Page 1 of 14

Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 09

August 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 127

An Empirical Assessment of the Influence of Individual

Entrepreneurial Orientation on Business Success: A Multidimensional

Approach

Salaudeen Nuraini Hashimu & Muhammad Shukri Bakar

School of Business Management, College of Business, Universiti Utara Malaysia (UUM)

1

salaudeennuraini@gmail.com/salaudeen_nuraini@oyagsb.uum.ed.my

2

shukribakar@uum.edu.my

ABSTRACT

A number of studies have established

relationship between entrepreneurial

orientation (EO) and business success.

However, only little of these researches have

been conducted between individual

entrepreneurial orientation (IEO) and

entrepreneur’s business success. This paper

employs a variance-based technique of

modeling to examine the effect of the

trinomial concept of IEO on women business

success by drawing on a sample of 361

women entrepreneurs. The findings from the

analysis reveals that all the three IEO

dimensions of proactive orientation,

innovative orientation and risk taking

orientation exert positive significant

influence on women business success. The

study offers some useful recommendations

and then concludes by discussing the

limitations and direction for future research.

Keywords: Individual entrepreneurial

orientation, multidimensional, women

business success.

INTRODUCTION

The study of EO-performance relationship

has largely been confirmed to the firm level

of analysis (e.g., Jabben & Mahmood, 2014,

Fairoz, Hirobumi, & Tanaka, 2010), however,

the study of EO in relation to individual

entrepreneur’s success at the micro

enterprises level are yet to be fully given the

deserve attention in the existing literature of

entrepreneurship. Several empirical study of

EO at the firm level has shown positive

relationship between entrepreneurial

orientations and firm performance (e.g.,

Shehu & Mahmood, 2014; Ambad &

Wahab, 2013), with other studies

establishing low correlation between EO and

performance (Dimitratos, Lioukas, & Carter,

2004; Lumpkin & Dess, 2001), while some

studies even finds negative or even no

relationship between EO-performance (e.g.,

George, Wood, & Khan, 2001; Navier &

Slater, 2000; Andersen, 2000). A probable

reasons for these inconclusiveness in

findings may have resulted from the

conception of EO as a unidimensional

construct whose dimension covaries (Covin

& Slevin, 1989).

This paper applies a multi-dimensional

approach to the concept of EO concept, in

which all the dimensions vary independently

of each other (Lumpkin & Dess, 1996). This

will provides an avenue for examining the

trinomial concept of EO comprising the

dimensions of proactiveness,

innovativeness, and risk taking (Covin &

Slevin, 1989). In addition, this study extends

the concept of EO from that of a firm level

Page 2 of 14

Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 09

August 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 128

strategic posture to entrepreneur’s strategic

decision of individual entrepreneurial

orientation (IEO), in the line

recommendation by Bolton and Lane (2012)

for a study testing the instruments of IEO on

entrepreneurs, and as response to call by

Hubbard, Vetter, and Little (1998) for

publishing of replications with extensions in

business research.

This paper employs PLS-SEM to

empirically investigate a sample of 361

women micro-entrepreneurs in north- western Nigeria, with a view to validate

IEO-entrepreneur’s business success

relationship, as the behavior of a micro or

entrepreneurially founded organization is a

manifestation of the behavior of the

individual owners (Bolton & Lane, 2012).

LITERATURE REVIEW

The Concept of Business Success

The term success and performance in

business research have been interchangeably

used in literature. Gill and Biger (2012),

have used the term ‘success’, ‘performance’

and ‘growth’ interchangeably to connote

firm’s performance, Komppula (2004)

makes no distinction between the term

‘success’ and ‘performance’. However, the

differences in the usage of this terms may

have, probably resulted from the differing

perception of the concept as shown by the

various indicators used in measuring the

concept, or as a result from the gender

perspective of the concept. However, to

some researchers (e.g., Bigsten &

Gebreeyesus, 2007; Reijonen & Komppula,

2007; Alasadi, 2007; Kraus, Harms, &

Schwarz, 2006) conceptualized firm

performance in terms of growth in

employment, while others such as, (e.g.,

Wang, & Yen, 2012; Carsrud, Olm, &

Thomas, 1989) uses the increase in sales

volume, and the owners’ report on market

share as their indicators of firm

performance.

Similarly, Hornaday (1992) proxy success as

the firm’s ability to renew itself through its

innovative capacity, while Krauss, Frese,

Friedrich, and Unger (2005) have used a

multiple criteria of business growth, size,

and external success evaluation to

conceptualize performance. However,

whichever way business success is

conceptualized, they are basically determine

either objective or subjective means.

Basically speaking, there exist two common

methods of assessing business success. This

are the financial and non-financial measures

of success. The financial measure

objectively assessed firm success in terms of

hard economic measures, such as total sales

volume, revenue, profitability, growth,

return on investment, and market share

(Greenbank, 2001), and this is often termed

as the ‘male’ approach of assessing business

success (Chell & Baines, 2014). On the

other hand, the non-financial measure,

which is subjective in nature, mainly

focused on the entrepreneurs’ aspirations,

motivation, and personal goals (Gorgievski

et al., 2011; Dej, 2010), and is often term as

the standard measure upon which women

success in business is being assessed

(Walker & Brown, 2004; Brush & Hisrich,

2000).

However, at the micro and small business

level, both the financial and non-financial

criteria of assessing business success are

subjectively determined due to absence of

objective quantitative data about the firm

(Laguna, et al., 2012) as the only

Page 3 of 14

Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 09

August 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 129

information about the business can be

obtained through the perceptual data from

the owners-managers (Richard, Devinney,

Yip, & Johnson, 2009).

The Multidimensional Construct of

Individual Entrepreneurial Orientation

Numerous scholars of entrepreneurship

(e.g., Walter, Auer, & Ritter, 2006; Bhuian,

Menguc, & Bell, 2005; Wiklund &

Shepherd, 2005; Covin & Slevin, 1989)

have suggested that the dimensions of

entrepreneurial orientation shows high

degree of intercorrelations with one another

(i.e., covary), which has justified for their

being lumped together into one single

unidimensional construct. However, some

studies (e.g., Stetz, Howell, Stewart, Blair,

& Fottler, 2000; Lumpkin & Dess, 1996)

assert that the EO dimensions may vary

independently, with each of the dimension

differentially impacting on business

performance.

Although, the argument for the

unidimensionality of EO is based on the

assumption that the three sub-constructs

makes equal contributions to the overall EO

(Covin & Slevin, 1989). However, evidence

abounds in literature where each of these

sub-dimension have uniquely contributes

differentially to the entrepreneurial posture

of the firm (Lumpkin & Dess, 1996). Some

notable instance is where the risk taking

sub-dimension reveals a curvilinear

relationship with performance (Kreiser, &

Davis, 2010), and where a positive linear

relation was shown to exist between

innovativeness and performance (Wang,

Yen, Tsai, & Lin, 2008).

However, since the conception of individual

entrepreneurial orientation (IEO) is derived

from the firm-level EO, the notion of

multidimensionality of EO construct may as

well applies to IEO at the entrepreneurial

level. Hence, a good entrepreneur must

possessed these three characteristics of

proactiveness orientation, innovativeness

orientation risk taking orientation (Kreiser,

Marino, & Weaver, 2002) to become

successful in the business.

Proactive Orientation

The proactive orientation of an EO has to do

with the entrepreneur’s ability to personally

take initiative at an appropriate time, with a

view to shape the business environment to

one’s competitive advantage (Kwak, Jaju,

Puzakova, & Rocereto 2013; Chen &

Hambrick, 1995). It refers to the

entrepreneur’s inclination to “take initiative

by anticipating and pursuing new

opportunities and by participating in the

emerging markets” (Lumpkin & Dess, 1996,

p. 146). However, Rauch, Wiklund,

Lumpkin, and Frese, (2009), conceives

proactiveness as an opportunity-seeking, and

a forward-looking perspectives of EO that is

often characterized by the introduction of

new products or services into the market

place ahead of one competitors, and also

acting in anticipation of the future.

Proactiveness is the way entrepreneurs

“‘seeks new opportunities which may or

may not be related to the present line of

operations, introduction of new products and

brands ahead of competition, strategically

eliminating operations which are in the

mature of declining stages of life cycle’

(Venkatraman (1989, p. 949). To Covin and

Slevin (1989), the proactive orientation

tendency of an entrepreneur is the ability to

impact changes in the environment. Hence,

Hughes & Morgan, (2007) argue that the

entrepreneur’s proactive tendency can be

achieved through the monitoring of both the

internal and external environment with a