Effect of Entrepreneurial Orientation on Performance of SMEs in Ethiopia The Mediation role of Innovation

Abstract

Innovation and entrepreneurship go hand in hand since applying creative thinking to SMEs manufacturing firms gives the sector a competitive advantage. Thus, the purpose of this study was to investigate how entrepreneurship orientation affects the performance of small and medium-sized firms (SMEs) in Ethiopia's textile, apparel, and garment manufacturing sector. It delves deeper into the role that innovation plays as a mediator in this relationship. So, investigation used an explanatory research design and a quantitative methodology. The study's focus is on the apparel, textile, and garment sectors in Ethiopia's Oromia regional state. There are ten textile, clothing, and apparel manufacturing businesses in the entire population. To gather information from a sample of 451, the researchers used a probability sampling technique, more precisely a multi-stage clustering sampling. Based on information from a pilot study with 95 respondents, an exploratory factor analysis (EFA) was carried out to evaluate the internal consistency and reliability of the study variables. Confirmatory factor analysis (CFA) and structural equation modeling (SEM) were used to analyse the gathered data. The data outcomes show that entrepreneurship orientation and innovation have a big impact on organisational success. Nonetheless, compared to the other correlations looked at, the relationship between organisational success and entrepreneurship inclination is somewhat weaker.