Entrepreneurial Capability, Institutional Factors and SME Performance in Ghana
Date
2019-03
Authors
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Journal ISSN
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Publisher
University Of Ghana
Abstract
Success and survival in today’s dynamic institutional environments and competitive
markets require Small and Medium-Sized Enterprises (SMEs) to develop and build
entrepreneurial capability (EC) to continuously explore and exploit opportunities to
generate value by creating and/or expanding entrepreneurial activities. Given the
significant contributions of SMEs to the growth of Ghana’s economy, successive Ghanaian
governments have sought to regulate, promote, and facilitate SME growth and
performance through institutional framework and policy interventions. Despite the
existence of these institutional framework and policy interventions, there is rather a high
persistent failure of SMEs and entrepreneurship in general across Ghana. Studies assessing
the failure of SMEs have not reached a consensus regarding the perspective from which
the high persistent SME failure could be comprehensively investigated and understood.
Process-view perspective of investigating SME failure has not been given much needed
research attention. Thus, this thesis seeks to develop a theory-driven and process-oriented
model to examine and predict the impact of EC and institutional factors on SME
performance in Ghana. To achieve this purpose, three research objectives were put forth
as follows: to examine and validate the theoretical linkages between opportunity
exploration and exploitation as the proposed dimensions of EC; to assess the direct impact
of EC on SME performance in Ghana; and to determine the moderating effect of
institutional factors (IFs) on the relationship between EC and SME performance in Ghana.
The resource-based theory, dynamic capabilities theory and institutional theory
were employed as theoretical underpinnings of the study. Drawing on these theories, a
conceptual framework was developed to examine the differential roles resources and
capabilities played in capturing the dynamics in the entrepreneurial process. Based on the
positivistic worldview, a quantitative research strategy was designed in a single stage cross-sectional survey. Five hundred and fifty (550) questionnaires were sent out to
respondents who were conveniently sampled from the sampling frame of all registered
SMEs in the Greater Accra region, drawn from the Integrated Business Establishment
Survey database. Out of the 512 complete responses retrieved, 488 of them were found
useable. Data was analysed using descriptive statistics and partial least square structured
equation modelling (PLS-SEM).
The findings validate EC as a process-oriented concept consisting of explorative and
exploitative capabilities, where opportunity exploration precedes opportunity exploitation.
The findings further show that EC positively and significantly impacts SME performance
in Ghana. Regarding the moderating role of institutional functions on the relationship
between EC and SME performance, the study found that the moderating effect is negative
and significant for the regulatory functions; positive and significant for the promotional
functions and positive but not significant for the facilitatory functions. In consequence,
therefore, SME growth and sustainability requires continuous exploration and exploitation
of opportunities, while taking into consideration the institutional constraints or
enablement. The study, recommends that future studies should replicate this study in the
informal sector to investigate how the sector builds EC and is affected by institutional
functions.
Description
PhD.
Keywords
Entrepreneurial Capability, SME Performance, Ghana