The Relationship Between Environmental Hostility and Entrepreneurial Orientation of Small Businesses

Abstract

<jats:p> Declining entrepreneurship as indicated by low total early-stage entrepreneurial activity (TEA) and high business failure is unacceptable in any economy. This predicament is indicative of South Africa’s business environment as well as the entrepreneurial disposition of firms operating within it. However, the factors precipitating entrepreneurial behaviour among small firms are yet to be fully comprehended and the environment as a motivation for entrepreneurship among these firms is yet to be examined thoroughly. Furthermore, research focus on the antecedents of entrepreneurial orientation (EO) is limited, even as EO has been considered as an aggregated construct repeatedly with inadequate attention directed at its independent constituents. In response to these concerns, this study investigates the relationships between environmental hostility (EH) and the individual components of EO among small businesses in South Africa. Using a quantitative methodological approach, the study conducts a survey, and analyses data obtained through random sampling. Through exploratory factor analysis (EFA) and partial least square structural equation modelling (PLS-SEM), it is discovered that only four components of EO are statistically recognisable, contrary to five as widely acknowledged in literature. Positive associations were also revealed between EH and each of these dimensions to varying degrees. These findings underline the necessity for entrepreneurial action along the lines of risk-taking, proactive-innovativeness, competitive aggressiveness and autonomy among small businesses in South Africa, given the hostile environment of her small business sector. </jats:p>

Impact of entrepreneurial orientation on performance and moderating role of crisis perception: multi-method examination

“…These findings confirmed previous propositions that hostile environments could increase the degree of organizational entrepreneurship (e.g. Covin and Slevin, 1989;Rosenbusch et al, 2013); in particular an entrepreneur's risk-taking (as reported by Dele-Ijagbulu et al, 2020) and proactiveness (Urban Boris, 2014).…”

“…, 2013). This was confirmed in the study of Dele-Ijagbulu et al. (2020), who reported that a hostile environment encouraged entrepreneurs to take on risky behaviors.…”

“…According to entrepreneurship theory, a hostile environment can encourage entrepreneurs to act entrepreneurially, including taking risks (Covin and Slevin, 1989;Miller, 1983;Miller and Friesen, 1982;Rosenbusch et al, 2013). This was confirmed in the study of Dele-Ijagbulu et al (2020), who reported that a hostile environment encouraged entrepreneurs to take on risky behaviors.…”

“…Covin and Slevin, 1989; Rosenbusch et al. , 2013); in particular an entrepreneur's risk-taking (as reported by Dele-Ijagbulu et al. , 2020) and proactiveness (Urban Boris, 2014).…”

“…Market conditions also impact firm proactiveness (Dele-Ijagbulu et al, 2020). A hostile market encourages entrepreneurs to act proactively (Miller, 1983;Urban Boris, 2014).…”