Entrepreneurial Orientations and Business Financial Performance: The Case of Micro Businesses in Tanzania

Abstract

Micro business in Africa including Tanzania does not perform well financially due to various business environmental challenges. In this line, entrepreneurial orientations are said to improve micro business financial performance regardless of unfavourable business environment. Despite such importance of entrepreneurial orientations, there was scanty knowledge on the influence of proactive and risk taking behaviour on business sales and costs. Focusing from the Contingency perspective, this article aimed at filling in such knowledge gap. Most studies examined the influence of entrepreneurial orientations on firm performance from the resource-based perspective. However, the influence of entrepreneurial orientations on firm performance depends on the match between entrepreneurial orientations and firm performance goals. The article involved 388 micro businesses from Dar-es-salaam, Mbeya, Morogoro, and Manyara. The questionnaire was used to collect data while Mean and Structural Equation Modeling (SEM) were used as data analysis techniques. The results revealed that proactive behavior had significantly positive influence on business sales and significantly negative influence on business costs. Furthermore, the risk-taking behaviour was found to have significantly positive influence on business costs. Among others, the article recommends that the micro business owners/operators should strengthen their entrepreneurial capacity together with their employees. It will be achieved by establishing sectoral associations in accordance with their business categories, i.e., trade, services and manufacturing in order to organize and access professional entrepreneurial trainings.