Market Orientation and Performance of Micro and Small Enterprises in Ethiopia: The Case of Harar Town

Abstract

Literature has shown that market orientation influences firm performance, particularly in large firms. Little research has been done, therefore the situation is unclear in developing nations where micro- and small businesses are important to the economy. Thus, the purpose of this study is to analyze the market orientation performance relationship in the context of micro and small enterprises. A quantitative method was used to achieve the purpose of the study. The study was based on a sample of 101 micro and small enterprise respondents which were drawn using a simple random sampling technique. The findings showed that customer orientation and inter-functional coordination significantly influence performance. Additionally, entrepreneurial propensity, start-up capital, and the number of institutional buyers influence performance. Consequently, managerial emphasis on enhancing customer orientation, and inter-functional coordination, as components of market orientation is emphasized. With the importance of micro and small enterprises for job creation and economies, understanding this relationship is also important for policy and practice.