The relationship between entrepreneurial orientation, organisational orientation and innovation performance of manufacturing small and medium enterprises in KwaZulu-Natal province

Abstract

This study was conducted to investigate the relationship between entrepreneurial orientation, organisational orientation, and innovation performance of manufacturing small and medium enterprises (SMEs) in KwaZulu Natal province. To instil innovation culture, an organisational architecture of SMEs should accommodate both organisational and entrepreneurial factors in order to create a synergy that is likely to achieve innovation objectives of SMEs. The empirical investigation was based on a quantitative study and used a cross-sectional survey design to collect data from owner-managers of 308 small and medium firms in the manufacturing sector. The provincial SMEs database from the Kwa-Zulu Natal Department of Economic Development and Tourism was used and it contained an estimate population of 1255 SMEs. This study found that there was a positive and significant correlation between entrepreneurial orientation and organisational orientation dimensions. It further established that organisational and entrepreneurial dimensions were correlated with innovation performance dimensions in the SMEs. An aptly entrepreneurial orientation is proven to be grounded in a related organisational orientation. This implies that an organisational strategy, its culture, structure, systems and the management style in SMEs strengthen the entrepreneurial strategy leading to improvements in the standard of the product, the process, the market position and the business model of SMEs. In the same context, other organisational factors such as available rewards, SMEs’ age, size and ownership provided another dimension and an insight into the innovation performance of SMEs. Based on the findings, the researcher suggests two models: the proximity model of the correlation between entrepreneurial orientation and organisational orientation and the new model of innovation performance for SMEs. The managerial implication is that the success of an entrepreneurial strategy of an SME is rooted into organisational orientation dimensions: culture, structure, strategy, systems and management style of owner-managers. However, an organisational orientation is proven to be driven by a mindset which, if entrepreneurial, leads to an entrepreneurial orientation and consequently achieve an innovation performance of SMEs. With such variables, the study recommends new approaches in line with the suggested models in support of manufacturing SMEs and the manufacturing sector in terms of managerial decision-making about firms’ innovation performance and competitiveness at organisational and sectorial levels.