Influence of Entrepreneurial Orientation on Firm Performance of Kenya’s Agro Processing Small and Medium Enterprises

Abstract

The study used Structural Equation Modeling partial least squares (SEM-PLS)to investigate the influence of Entrepreneurial Orientation on Firm Performance of Kenya's Agro Processing SMEs. The study was undertaken on Agro Processing SMEs registered with Kenya Association of Manufacturers operating with Nairobi and its environs. The questionnaires were self-administered on owner/managers of agro processing SMEs. Entrepreneurial Orientation was conceptualized and analyzed as a latent second-order construct comprised of innovativeness, proactiveness and risk taking. The study results revealed that Entrepreneurial Orientation has a positive and statistically significant influence on firm performanceof Kenya's agro processing SMEs. The study concludedthat Entrepreneurial Orientation as a uni-dimensional construct is an important predictor of firm performance, in terms of growth and profitability.The implication of this finding for managerial practice and future research is discussed.