Pro-activeness and firm performance in South Africa revealed that there is a
positive significance relationship between Pro-Activeness and business success (Krauss et.al.
2005) thus:
H2: Pro-activeness has positive influence on performance of women owned and managed
Micro and small enterprises in Somalia
2.3: RISK TAKING AND FIRM PERFORMANCE
According to coulthard (2007) risk taking is management decision to take large ventures at
foremost, risk taking has been major character of effective entrepreneurs and managers, there is
no single person who desires to experience hazardous business event, but real entrepreneurs and

experienced managers are able to tackle intimidations in competitive environment and make
decision considered a risky but business opportunity in their view.
Entrepreneurs are naturally risk taking individuals according to their decisions to work
themselves rather being employed; this also applies to companies and large firms that commit
project that cost amount of resource with indefinite results (Madhouse et al., 2011).
Some studies have been argued that increased risk taking behavior beyond a particular level may
be detrimental to firm performance (Miller and Friesen, 1982), while others suggest that
contingent rather than direct relationships are likely to lead to a more accurate explanation of
performance (Lyon et al., 2000).
Even though the relationship between risk taking and firm performance is not as obvious as the
previous ones, research suggest that when looking in the long run variations in the projects'
performance the relationship can go in the favour of a positive link between these two concepts
(March, 1991; McGrath, 2001). Thus:
H3: Risk taking has positive influence on performance of women owned and managed
Micro and small enterprises in Somalia
3. METHODOLOGY
3.1. RESEARCH DESIGN AND SAMPLING PROCEDURE
.
The current study adopts survey research design as data collection method. A self-administered
questionnaire comprising of two sections was developed for gathering information related to the
study. The first section gathered information related to demographics. While the second section
gathered entrepreneurial orientation dimension (innovation, Proactiveness and risk-taking, and
firm performance.
The population of the survey was women entrepreneurs In Somalia; four regions were
participated the study, first region is Banadir where the capital city of Mogadishu locates in
Mogadishu; Second region is Puntland was previously known as the north-eastern region of
Somalia. In 1998, it adopted the name Puntland and established its own regional administration.
Puntland supports a unified Somalia. The third region participated the survey is Somaliland is
located in the north-west region of Somalia. It declared its independence in 1991 but has not
received international recognition. Somaliland has its own government and the fourth region is
south central Somalia.
The study employs stratified random sampling where the main strata are based on regions of
respondents where each zone is represented according to its proportion in the population. The sample
of this study comprises of 500 women entrepreneurs. Following proportionate stratified random
sampling, each woman entrepreneur had a chance for representation in the study. The
questionnaires were distributed in May-July. Within three months, three hundred and fourteen
(314) valid responses were returned, making the response rate more than 63%.
3.2: Measurement of variables

Entrepreneurial orientation is evidenced through visible entrepreneurial tendencies

toward innovation, pro activeness and risk taking; EO was measured using a nine item,

five point interval scale type scale ranging from strong agreement with the question to
strong disagreement adopted from (Miller/Covin & Slevin (1989)). Each dimension of
entrepreneurial orientation, pro-activeness, innovativeness and risk taking, was described
by three questions
Firm performance is measured through financial indicators (profitability and firm
liquidity) using 11 items, and non financial indicators such as market share, budget goal
achievement, new Product Development and customer satisfaction using five point
interval scale type scale ranging from 1 indicates that you are highly dissatisfied with the
performance of your firm, selecting a 5 indicates that you are highly satisfied with the
performance of your firm, and a selection of 3 indicates neutrality.

3.3: RELIABILITY TEST

A reliability test was conducted to assess the internal consist of the items by using Cronbachs
alpha. A variable is reliable and internally consistent when the alpha is .70 and above (Hair,
Black, Babin, & Anderson, 2010). However, Bowling (2009) suggests that alpha of .50 and
above is an indication of internal consistency. Based on the literature, all the Cronbachs alpha
scores for the variables were greater the .60. The highest alpha was obtained by firm
performance (=.852), followed by innovation (=.721) and pro-activeness (=.719). The lowest
alpha was found to belong to Risk-taking (=.625).
Table 1: Reliability test
NO.
1.
2.
3.
4.

VARIABLE
Innovation
Pro-activeness
Risk taking
Firm Performance

Items

314
314
314
314

3
3
3
15

CRONBACHS
ALPHA
.721
.719
.625
.852

4.FINDINGS
4.1: DEMOGRAPHIC PROFILE
Table 2- Demographic characteristics of the respondents
Demographic Profile
Frequency
Percent
Age
25-35
97
30.9

Cumulative Percent
30.9

36-45

168

53.5

84.4

Above 46

49

15.6

100.0

Total

314

100.0

64

20.4

20.4

190

60.5

80.9

60

19.1

100.0

314

100.0

172

54.8

54.8

83

26.4

81.2

52

16.6

97.8

2.2

100.0

314

100.0

150

47.8

47.8

116

36.9

84.7

48

15.3

100.0

314

100.0

247

78.7

79.4

64

20.4

100.0

311

99.0

122

38.9

44.7

77

24.5

72.9

50

15.9

91.2

24

7.6

100.0

273

86.9

Marital status
Single
Married
Divorced
Total
Educational Background
Primary Education
Secondary
Diploma
Degree
Total
Experience
1-5 years
6-10 years
Above 10
Total
Family background-children
Yes
No
Total
How many children do you have?
1-3 Children
4-6 children
7-9 children
10> children
Total

4.2: ENTREPRENEURIAL ORIENTATION AND FIRM PERFORMANCE

Zero-order correlation was conducted for the dimensions of entrepreneurial orientation and firm
performance using Bivariate correlations. As shown in table 3, firm financial performance was
significantly and positively correlated with Innovation (r=.433, p=.000), Pro-activeness (r=.519,
p=.000), risk-taking (r=.490, p=.000), and firm non-financial performance (r=.581, p=.000).
Moreover, firm non-financial performance was significant, positively correlated with the three
dimensions of entrepreneurial orientation, namely innovation (r=.279, p=.001), Pro-activeness
(r=.333, p=.000), and risk-taking (r=.272, p=.000). On the other hand, there were significant
relationships among all the three dimensions of entrepreneurial orientation. Innovation had
significant positive and moderate relationship with Proactiveness (r=.522, p=.000) and risktaking (r=.427, p=.000), whereas Proactiveness was significantly correlated with risk-taking
(r=.590, p=.000).
Table 3-: Zero-order correlation between entrepreneurial orientation and firm performance
No. Variables
1
2
3
4
5
1.
Innovation
1
2.
Proactiveness
.522**
1
3.
Risk-taking
.427**
.590**
1
4.
Firm Financial performance
.433**
.519**
.490**
1
5.
Firm Non-Financial performance
.279*
.333**
.272**
.581**
1
Note: ** p<.001, *p<.05
4.3: HYPOTHESIS TEST
This section thought to investigate the effect of entrepreneurial orientation dimensions namely,
innovation, Proactiveness and risk-taking propensity on the firm performance owned by Somali
women. Three hypotheses were developed based on the literature. In order to test these
hypotheses, a linear multiple regression analysis was conducted to get the best predictor.
The regression assumptions were checked before proceeding to further analysis. The dependent
variable in this study (firm performance) was normally distributed across all independent
variables. The linearity, Collinearity, and outliers were also checked. Therefore, no violations
were observed.
Regression analysis was used to test the relationship between innovation and firm performance
(H1), the regression analysis result in Table (4) indicates that innovation has positive and
significance influence on performance of women entrepreneurs (= .173, t=4.697, p<.001),
therefore, this findings supports H1. Also the below table shows that Pro-activeness has
influence on firm performance (=.272, t=.4.227, p=.000). Therefore (H2) supported. Whereas
risk taking (=186, t=3.066, p=.002) were found to have statistically significant and positive
effect on firm performance. Therefore (H3) supported. All the entrepreneurial orientation
dimensions (R2=.276) managed to explain 27% of variance in the criterion variable (firm
performance).

Table: 4-: Entrepreneurial orientation dimensions and firm performance dimensions

Predictors

Sig

Collinearity statistics
Tolerance
VIF
.705
1.417

Innovation

.173

3.004

.003

Pro-activeness

.272

4.227

.000

.562

1.778

Risk-taking

.186

3.066

.002

.633

1.581

R=.525, R2= .276, R2 adjusted= .269,

5. CONCLUSION
This study is intended to examine the relationship between entrepreneurial orientation and firm
performance among the women entrepreneurs in Somalia. Specifically, the objectives of the
study were 1) to determine the impact of innovation on performance Somali women
entrepreneurs in Banadir region, 2) To investigate the impact of risk- taking behavior on
performance Somali women entrepreneurs in Banadir region; and finally 3) To examine the
impact of pro activeness on performance of Somali women entrepreneurs in Banadir region.
By employing proportionate stratified random sampling technique, this study collected responses
regarding the main variables of the study from 314 women owned and managed enterprises in
four main regions in Somalia. Women provided responses to three main constructs, namely
innovation, pro-activeness, Risk-taking, and firm performance.
The results of Bivariate correlation suggested that the criterion variable (firm performance) had
statistically significant and positive correlation with the three predictors namely innovation, proactiveness and Risk-taking. On the other hand, the results of multiple regression analysis
revealed that all these three constructs had statistically significant and positive effects on the firm
performance. Therefore verifying to all of three hypotheses constructed in the beginning of this
paper. Thus, this paper supports the findings made by previous researchers such as (Lumpkin and
Dess 2001; Baird and Thomas, 1985;; Miller and Friesen, 1982 and Morris, Kuratko and Covin
2008) that the firms entrepreneurial orientation is an important factor contributing to the higher
firms performance.

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