Ghanaian SMEs' perspective on the interrelationship between market and entrepreneurial orientations.

AutorIssau, Kassimu


Globalisation has heightened competition among firms across the globe. Failure for firms to adjust to such environment threatens their survival and growth. The consequences that may result include job losses and increase in poverty, particularly in unindustrialised countries. According to Rahman, Yaacob and Radzi (2016), marketing and financial issues are among the factors that impede performance of small- and medium-sized enterprises (SMEs). Machado, Gaiotto and Machado (2021) also opined that lack of machinery and materials are among the factors that hinder growth of entrepreneurs. In the view of Ocloo, Akaba and Worwui-Brown (2014), problems of SMEs in Ghana are deepened by strong global competition. To Asomaning and Abdulai (2015), lack of deployment of elements such as market orientation (MO) and entrepreneurial orientation (EO) is the cause of the poor performance of SMEs in Ghana. Opoku (2017) indicated that the growing failure rate of SMEs in Ghana is due to their poor performances. However, since MO and EO are the essential components identified in the literature as propellants of SMEs' performance, their investigation within the context of SMEs is admissible because of the role played by SMEs in different countries. Relying on the resource-based view (RBV)--which contends that a firm's competitive position and performance is influenced by the kind of resources and capabilities it possesses (Peteraf & Barney, 2003)--MO and EO can be considered "soft" or intangible resources with characteristics such as "valuable", "rare", "inimitable" and "non-substitutable" that can provide performance differentials to firms that harbour them. In support, Lonial and Carter (2015) claimed that MO and EO are important resources that have aforementioned characteristics needed for successful performance. Thus, MO, which shows the extent to which an establishment's strategies and operations are strengthened to respond to market demands (Kohli & Jaworski, 1990), could be seen as having the aforementioned desirable resource characteristics because of its innate nature. The same can be said for EO, which exhibits a reflection of what is in the minds of decision-makers, focusing on creating new establishments, sustaining the vision of the establishments, and achieving competitive advantage in the market arena (Lumpkin & Dess, 1996).

Because of the importance attached to MO and EO, prior researchers carried out studies to determine how each construct contributes to performance. However, conflicting results were seen from the studies. With respect to the link between MO and firm performance, results of their findings are yet to converge to one point (Shehu, 2014). For example, whilst studies by Hussain, Ismail and Shah (2015), Gruber-Muecke and Hofer (2015), Amin, Thurasamy, Aldakhil and Kaswuri (2016), and Issau and Soni (2019) established positive link, Gholami and Birjandi (2016) established negative nexus. Nevertheless, the conclusion reached by Cano, Carrillat and Jaramillo (2004) in their thorough examination of 200 MO publications revealed that MO has a significant influence on firm performance. Furthermore, Issau, Acquah, Gnankob and Hamidu's (2021) conclusion on market innovation and SMEs' performance is a confirmation of MOs' importance to the improvement of SMEs' performance. Agreeably, a stream of studies by Hussain et al (2015), and Amin et al. (2016) on the effect of MO on SMEs' performance all supported the positive impact claim between the two variables. Noble, Sinha and Kumar (2002) asserted that the conflicting results might be ascribed to issues in methodology relating to the scaling of MO and the usage of different performance measures. However, current studies (Hussain et al., 2015; Amin et al., 2016) seem to favour positive linkages between the two constructs. This is not surprising, given the fact that there is enough time lag for current researchers to overcome the challenges of previous scholars and for owners of SMEs to overcome the implementation challenges of MO.

Furthermore, though many scholars (Hussain et al., 2015; Gruber-Muecke & Hofer, 2015; dos Santos & Marinho, 2018) have established a positive node between EO and performance, some of the investigations fail to determine the positive nexus between the constructs (Pelham, 2000). Additionally, whilst studies by authors, such as Hussain et al (2015) and Nasir, Al Mamum and Breen (2017), have recorded significant positive nexuses between EO and SMEs' performance, others, such as Affendy, Asmat-Nizam and Farid (2015), failed to record a significant nexus between the constructs. Though mixed results have been established on the EO-performance linkage, the positive nexus is supported by many empirical studies (e.g. Hussain et al., 2015).

Due to the conflicting results associated with each orientation's influence on firm performance, researchers such as Lonial and Carter (2015), Nasir et al. (2017) and Issau and Soni (2019) advanced that scholars should resort to concurrent observation of the constructs. To these researchers, concurrent deployment of the constructs by businesses is likely to result in an enhanced performance. The viewpoint held by the authors could be agreed upon because each of the two constructs has been established in the literature as a performance differential resource. However, what is lacking in their proposition is how the constructs influence each other. The researchers failed to determine the interaction of these performance differential resources, thereby leading to a knowledge gap in the literature on how the deployment of these resources should be. The intriguing question is as follows: Should EO be the first resource to be employed by businesses or MO during their concurrent deployment by establishments? What are the reasons for supporting any of the positions? Do the two constructs affect each other? These knowledge gaps are what this paper seeks to address. The purpose of this study, therefore, is to examine the interrelationships between MO and EO in the SME sector.

In Ghana, SMEs may be grouped into urban and rural businesses. The former can be sub-divided into "organised" and "unorganised" businesses (Kayanula & Quartey, 2000). Kayanula and Quartey (2000) postulated that the "organised" ones are those having paid employees with registered offices, while the "unorganised" ones are those operating in temporary wooden structures, sometimes with no salaried workers. This study concentrates on "urban-organised" SMEs because they have the potential for growth and expansion needed for economic and social development and well-being (Lingelbach, De La Vina, & Asel, 2005). The originality of the current study is in the fact that its findings add to the empirical literature by revealing the interrelationships between MO and EO, which serve as a guide to owners of SMEs and practitioners in their concurrent deployment of the two constructs. The findings would also open replication doors for future researchers in different settings.

Literature review and hypotheses development

Market orientation

Marketing literature has seen enormous contributions from different investigators on MO. MO shows the extent to which an establishment's strategies and operations are strengthened to respond to market demands. Researchers (Gruber-Muecke & Hofer, 2015; Prifti & Alimehmeti, 2017) have described the construct in different ways. Though various perspectives on MO exist, researchers (Gholami & Birjandi, 2016; Gruber-Muecke & Hofer, 2015; Issau, 2019) endorsed behavioural and cultural approaches. Next is the explanation of the perspectives.

Cultural perspective

From the perspectives of Narver and Slater (1990) and Gholami and Birjandi (2016), the cultural aspect of MO can be achieved through the implementation of three things by an establishment. First, "a firm must understand its customers' needs and create superior value to satisfy those needs". Second, "a firm must understand the strengths and weaknesses of its opponents", which will serve as a guard to the products that it can offer to its clients. Finally, "a firm must coordinate all its functional activities in order to create value for buyers". The views of the authors indicate that three conditions must be present for a firm to qualify as a market-oriented one. The first condition is that a firm must generate enough information about its customers, sufficient to understanding their current and future needs to be able to create constant superior value for them. The second condition is that much information must also be generated from the firm's competitors in order to understand their strengths, weaknesses and tactics. Finally, the information generated by a firm must be shared across the entire organisation for various units of such an organisation to contribute their quota in the creation of better value for clients. This presupposes that MO is beyond the capability of the marketing department and, therefore, must be undertaken by every unit of an organisation for the creation of superior value for customers to ensue.

Behavioural perspective

Prifti and Alimehmeti (2017) and Kohli and Jaworski (1990) offered a different perspective to MO, showing that MO comprises three behavioural components: "organisation-wide generation of market intelligence, dissemination of the intelligence and organisation-wide responsiveness to the intelligence". This means that a firm that engages in activities geared towards the comprehension of customers' needs, the sharing of the understanding among units and the units engaging in activities designed to handle those needs is a market-oriented one.

From both perspectives, it can be said that MO is a responsibility of the entire organisation and not only the marketing department. However, the dissimilarity between the two perspectives is that while a cultural perspective was emphatic about the kind of information (customer and...

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