Effect of Entrepreneurial Orientation on SMEs Product Innovativeness

Abstract

This study investigated the effect of Entrepreneurial orientation (EO) on product innovativeness in manufacturing SMEs. Using a cross sectional survey design with a sample size of 196, a standard multiple linear regression (MLR) was performed between product innovativeness as the dependent variable and proactiveness and risk-taking dimensions of EO, as independent variables. The results indicate that the predictors explained 22.9% of the variance (R2=.241, Adj R2 =0. 229), F (2,123) = 19.565, t = p < 0.01. Proactiveness (B = .368, t =2.934, p < .004 and risk taking (B = .221, t = 3.272, p = .001) positively and significantly contributed to predicting product innovativeness. It is concluded that proactiveness enhances SMEs’ potential to introduce new products featuring more differentiated characteristics for the market. Similarly, risk-taking enables SMEs to deliver new products of higher uniqueness that enables them surmount fierce competition. The researcher recommend that SME ownermanagers should be proactive in seeking new product ideas and customer product information that will in turn enable them generate ideas on designing and manufacturing innovative products.