Market orientation and Organizational culture's impact on SME Performance: A SEM Approach (original) (raw)

2014, International Affairs and Global Strategy

The purpose of this study is to examine the relationship between market orientation and organizational culture on small and medium enterprise performance (SMEs). A quantitative approach was employed, using a crosssectional research design. The data were collected through the self-administration method from 640 respondents. SMEs are very important to the economic growth of Nigeria, they serve as a major source of employment, contributes significantly towards the industrial establishment, a source of capital formation, an avenue for the production of intermediate goods and help in the development of craftsmanship. A model was developed based on theoretical consideration to examine the relationship. Structural Equation Modelling (SEM) was employed, which reported a significant and positive relationship between the market orientation and business performance of SMEs. Whereas, the association between organizational culture and business performance was not supported. Implications and future research directions were discussed. 1.Introduction Small and medium enterprises are important avenues for job creation and a powerful source for innovation (Dauda & Akingbade, 2010, Shehu & Mahmoud, 2014a). SMEs plays a significant role in sustainable socioeconomic development of a given country in terms of contribution to GDP, provision of employment, generation of wealth, poverty reduction, competence building and enriching the welfare of people through the provision of goods and services including education (Kanyabi & Devi,2011). SMEs in Nigeria has been an avenue for Job creation and empowerment of citizens proving about 70% of all job opportunities and also for wealth formation (Shehu & Mahmoud, 2014b). The sector had its own share of problems as identified by (Oluboba, 2002). which includes: poor market orientation, low level of entrepreneurial skills, poor management policies, societal and attitudinal problems, constrained access to money and capital markets, low equity participation from the promoters because of insufficient personal savings due to their level of poverty and low return on investment, inadequate equity capital, poor infrastructural facilities, high rate of enterprise mortality, shortage of skilled manpower, multiplicity of regulatory agencies, societal and attitudinal problems, bureaucracy, integrity and transparency problems, lack of access to information given that it is costly, time consuming and difficult at times. Therefore, the paper is organized as follows: section two provides the problem statement; section three is about the literature review, the next section discuses methodology, including research design, population and sampling technique, and the measurement of variables; section five lament on the conclusion and recommendations; section six provides the limitations, direction for future studies and the implications for the study. 2. Problem Statement Several studies have been conducted on the market orientation to performance relationship, but there exists a mixed finding. Some of the studies that reported a positive and significant relationship between the two constructs includes