Page 1 of 13

Journal for Studies in Management and Planning

Available at

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

e-ISSN: 2395-0463

Volume 02 Issue 10

October 2016

Available online:http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 123

The Effects of Entrepreneurial Management and

Ethics On The Women-owned SMEs Business

Performance in Malaysia

1Umi Kartini Rashid, 2Rosli Mahmood

1Faculty of Technology Management and Business, UniversitiTun Hussein Onn

Malaysia.kartini@uthm.edu.my

2School of Business Management, College of Business, Universiti Utara

Malaysia.rosli@uum.edu.my

Abstract

Being one of the major players in the

economic growth, the number of women

entrepreneurs in many countries, including

Malaysia, is increasing and researches are

directed on their business performance.

Despite the studies that have been

conducted to investigate the factors that

influenced women-owned SMEs

performance in Malaysia, this study

intends to examine the role of ethics as a

mediator of entrepreneurial management

and business performance

relationship.This study involved the

women-owned SMEs from all over the

country and data were gathered through

mail survey questionnaire. The constructs

used were adapted from prior research

and already tested for reliability.All

research hypotheses including mediation

were tested by multiple regression

analyses to determine whether the

conditions of mediation outlined by Baron

and Kenny (1986) were addressed.

Statistical results confirmed the significant

relationships between resource orientation,

reward philosophy, strategic orientation,

and women-owned SMEs business

performance. Meanwhile, ethics was found

to mediate the relationships between

reward philosophy, strategic

orientationand women-owned SMEs

business performance. Theoretical

contributions and practical implications

are also significant findings for women

owner-managers of SMEs and women

entrepreneurial development in the

country. Some limitations are also

acknowledged that indicate future

research directions.

Keywords: Entrepreneurial Management,

Business Performance, Ethics, Women- owned SMEs, Mediating Effect.

1.0 Introduction

According to the report by Survey of

Business Owners based on the data from

the United States Census Bureau, between

1997 and 2015, the number of women

entrepreneurs in the United States

increased by 51 per cent with the number

of women-owned firms strengthened by 74

per cent, employment growth up 12 per

cent, and accumulating up to 79 per cent in

revenues over the years (American

Express OPEN, 2012).

The scenario is similar with the women- owned small and medium enterprises

(SMEs) in Malaysia where a total of

Page 2 of 13

Journal for Studies in Management and Planning

Available at

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

e-ISSN: 2395-0463

Volume 02 Issue 10

October 2016

Available online:http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 124

82,911 business establishments were

owned by women in 2005 (DOSM, 2005),

and the figure increased to 126,910 in

2011with the majority of the businesses

was in the service sector (91.7 per cent),

followed by manufacturing sector with 7

per cent (DOSM, 2011). However, fewer

women-owned businesses were in the

sectors of construction, agriculture, mining

and quarrying where the percentage was

less than 1.0 per cent (DOSM, 2011).

However, besides the crucial role of

women in the economic development, they

made less sales profit compared to their

counterparts, and had low survival rates in

all countries and economic levels due to

low initial capital (Pines, Lerner, &

Schwartz, 2010), and were less efficient

and less growth-oriented (Harrison &

Mason, 2007; Ekpe, 2011). In conclusion,

despite the increasing number of women- owned firms that exceeds the national

average and their economic clout

continued to strengthen, they remained

smaller than the average firm (American

Express OPEN, 2012, 2015).

There were many factors that contributed

to the success of the women-owned

businesses. Thus, the studyattempts to

examine the factors that relate to the

success of the women entrepreneurs which

could further added to the body of research

on the unique challenges faced, for

instance entrepreneurial management

(EM) and ethics.

2.0 Literature Review and

Hypothesis Development

2.1 Entrepreneurial

Management(EM)

EMas proposed by Stevenson (1983)

assumes that entrepreneurial firms are

driven and motivated by the opportunity,

seize it regardless of the resources they

have and if necessary, prefer to rent these

resources (Kuhn, Sassmannshausen,

&Zollin, 2010). Stevenson (1983) then

holds that EM practices can help firms

remain vital and contribute to firm and

societal level value creation.In order to

achieve these, they develop supporting

mechanisms like structure, culture and

people.

The six dimensions of entrepreneurial

management that will be used in this study

are entrepreneurial culture, growth

orientation, management structure,

resource orientation, reward philosophy,

and strategic management, as created by

Brown, Davidsson, and Wiklund (2001)

for Stevenson (1983), Stevenson and

Jarrillo-Mossi (1986), and Stevenson and

Jarillo's (1990).

Entrepreneurial culture is defined by the

development of new ideas in an

entrepreneurial organizational culture

(Stevenson & Gumpert, 1985; Stevenson

& Jarillo, 1990) that are essential for

opportunity recognition (Brown et al.,

2001), while growth orientation is the

growth objective that has to be known and

understood by all the employees

throughout the firm (Brown et al., 2001),

and that EM will help create it (Stevenson

& Gumpert, 1985; Stevenson & Jarillo,

1990).

Meanwhile, management structure is the

extent to which the firm has a flat and

organic structure (Brown et al., 2001)

where employees are free to create and

seek opportunity (Stevenson, 1983).

Resource orientation is the combination

between commitment of resources and

control of resources, and reward

philosophy is the employee’s rewarding

system for their contributions to the

organization, or when they add value to the

firm (Brown et al., 2001). Finally, strategic

orientation is an organization’s orientation

in strategy creation, and is concerned with

the decisions that businesses make to

Page 3 of 13

Journal for Studies in Management and Planning

Available at

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

e-ISSN: 2395-0463

Volume 02 Issue 10

October 2016

Available online:http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 125

achieve superior performance (Slater,

Olson, & Hult, 2006). It also defines the

broad outlines for the firm’s strategy while

leaving the details of strategy content and

strategy implementation to be completed

(Slater et al., 2006).

In summary, Stevenson’s view of EMputs

opportunity-based behaviour at the centre

(Brown et al., 2001) since these behaviours

may be “critical to the long term vitality of

our economy” (Stevenson, 1983) and thus,

it is important to facilitate the empirical

study of them.

2.2 Business Performance

Generally in the business field,

performance indicator helps to ascertain

the current situation of a business, besides

revealing the financial capacity of

individual’s business, firm or organization,

which shows their success or failure at a

particular point of view (Lucky, 2011).

What is more, even though performance is

a measurement to evaluate or assess the

strengths and weaknesses of individuals,

group, firm and organizations, Lucky

(2011) further assumed that all

performances; entrepreneurial performance,

firm performance, organizational

performance and business

performance/success, fall into business

performance (Lucky, 2011).

Despite various definitions of business

performance in the literature, this study

will be considering business performance

as success from an economic point of view,

parallel with the suggestion from Buttner

and Moore (1997) that business

performance is usually measured from the

economicperspectives of growth in sales or

employees; and/or by the increase in

profits. Furthermore, subjective measures

of financial data will be adopted as

specified by Dess and Robinson (1984)

that managers may be neither hesitant nor

unwilling to disclose their actual

performance data if they consider it

commercially sensitive or confidential.

2.3 Entrepreneurial

Management (EM) and

Women-owned SMEs

Business Performance

Relationship

Current studies on EM practices revealed

that EM can help firms remain vital and

contribute to firm and societal level value

creation (Stevenson, 1983), later act as one

of the most important factors that

contributed to the success of neither men

nor women-owned businesses (Eliasson &

Davidsson, 2003; Gürbüz & Aykol, 2009;

Hortovanyi, 2010; Abdul Majid, Ismail, &

Cooper, 2011; Bradley, Wiklund, &

Shepherd, 2011). However, there is

relatively lack of studies that have

examined the effects of EM on the

relationship towards women-owned SMEs

business performance although women

were identified to be weaker compared to

their male counterparts in terms of

performance, including profits and

management practices (Knotts, Jones, &

LaPreze, 2004).

To date, empirical studies on EM have

been done by numerous researchers and

results revealed the significant

relationships between EM and firm growth

(Eliasson & Davidsson, 2003; Hameed &

Ali, 2011), and thus suggested that the

firms tend to be more entrepreneurial with

regard to the EM’s dimensions, namely

entrepreneurial culture, growth orientation,

management structure, resource orientation,

reward philosophy, and strategic

orientation. Therefore, this variable cannot

be ignored in the context of women-owned

SMEs to improve their business

performance. Hence, based on the reported