Assessment of the Effects of Moderating Factors of Entrepreneurial Orientation on the Performance of SMEs in Tanzania

Abstract

This conceptual study was conducted in order to assess the effects of the
Moderating Factors of Entrepreneurial Orientation (EO) on the performance of SMEs in Tanzania. According to the literature EO refers to the strategy making process that provides organizations with the basis for entrepreneurial decisions and actions. The dimensions of EO are innovativeness, proactiveness, risk taking, competitive aggressiveness and autonomy. The need for firms to exercise EO has been widely recognized. In less developed countries like Tanzania where the growth rate of SMEs is very limited, the subject matter has not been fully exploited for firms to cope and understand the effects of EO on firm performance especially the SMEs. To the authors’ best knowledge there exists only a few studies in Tanzania on EO especially those looking at the  oderating factors and linking them to SMEs performance. According to the literature several moderating factors such as cultural orientation and organizational structure (internal factors), social economic factors and political and legal factors (external factors) have a contribution on the applicability of EO hence performance of SMEs. The study found out that the moderating factors have an effect on performance of SMEs. However there is a need for research to test the applicability of moderating factors of EO and firm performance in a Tanzanian context.