The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania
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Ringo, Denis Samwel; Tegambwage, Amani; Kazungu, Isaac Article The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Ringo, Denis Samwel; Tegambwage, Amani; Kazungu, Isaac (2022) : The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 9, Iss. 1, pp. 1-21, https://doi.org/10.1080/23311975.2022.2157769 This Version is available at: https://hdl.handle.net/10419/289411 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/
Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 Cogent Business & Management ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/oabm20 The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania Denis Samwel Ringo, Amani Tegambwage & Isaac Kazungu To cite this article: Denis Samwel Ringo, Amani Tegambwage & Isaac Kazungu (2022) The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania, Cogent Business & Management, 9:1, 2157769, DOI: 10.1080/23311975.2022.2157769 To link to this article: https://doi.org/10.1080/23311975.2022.2157769 © 2022 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. Published online: 16 Dec 2022. Submit your article to this journal Article views: 2255 View related articles View Crossmark data Citing articles: 7 View citing articles
ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS | RESEARCH ARTICLE The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania Denis Samwel Ringo 1 *, Amani Tegambwage 1 and Isaac Kazungu 2 Abstract: This paper examines the effect of innovativeness and proactiveness on export performance and the moderating effect of risk-taking on the relationship between innovativeness, proactiveness, and export performance. A quantitative research approach and a cross-sectional survey design were employed. In addition, stratified random sampling was employed to obtain data from 250 managers of manufacturing-exporting SMEs. Hypotheses were examined using the PROCESS macro test. The findings affirm that innovativeness is a significant predictor of export performance (β = 0.3854 and p < 0.001). However, negative effect of proactiveness on export performance was revealed (β = −0.1748 and p < 0.001). Risktaking was found to be a significant moderator of the relationships between innovativeness and export performance (β = 0.2234 and p = 0.0009) as well as proactiveness and export performance (β = 0.1041 and p = 0.0271).The findings of this study broaden the applicability of RBV theory to an exporting context by examining the process through which entrepreneurial-orientation (EO) as an intangible resource leads to successful export performance. This study also contributes to the debate on the EO-export performance relationship by establishing the interplay effect between EO dimensions in enhancing export performance. The study contributes that risk-taking significantly moderates the relationship between innovativeness, proactiveness and export performance. Furthermore, the study recommends that the owners-managers of exporting SMEs develop and implement more innovative strategies, respond quickly to seize available export market opportunities, cultivate a positive attitude toward risks, and increase their capacity to take risks in order to improve their export performance. Subjects: Business, Management and Accounting; Corporate Governance; Corporate Social Responsibility & Business Ethics Keywords: Export performance; innovativeness; proactiveness; risk-taking; SMEs; Tanzania 1. Introduction Small and medium-sized enterprises (SMEs) play a significant role in the economic development in all nations (Jin & Hurd, 2018). This is because they contribute significantly to jobs creation, wealth, and the reduction of poverty (Ismail & Wright, 2022; Muriithi, 2017). In addition, SMEs make a major contribution to the country’s GDP (Edeh et al., 2020). Furthermore, SMEs are considered to be the birthplace of innovations and entrepreneurship (Agyapong, 2010). As a result, both Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 1 of 21 Received: 19 October 2022 Accepted: 07 December 2022 *Corresponding author: Denis Samwel Ringo, Department of Business Administration and Management, College of Business and Economics, The University of Dodoma, Dodoma, Tanzania E-mail: [email protected] Reviewing editor: Collins G. Ntim, Accounting, University of Southampton, United Kingdom Additional information is available at the end of the article © 2022 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license.
developed and developing countries have paid close attention to their growth and competitiveness (Ali et al., 2020). For instance, the government of Tanzania has put in place various efforts to support the growth of SMEs. The efforts include the formation of the Small Industries Development Organization in 1973 and the creation of the University of Dar es Salaam Entrepreneurship Center in 2001. Also, the establishment of the SME development policy in 2003, the creation of the SME credit guarantee scheme in 2005, and the establishment of the SME department in the Ministry responsible for Industry and Trade in 2003 (Kiyabo & Isaga, 2019; Mpunga, 2016). Exporting is the initial step of the internationalization process (Paul & Mas, 2019), and is considered to be the least expensive and easiest mode of SMEs’ internationalization (Gupta & Chauhan, 2020). Likewise, export performance refers to the outcomes (success or failure) of a firm’s operations in export markets (Chen et al., 2016). Zou et al. (1998) suggested that, in measuring export performance, both financial and non-financial measures should be taken into account. Additionally, Beleska-Spasova (2014) contended that the multifaceted EXPERF Scale of Zou et al. (1998) is a valid instrument for measuring export performance in different nationalities. Therefore, the EXPERF Scale was used in this study to measure export performance. Exporting is regarded as a means for SMEs to grow, increase competitiveness and survival (Haddoud et al., 2017). Unfortunately, SMEs in various economies experience disappointing performance in export markets (Acikdilli et al., 2020; Hossain et al., 2022a; Mkenda & Rand, 2020; Paul, 2020). As a consequence, their contribution to total exports is low, and they often achieve less than expected (Gupta & Chauhan, 2020;). For instance, in OECD economies, although SMEs represent 95 percent of all firms, they only generate around 20–30 percent of the total exports (OECD, , 2019). In Africa, particularly in Sub-Saharan Africa, SMEs generate around 10–15 percent of total exports, as opposed to the planned share of 30 percent, despite they account for 95 percent of all enterprises (International Trade Center, 2018). Likewise, Tanzania is not exempt from such problems. Despite SMEs accounting for 95 percent of all enterprises in Tanzania, their contribution to overall country exports is estimated to be between 10–15 percent (Edwin, 2019; Mkenda & Rand, 2020). In addition to that, empirical evidence worldwide shows invariably this problem of poor export performance of SMEs. For instance, the studies of Ferreras-Méndez et al. (2019) and Manzanares (2019) in Spain and Rekarti et al. (2018) in Indonesia. Also, Abu-Rumman et al. (2021) in Jordan, Li et al. (2019) in China, Kalinic and Brouthers (2022) in Dutch and Italian. In addition, the studies of Imran et al. (2019) and Mubarik et al. (2020) in Pakistan, Acikdilli et al. (2020) in Turkey, and Kamal et al. (2022b) and Hossain and Azmi (2021) in Bangladesh. Furthermore, the studies by Edeh et al. (2020) in Nigeria, Robb et al. (2020) and Robb and Stephens (2021) in South Africa. Moreover, the studies of Ahimbisibwe et al. (2016) and Ahimbisibwe and Abaho (2013) in Uganda, Cherotich (2021) and Kitonyi et al. (2020) in Kenya and Luge et al. (2021), Mbura (2019), Mkenda and Rand (2020), and Mpunga (2016) in Tanzania. These studies provide evidence of the problem regarding the poor export performance of SMEs worldwide. Nevertheless, because exporting is an act of entrepreneurship (Ibeh & Young, 2001), researchers have developed an interest in how entrepreneur orientation helps SMEs perform better in export markets (Hernandez-Perlines, 2018; Hossain et al., 2022a). Likewise, Leko-Šimić and Horvat (2006) opined that the entrepreneurship behavior of the firm owner/manager and of the firm itself has a significant impact on the process of internationalization and, export performance. The entrepreneurship behavior of the firm is measured through its entrepreneurial orientation (EO), because EO is widely regarded as the cornerstone and central focus of entrepreneurship (Covin & Slevin, 1991; Wales et al., 2011). EO is a strategic organizational stance comprised of the specific processes, practices, and activities that allow firms to create value through entrepreneurial endeavors (Lumpkin & Dess, 1996). Likewise, EO is a dynamic capability that helps firms to acquire and maintain a competitive edge in ever-changing marketplaces (Rwehumbiza & Marinov, 2020) like export markets and is intimately linked to the firms’ exporting behavior and success (Hossain et al., 2022a). Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 2 of 21
Based on that, a number of empirical studies have examined the relationship between EO and SMEs’ export performance (Ajayi, 2016; Boso et al., 2018, 2016; Chin et al., 2016; Hossain & Azmi, 2021; Imran et al., 2019; Jin & Cho, 2018; Kalinic & Brouthers, 2022; Kamal et al., 2022b; A. Monteiro et al., 2019; Robb et al., 2020; Rua et al., 2018). However, the studies produced mixed evidence leading to the conclusion that the empirical findings on this relationship are not conclusive (Hossain & Azmi, 2021; Imran et al., 2019). While the majority of studies indicate a significant positive effect (Ajayi, 2016; Boso et al., 2016; Imran et al., 2019; Jin & Cho, 2018; Kalinic & Brouthers, 2022; Kamal et al., 2022b; Karami & Tang, 2019; Monteiro et al., 2019; Rua et al., 2018) some studies found insignificant effect (Baldegger et al., 2021; Chin et al., 2016; Felzensztein et al., 2015; FernándezMesa & Alegre, 2015; Imran et al., 2017) and others revealed mixed findings regarding EO dimensions and export performance (Hossain & Azmi, 2021; Robb et al., 2020). To the best of the authors’ knowledge, there is no published study on the relationship between EO and export performance in Tanzania. However, we found few empirical studies that investigated the EO-performance relationship in the context of Tanzania. For instance, Kapaya et al. (2018), Nyello and Kalufya (2021), and Roux and Bengesi (2014) found significant positive effect on the relationship. Also, a study by Kiyabo and Isaga (2020) found a negative effect of EO on the performance of SMEs. Furthermore, studies of Shayo and Uiso (2019) and Okangi (2019) revealed mixed results regarding the dimensions of EO and the performance of tourism firms in Tanzania. Based on these findings it has been argued that the EO-performance is a complex relationship that needs further explorations (Hossain et al., 2022a; Otache & Mahmood, 2015; Robb et al., 2020). Also, Anderson and Ronteau (2017) and Hossain et al. (2022a) explained that the majority of studies that examined the EO-performance relationship have been conducted in developed nations whereas a dearth of empirical based-evidence exists in developing nations. As a result of this, various authors have called for further research on the EO-performance relationship, particularly in a developing country context, to advance researchers’ knowledge of the mechanisms and contingent factors affecting the relationship (Anderson & Ronteau, 2017; Hossain et al., 2022a; Knight et al., 2020). This study, therefore, responds to those calls by investigating the EO-export performance relationship in a developing country context, Tanzania, and also contributes to the body of knowledge by examining the mechanism underlying the performance impacts of EO. In this study, unlike the previous studies, we contend that there could be a potential interplay between different dimensions of EO in enabling SMEs to achieve better export performance. By so doing, the current study unpacks the process of how SMEs’ EO improves export performance. Consistent with Miller (1983) and Covin and Slevin (1989) who argued that the three dimensions of EO namely innovativeness, risk-taking and proactiveness positively interact to enhance performance; the current study posits that there would be joint effects of different dimensions of EO leading to successful export performance. For instance, the ability of a firm to innovate a new product or market may need a considerable amount of risk-taking propensity. Similarly, the ability of a firm to identify and exploit market opportunities before other competitors may necessitate a significant level of risk-taking behavior. This study centered on the three EO dimensions namely innovativeness, risk-taking, and proactiveness among others. This is because the literature suggests that EO is majorly composed of these three dimensions (Covin & Slevin, 1989; Miller, 1983). Also, it is acknowledged that an individual or a firm is entrepreneurial-oriented if pursuing innovativeness, risk-taking, and proactiveness (Covin & Slevin, 1991; Karami et al., 2020). Furthermore, the literature identified that SMEs engaging in these three dimensions are more likely to thrive in export markets (Ajayi, 2016; Hossain et al., 2022a). Based on this, the study proposes a moderation model of the EO dimensions on export performance. Specifically, the study suggests that risk-taking moderates the effect of innovativeness and proactiveness on export performance. To test the developed conceptual model this study collected data from 250 manufacturing exporting SMEs in Tanzania. By so doing, this study contributes significantly to the body of literature and practical standpoint. First, by examining the performance impact of EO, the study Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 3 of 21
conceptualizes the moderating effect of risk-taking on the relationship between innovativeness, proactiveness and SMEs’ export performance which has not yet been done in previous studies. Second, by examining the moderating role of risk-taking on the relationships between innovativeness, proactiveness, and export performance, this study unpacks the process through which EO leads to export achievements. Specifically, the current study adds to the entrepreneurship and export literature a comprehensive insight into how SMEs might develop effective EO leading to successful export performance. Uncovering the process would allow policymakers and business owners/managers to improve and enhance the effectiveness of EO in attaining better export performance. 2. Literature review and hypotheses development 2.1. The resource-based view (RBV) theory This study employed the resource-based view (RBV) theory by Penrose (1959) consistent with prior studies that examined EO-performance relationship (Abu-Rumman et al., 2021; Hossain & Azmi, 2021; Imran et al., 2019; Jin & Cho, 2018; Kiyabo & Isaga, 2020; Monteiro et al., 2019; Monteiro et al., 2017) in the extant literature. According to the RBV theory, a firm is defined as a bundle of resources integrated into different ways, and it is this combination that gives a firm its uniqueness (Wernerfelt, 1984). The RBV offers a theoretical underpinning for the importance of various types of resources owned by a firm to its competitiveness and overall performance (Roxas & Chadee, 2011). Based on the theory, organizations’ performance varies due to differences in resource endowment (Barney, 1991; Peteraf, 1993). Firm resources can be categorized as tangible, like finance and physical resources, or intangible like capabilities, skills, and knowledge. The theory further asserts that the possession of strategic resources is critical for a firm to achieve competitive advantage and superior performance (Kiyabo & Isaga, 2020; Monteiro et al., 2019). Strategic resources can provide either “cost leadership or differentiation” as a result they have the potential to be a source of sustainable competitive advantage (Bhat & Momaya, 2020). Strategic resources are resources which are valuable, rare, and non-substitutable, and have been recognized as the major differentiators between firms that have advantages and those that do not (Kellermanns et al., 2016). Extant literature acknowledges intangible resources as strategic resources because they feature distinguishing characteristics (Gupta & Chauhan, 2020; Locket et al., 2009). As a result, recent studies have shifted the emphasis from tangible to intangible resources, which are regarded as more vital and relevant for firm success and performance (Gupta & Chauhan, 2020; Monteiro et al., 2019). Similarly, Racela and Thoumrungroje (2020) claimed that to generate a sustainable competitive advantage and superior performance, strategic intangible resources must be efficiently utilized. For SMEs, EO is viewed as a strategic intangible resource that significantly contributes to competitive advantage and superior performance (Monteiro et al., 2017; Runyan et al., 2006). EO promotes the ability of firms to gain and maintain a competitive advantage in a volatile business environment such as the export markets (Altinay et al., 2015; Hossain et al., 2022a). This is because, SMEs with high level of entrepreneurial management build strong business plans and make the required changes to capitalize on market opportunities (Ipek & Tanyeri, 2020). Therefore, based on RBV theory, EO is a distinctive capability in terms of risk-taking, innovativeness, and proactiveness that provides SMEs with a competitive edge and in turn successful export performance (Jin & Cho, 2018). In light of this, the RBV theory explains why SMEs should strategically utilize EO to gain a competitive advantage and achieve success in export markets. 2.2. Entrepreneurial orientation and export performance Despite the fact that research on EO in developing economies is increasing, empirical evidence of its effect on export performance, particularly for SMEs in developing countries, is scant (Hossain et al., 2022a; Robb et al., 2020). Given the negative consequences of globalization, SMEs are frequently encouraged to evaluate their existing capabilities, like EO, when developing a strategy for global success (Robb et al., 2020). EO refers to the procedures, practices, and decision-making Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 4 of 21
activities that lead to the new entrance (Lumpkin & Dess, 1996). Also, D. Miller (1983) describes EO as a firm’s ability to engage in product-market innovation, make somewhat risky decisions, and come out on top by outperforming competitors. In addition, D. Miller (1983) further explained that EO is comprised of innovative, proactive and risk-taking characteristics. Among the three dimensions, innovativeness and proactiveness are regarded as the primary elements of EO (AbuRumman et al., 2021; Otache & Mahmood, 2015). Therefore, entrepreneurial SMEs should primarily possess the two dimensions. 2.2.1. Innovativeness and export performance The ability to innovate is regarded as the most important attribute of an entrepreneurial firm (Kuratko et al., 2011). Innovativeness is referred to the tendency of a firm to engage in and promote experimentation and creative activities that may result in new products, processes, or services (Lumpkin & Dess, 1996). Innovative firms expand their business operations easily through exporting (Saridakis et al., 2019). This is because innovative firms can develop improved, modified, or new products and processes that can provide them with a competitive advantage in foreign markets (Ahimbisibwe & Abaho, 2013). Furthermore, highly innovative organizations are likely to experience positive outcomes in their respective markets in terms of new technology, products, services, or processes (Edeh et al., 2020). As a result, firms with high levels of innovation outperform those with lower levels (Covin & Wales, 2019). In addition, the process of innovation is regarded as a vital performance factor, with organizations that encourage innovative behavior performing better in exporting (Calantone et al., 2006). Firm innovation provides a competitive edge in foreign markets by allowing businesses to benefit from economies of scale and scope (Silva et al., 2017). As consequently, innovative SMEs are more likely to flourish in international markets. Thus, it is worth hypothesizing that: H 1 : Innovativeness positively influences the export performance of SMEs. 2.2.2. Proactiveness and export performance Proactiveness refers to a company’s ability to predict market demand and opportunities through market analysis and develop new products or processes ahead of its rivals to gain first-mover advantages in the marketplace (Hossain et al., 2022a). Proactive SMEs are optimistic about market potential opportunities (Lee & Peterson, 2000). Also, foreign markets have distinct customers with changing requirements and tastes, thus, being proactive in dealing with them is critical. Proactive SMEs concentrate on making their ideas a reality and achieving a competitive edge by being the first to seize on new market opportunities (Lee & Peterson, 2000). In addition, Jafari-Sadeghi and Dana (2022) suggest that firms must be proactive to guarantee competitiveness and superior performance in foreign markets. Moreover, the ability to be proactive may add a degree of proficiency, leading to improved export performance for the firm (Hughes & Morgan, 2007). Therefore, firm proactiveness is a vital instrument, particularly for SMEs in recognizing and responding to varying customer needs which ensures success in foreign markets (Hunt & Arnett, 2006). Thus, the study hypothesizes that: H 2 : Proactiveness positively influences the export performance of SMEs 2.3. Moderating effect of risk-taking Risk-taking refers to the willingness of the owner-manager to devote a substantial amount of resources while executing strategies and opportunities with unknown expected returns (Lumpkin & Dess, 1996). Risk is regarded as an essential element of the entrepreneurial process (McMullen & Shepherd, 2006) because both innovation and proactivity are related to a significant amount of risks (Kuratko et al., 2011). For instance, the ability of the management to take risks is often a key component of the process when a firm engages in innovative and proactive activities. When Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 5 of 21
a business intends to launch a new product, process, or market, a high degree of managerial risktaking aptitude is essential. Similarly, a significant level of management risk-taking propensity is needed when a firm seeks to capitalize on discovered opportunities ahead of competitors in order to acquire first-mover advantages in the marketplace. Therefore, when managers have a strong risk-taking mentality, the firm’s entrepreneurial performance improves (Stambaugh et al., 2017). In addition, firm internationalization success is contingent on the entrepreneurial behavior of the firm owners’/managers’ readiness to take risks (Jafari-Sadeghi, 2021). As such, the current study investigates the argument that higher export performance may be attained through innovativeness and proactiveness if managers’ risk-taking attitude is working properly. Therefore, the study hypothesizes that the relationship between innovativeness, proactiveness and export performance may be influenced by the management’s risk-taking ability to commit resources to undertake risky strategies related to the potential opportunities in the export market. The interplay might occur in such a manner that a higher level of risk-taking attitude, the likelihood that, innovativeness and proactiveness will have a strong effect on export performance. It is thus hypothesized that: H 3 : Risk-taking significantly moderates the relationship between innovativeness and export performance of SMEs. H 4 : Risk-taking significantly moderates the relationship between proactiveness and export performance of SMEs. 2.4. The conceptual model The conceptual model of this study is depicted in Figure 1; it has been developed based on the literature review and hypotheses formulated which have been grounded on the RBV theory. The model proposes that innovativeness and proactiveness lead to export performance. Also, the model suggests that risk-taking moderates the relationship between innovativeness, proactiveness, and export performance. 3. Research methodology 3.1. Study areas and research design The research was carried out in Tanzania, in the cities of Arusha, Dar es Salaam, Dodoma, Mbeya, and Mwanza. The cities are selected because they hold a large portion of Tanzania’s manufactured outputs (Andreoni, 2017; Kiyabo & Isaga, 2020). Furthermore, these cities were chosen because they have a relatively significant number of manufacturing SMEs in Tanzania (Nyello & Kalufya, 2021; URT, 2016). Consequently, a quantitative research approach was employed in this study to test the hypotheses formulated by the collected data. The study employed a cross-sectional survey design since data from a target population were only gathered once. The design is considered H3 H4 H1 H2 Innovativeness Proactiveness Risk-taking Export Performance Figure 1. The conceptual model Source: Literature review Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 6 of 21
effective and efficient because it enables the collection of a significant amount of data within a short period (Kresmodel, 2018). 3.2. Sampling and data collection The study’s target population consisted of 958 manufacturing-exporting SMEs in the selected cities, and the list was acquired from the National Bureau of Statistics (NBS), supplemented with a registered list from the regionals’ Small Industries Development Organization (SIDO). The target population comprised exporting SMEs in the food, leather, textile, and wood industries. The four industries were chosen because they account for the majority of Tanzania’s exporting SMEs in the manufacturing sector (Andreoni, 2017). This study includes manufacturing SMEs that have been regularly active in exporting activities for at least three years in order to acquire sufficient and relevant data to answer research hypotheses. Three years has been described as enough time to establish the firm’s direction and performance outcomes (Quaye et al., 2017). In this study, the Tanzanian definition of SMEs was adopted, with micro-enterprises having 1–4 workers, small-firms having 5–49 employees, and medium-sized firms having 50–99 employees United Republic of Tanzania (URT), 2003) Also, Yamane’s (1967) algorithm was utilized to calculate sample size, with a target population of 958 exporting SMEs, a confidence level of 95%, and a margin of error of 5% as suggested by Leavy (2017), resulting in a sample size of 282. Consequently, proportionate stratified sampling was used to ensure that each city has a representation of SMEs as indicated in Table 1. Following that, SMEs from the chosen cities were included in the sample using a simple random sampling technique. A total of 282 managers of manufacturing-exporting SMEs participated in an actual survey that was conducted from November 2021 to April 2022. The decision to use managers in this study was due to the fact that they are knowledgeable about the study variables and are actively involved in the businesses’ strategic decisions. After distributing 282 questionnaires, only 250 valid responses were gathered, translating to an 88.7% response rate. In addition, data was gathered using a standardized questionnaire. The questionnaire was used because it covers a wide area and gives a large amount of information in a short period. A structured questionnaire was also employed since it shields the researcher and the participants from any potential bias (Kim et al., 2016). Also, to ensure that the content and design were simple for the respondents to grasp, the questionnaire was pre-tested by 20 managers of exporting SMEs before the actual survey, and it was then improved based on their input. 4.3. Measurements of study variables The measurement scales for EO dimensions and export performance were adapted from extant literature and they have been validated and used in previous studies. The multi-item measurements with five-point Likert scales ranging from one “strongly disagree” to five “strongly agree” were used to measure the study’s constructs. The measuring items were chosen because they matched the conceptual model of the current study and had sufficient past reliability. The measurement scale for EO dimensions was adapted from Miller (1983) and further modified by Lumpkin and Dess (1996). The scale consists of innovativeness, proactiveness, and risk-taking, making EO a multidimensional formative indicator. Four items were used to measure each of the innovativeness, proactiveness and risk-taking. In addition, export performance (EXPERF) was measured using the EXPERF scale developed by Zou et al. (1998). The scale is used in this study because it is a comprehensive scale that integrates both objective and subjective measures, to ensure the validity of the results (Zou et al., 1998). This scale comprises nine items. 4.4. Data analysis Confirmatory factor analysis (CFA) in the structural equation model (SEM) was used in this study to assess model measurements like model fit indices, reliability, and validity. The CFA is regarded to be relevant in multivariate data analysis for determining the reliability of indicators for latent variables (Barati et al., 2019). Also, Hayes’ PROCESS macro was used to examine the moderating influence of risk-taking behavior on the effect of innovativeness and proactiveness on export Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 7 of 21
suggests that the effect of innovativeness and proactiveness on EXPERF is strong for SMEs that have high levels of RS. The findings of this study back up Leko-Šimić and Horvat (2006) assertion that firms with risk-taking attitudes outperform those with a lower degree of risk-taking attitude. Furthermore, the study’s findings validate the RBV theory and reveal the process through which EO enhances export performance, particularly how the EO dimensions interact to improve export performance. Therefore, exporting SMEs in developing countries should not be scared to make risky decisions about the creation and introduction of a new product, process, and market to take advantage of the vast opportunities available in foreign markets. 6. Conclusions The overall objective of this study was to examine the effect of innovativeness and proactiveness on EXPERF and the moderating effect of risk-taking on the relationship between innovativeness, proactiveness and EXPERF. The current study utilizes RBV theory to develop the conceptual model in order to accomplish the objective. The developed conceptual model was empirically tested in the context of Tanzanian manufacturing SMEs. The motive to undertake this study was influenced by the dearth of empirical based-evidence of the relationship between EO and export performance in developing economies and, the absence of the process through which EO leads to better EXPERF. Therefore, this study was carried out to investigate the process through which EO leads to improved EXPERF. The findings of this study reveal that innovativeness is a significant determinant of EXPERF. However, proactiveness negatively affects EXPERF. In addition, the findings reveal that risk-taking significantly moderates the effect of innovativeness, and proactiveness on EXPERF. The findings imply that at higher levels of risk-taking the effect of innovativeness and proactiveness on EXPERF increases. Therefore, it may be concluded that when SMEs in emerging economies adopt risky decisions concerning innovations and exporting operations, and commit a significant amount of resources to them, their EXPERF improves. 7. Implications of the study 7.1. Theoretical implications The current study examined the relationship between innovativeness, proactiveness, and EXPERF in Tanzanian manufacturing SMEs and also the moderating effect of risk-taking on the effect of innovativeness and proactiveness on EXPERF. Thus, this study contributes to the effect of Figure 2. Slope plotting for the interaction effect (INV*RS). Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 14 of 21
innovativeness and proactiveness on EXPERF of manufacturing SMEs in a developing economy context. Given the paucity of empirical evidence on the relationship in developing economies, this study offers empirical insights into SMEs in a developing economy context, hence, contributing to the existing literature. Also, the study adds to the already available stream of empirical evidence of the EO-export performance link by widening the current thinking on exporting by affirming that different EO dimensions affect EXPERF in ways that prior studies have not yet addressed. In particular, this study adds to the existing literature that the risk-taking element significantly moderates the influence of innovativeness and proactiveness on EXPERF. Moreover, the findings of this study extend the applicability of RBV theory in the context of exporting on the process by which EO leads to improved EXPERF. The study reveals how EO as an intangible resource results in improved EXPERF. That is the interplay between the dimensions of EO results in improved EXPERF. Furthermore, the results of this study support the RBV theory that strategic resources lead to superior export performance. 7.2. Managerial implications This study has managerial implications for the owners/managers of the manufacturing SMEs looking to improve their EXPERF. First, the findings of this study affirm that innovativeness is a strategic determinant of EXPERF. Therefore, owners/managers should nurture more innovative strategies and carefully execute them to provide the groundwork for successful EXPERF. This might be done by setting innovation goals and objectives and fostering an innovative culture within their businesses. Through innovation initiatives their firms will benefit from economies of scale and scope. Second, the results of this study reveal that proactiveness is negatively related to EXPERF of SMEs. However, owners/managers and entrepreneurs are urged to have the capacity to respond swiftly and ahead of competitors in order to seize the numerous opportunities present in export markets. This is because being proactive may lead to stronger EXPERF, especially when trends and possibilities are few or unpredictable (Cannavale & Nadali, 2019). Furthermore, the empirical findings of this study emphasize the significance of adopting risk-taking behavior for EXPERF as study’s findings indicate that innovativeness and proactiveness can have a significant influence on EXPERF when SMEs are risk-takers. Thus, owners/managers of exporting SMEs should cultivate Figure 3. Slope plotting for the interaction effect (PR*RS). Ringo et al., Cogent Business & Management (2022), 9: 2157769 https://doi.org/10.1080/23311975.2022.2157769 Page 15 of 21
a positive attitude toward risks and must increase their capacity to adopt risk-taking behavior for their business operations by conquering the negative bias and developing risk-taking self-efficacy. 8. Limitations and directions for future studies The results of the current study should be examined in light of a few shortcomings that may present opportunities for future studies. This study was carried out in Tanzania, a single-country context, which might raise doubts about the findings’ generalization. Likewise, the study’s findings may not apply to SMEs in other developing nations since the level of entrepreneurship among countries may vary; thus, future research may replicate this study in other emerging economies to test the veracity of the results. Also, this study covered only manufacturing SMEs; future studies can include large firms, as they may behave differently on innovation, proactivity and risk-taking due to the resources advantage they have. Additionally, the study employed a cross-sectional design; future research can use longitudinal designs to examine how the variables used in this study change over time, which could lead to different results. Moreover, this study reveals the surprising negative effect of proactiveness on EXPERF; hence, future studies might incorporate a qualitative paradigm into the findings of this study to further investigate the causes of such a negative effect. Furthermore, this study examines risk-taking as the moderator variable; future studies may investigate the mediation impact of this variable to widen the existing knowledge. Finally, the study recommends future studies to investigate whether risk-taking moderates the relationship between autonomy, competitive aggressiveness, and EXPERF to reveal its effect on the complete scope of EO dimensions and hence, add to the existing body of knowledge. Acknowledgements The corresponding author wishes to express his gratitude to the administration of the University of Dodoma (where he works) for sponsoring the PhD programme that culminated in the development of this work. In addition, the corresponding author wishes to thank the co-authors who are his supervisors. Furthermore, the authors would like to appreciate the efforts of experts from the department of business administration and management, whose contributions resulted in substantial improvements to this work. Funding The corresponding author received funds from the employer (The University of Dodoma) through internal funds designated for long-term training programmes (PhD studies). Author details Denis Samwel Ringo 1 E-mail: [email protected] Amani Tegambwage 1 Isaac Kazungu 2 1 Department of Business Administration and Management, College of Business and Economics, The University of Dodoma, Dodoma, Tanzania. 2 Department of Marketing and Enterprise Management, Moshi Co-operative University, Moshi, Tanzania. Disclosure statement No potential conflict of interest was reported by the author(s). Ethical clearance The ethical clearance for this study was granted by the University of Dodoma (UDOM) ethical committee in accordance with postgraduate regulations of UDOM. Citation information Cite this article as: The effect of entrepreneurial orientation on export performance: Evidence from manufacturing SMEs in Tanzania, Denis Samwel Ringo, Amani Tegambwage & Isaac Kazungu, Cogent Business & Management (2022), 9: 2157769. References Abu-Rumman, A., Al-Shraah, A., Al-Madi, F., & Alfalah, T. (2021). 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