CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Small and medium enterprises (SME’s) form a very important part of the Nigerian economy.

SME’s are considered as one of the central pillar in much country’s economic growth and a key

contributor to the GDP. In the emerging economic, SME’s serve as a major contributor to the

prosperity of the country’s economy (Arshad & Arshad, 2018, 2019). The SME’s sector is a

major engine which encourages the growth of jobs and wealth creation in many economics.

SME’s performance act as a significant part that is linked to the strengthening and development

of many countries economic system especially that of Nigeria. Sustainable growth and the

increase of SME’s activities have opened numerous doors for employment opportunities,

tangible and intangible assets (investment) in the environment.

In the case of developing nations, the role of SME’s is considered more emphatic because

this sector is regarded as a vital means of boosting the development of the country as much as or

even more than large multinational enterprises (MNNs) (Arshad, M. Z., M. J., Ali, M., and Khan

W. A 2020). In Nigeria, the importance and contributions of SME’s as a creator of employment

in particular to those with low skill level is widely recognized. Studies done by the federal

office of statistics shows that 97% of all businesses in Nigeria employs less than 100 employees.

Similarly, the attention of SME’s literary works has increased significantly over the last few

decades. The majority of enterprises in the world are small and medium enterprises, important

predictors of jobs creation and huge market economic growth (Ouma Mugabe, etal. 2021). Small
and medium enterprises account for about 90% of enterprises and more than 50% of productive

economic activities (World Bank, 2020).

Structured SME’s contributes up to 40% of the gross domestic product (GDP) in

developing countries. The SME’s sectors provide an average of about 50% of Nigeria’s

employment and 50% of its industrial output. SME’s further comprises of about 70% to 90% of

the businesses establish in the manufacturing sector in Nigeria. SME’s provide over 90% of the

employment opportunities available in the manufacturing sector and account for about 70% of

aggregate employment created per annum (Oyelaran – Oyenyinka, 2019. Fringpom 2018). The

contribution or existence of SME’s in Jos North Local Government Area of Plateau State has

contributed immensely to the development of that locality in terms of revenue generation,

bringing in development, creating jobs, commercialization, and has helped citizens to be self-

employable and self-sustainable.

Small and Medium Enterprises (SME’s) have been considered as the cornerstone of the

business environment in every country, a principal driver of economic development and progress

(Qamruzzaman and Jianguo, 2018). Nigeria is experiencing immense structural changes which

are affecting the economy. To achieve better performance of SME’s or business, entrepreneurs

play a vital and key role in bringing resources together and making strategic decisions that might

either lead to success or failure. Entrepreneurial Orientation (E.O) also is a vital force in the

economy of any nation especially in SME’s performance because of the strategic role it plays in

the achievement of productivity.

Hence, this study intends to enrich the knowledge gap of EO influence on SME

performance by shedding more light on the intricacies and EO impact on SME’s and also X-
raying the performance and contributions of SME’s in Jos North LGA, Plateau State.

Additionally, it will also consider attitude of the entrepreneurship and its relationship with EO

which will lead t productivity, so that it will stop the misspecification of the relationship of how

EO is being driven and executed across the functional activities of SME’s.

1.2 Statement of the Problem

SME’s are the core of development in any human society or nation. Those enterprises exist in

Nigeria and indeed Plateau State which is one of the commercial units of the country. Growing a

business is no easy challenge to most businesses and yet it is a great desire and an expectation for

most business owners to grow after some few years of operation. EO of SME’s in Nigeria and

most especially SME’s in Jos North LGA, Plateau State face some number of issues that has

affected their growth and performance.

It’s been obvious over the years that SME’s face quite a number of numerous

challenges/problems that has been affecting them still yet, it’s not just limited to that,

entrepreneurial orientation (EO) of these SME’s also face their own challenges which have a

ripple effect directly or indirectly on SME’s performance in general. With regards to problems

with EO of SME’s in Jos North LGA, Plateau State, it’s been observed that quite a number of

SME’s are not aware of the concept of EO and as such can’t even apply it to their businesses.

The few SME’s that are aware of EO find it difficult to apply it to their businesses because they

think it’s time consuming and of less importance and effective to their business. Some SME’s are

just focused on making profit and managing their business to survive and neglect the fact that by

applying concept such as EO. They could perform more competitively, effectively and
efficiently. Because of how certain SME’s are structured they do not give room for EO

(Entrepreneurial Orientation) to fit into their activities.

Furthermore, there is no proper orientation or awareness of EO to a huge number of

SME’s especially those within the confines of Jos North LGA, Plateau State. This is as a result

of failure on the part of government and the private sector by creating little or no programs,

seminars, conferences or consultation avenues to enlighten SME’s on the need to apply EO to

their activities for better performance, growth and development,

Other factors that affect SME’s performance in general include inconsistency in policy

measures, unstable micro and macro-economic environment, poor infrastructural facilities i.e.

roads/railways growth, good water supply, electricity, telecommunications and insecurity which

mostly affects SME’s in Jos North LGA, Plateau State.

1.3 Objectives of the Study

The overall objective of this study is to examine the impact of entrepreneurial orientation (EO)

on SME’s performance in Jos North LGA, Plateau State.

The study seeks to achieve the following specific objective:

To understand the effect of innovativeness on SME’s performance.

To understand the effect of competitive aggressiveness on SME’s performance.

To understand the effect of pro-activeness on SME’s performance.

To understand the effect of autonomy on SME’s performance.

To determine the effect of risk taking on SME’s performance.

1.4 Research Questions

This study looks forward to answering questions that forms the basis of the research work. As

such, the research questions for this study are as follows:

To what extent does innovativeness affect SME’s performance in Jos North LGA,

Plateau State?

To what extent does competitive aggressiveness predict SME’s performance in Jos North

LGA, Plateau State?

To what extent does pro-activeness relates to SME’s performance in Jos North LGA,

Plateau State?

To what extent does autonomy predict SME’s performance in Jos North LGA, Plateau

State?

To what extent does risk taking determine SME’s performance in Jos North LGA,

Plateau State?

1.5 Scope of the Study

The scope covers the area of entrepreneurial orientation (EO) in Plateau State with particular

reference to Jos North LGA. The study will critically examine the nature of the effect of

entrepreneurial orientation (EO) on SME’s performance in Jos North LGA, Plateau State.

1.6 Significance of the Study

The importance of entrepreneurial orientation on SME’s performance cannot be over

emphasized, the significance of this study is aimed at impacting and contributing to the practical,

theoretical and policy aspect of EO and its impact on SME’s performance. This is because the

theoretical aspect of this research will explain to students, scholars and other researchers with

similar research topic with in-depth knowledge and scenarios of why EO makes SME’s perform

better compared to when they do not apply for EO at all. Previous studies have shown

theoretically that SME’s who apply for EO concept to their activities are likely to survive and

perform more competitively compared to those with little or no knowledge of it all.

Practically, this research will examine business practices (SME’s), business practices

regarding E.O will be critically examine to bridge the gap between theory and practice with

overall intention of contributing to a better understanding of E.O itself. This study will further be

of utmost significance to businesses (SME’s) in asserting the impact E.O to their performance.

They will have the knowledge of present dimension of the entrepreneurial orientation. It will also

assist entrepreneurs who are major stakeholders in SME’s sector with useful information on

dynamics of entrepreneurial orientation (E.O) towards a better performance and contributions of

SME’s to economic growth and development.

1.7 Definition of Terms

Business: this includes any trade, industry professional and occupation carried on for profit.

Growth: this refers to the increase in output as a result of bank loans invested in small and

medium scale business

Enterprise: this means any establishment engaged in production, repairs or services to satisfy

human wants and make room for profit.

Entrepreneurial Orientation (E.O): entrepreneurial orientation is a set of processes, actions

and practices carried out by the organizations to make the right decisions that will lead them to

undertake certain entrepreneurial actions.

Performance: performance comprises the actual output or results of organizations as measured

against its intended output (or goal & objectives).

Entrepreneurship: Entrepreneurship is a process of opportunity identification and the creation

of an organization to exploit the opportunity.

Small and Medium Scale Enterprise (SME’s): this is an enterprise with labour force of 11-

1000 workers or a total cost of not more than NGN50 million including working capital but

excluding cost of land.

Economy: financial affairs, the production and consumption of goods and services of a

community regarded as a whole.

 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

The previous chapter gave a general introduction of the research work, which serves both as a

proposal and foundation of this study. In this chapter, titled "Literature review," emphasis is laid

on the proper examination and review of past literature works on Entrepreneurial orientation

(EO) and how it impacts SMEs performance and also current contributions of scholars on the

subject matter. This review process s of immense benefit in understanding the concept of

Entrepreneurial Orientation (EO), the role it plays on SMEs performance, it importance,

problems people might face in the near feature and better ways to overcome them.

The chapter is further designed to provide business executive, government officials,

scholars and student with a better insight into the changing context in which businesses are

conducted from the local scale like Jos North local Government Area of plateau state and up into

the global scale. It is also essential in the analysis of the relationship that exists between the

variables involved in the research topic. In this case the general concept of Entrepreneurial

Orientation (EO) impact will be reviewed. As changing definition, scope and entrepreneurship

will equally be elaborated.

Finally this chapter will be conducted with a brief summary of what have been identified about

the subject matter.

2.2 Conceptual Review

2.2.1 Entrepreneurial Orientation (EO).

The concept of EO was first introduced by Khandwalla (1977) and Miller (1983). According to

these authors, firms with high EO are alert to new opportunities; subsequently, exploitation will

strengthen their competitive positions. Li et al. (2008) associated EO with the first mover

advantage, a tendency to take advantage of emerging opportunities to enhance a firm's

performance. Some of these environments are characterized by new emerging opportunities

resulting from free movement of capital, goods and technologies. This allows entrepreneurs to

exploit opportunities with the minimum boundary restriction. SMEs in this former protected

environment often lack EO to recognize or seize opportunities presented. Entrepreneurial

orientation (EO) as it is known today can be seen as having developed in different phases. Most

researchers acknowledge four main phases for the development of EO Basso et al., 2009;

Edmond and Wiklund, 2010; Miller, 2011; Wales, Gupta, et al., 2013). First, there is the pre-EO

phase on which the EO research would be founded. Then, most researchers credited Miller

(1983) for laying the foundation, thereafter came a refinement from Covin and Slevin (1989,

1991) and even later are-conceptualization by Lumpkin and Dess (1996). The concept of EO can

be of great interest for small businesses. From the reasoning above, EO is stated as the CEO's

strategic orientation reflecting a willingness of a firm to engage in entrepreneurial behaviors.

Moreover, in small firms, the strategic orientation of key managers (founder, director) is likely to

equal the strategic orientation of the firm. EO appears to be a sign of a firm's overall strategic

and competitive orientation in its intention to take advantage of opportunities (implying a focus
on perceiving and pursuing opportunities) and to consider new combinations of resources

(Stevenson and Gumpert,1985).The following two themes further define EO·

As a strategic orientation;

Entrepreneurship orientation and its implementation are both parts of its strategy. In fact, when

studying the strategic choices that may influence success and performance of small business, the

focus must be on strategy. Thus, EO seems to be a "key ingredient of organizational

success"(Lumpkin and Dess, 1996: 151). Several useful typologies of strategic orientation have

been set forth in the strategic management literature (Porter, 1980; Miles and Snow, 1978).

Among the various typologies, Miles and Snow's (1978) typology has received the most

attention. The typology consists of four strategic orientations: defender, prospector, analyzer, and

reactor. Organizations in each category exhibit a consistent pattern of decision making behavior

while dealing with various environmental forces. The most aggressive strategy is "prospector"'

and underlies an organization’s aggressiveness in pioneering products and markets, requiring

management to spend more time in scanning its external environment and evaluating

opportunities and threats (Miles and Snow,1978;Dess et al,1997).

Willingness to engage in entrepreneurial behavior:

EO has been shown to be a good predictor of the outcomes of entrepreneurial behavior

(Covinand Slevin, 1990; Merz etal, 1994). Wiklund (1998a, 1998b) as researchers determine a

strong association between entrepreneurial orientation and entrepreneurial behavior. This means

that a strategic EO leads to actual entrepreneurial behavior, such as entering new markets and

manufacturing new product. As well, EO describes a voluntary oriented-action resulting in actual

entrepreneurial behavior to sum up, the proposal to study EO will hold in consideration

significant determinants, which influence the orientation to entrepreneurial activities.

2.2.2 Entrepreneurial Orientation and It Dimensions

Innovativeness

Innovation is at the very heart of entrepreneurship (Schumpeter, 1934; Dnicker, 1985; Filion,

1997). Schumpeter was one of the first scholars to argue that innovation is the fundamental

endeavor of entrepreneurial organization for developing new products or inventing new

processes. The attribute of in innovativeness describes an organizational imperative to introduce

newness with added value. It reflects a firm's propensity to engage in new idea generation,

experimentation, and R&D activities by introducing new products/services, manufacturing

processes and new markets (Lumpkin and Dess, 1996). Innovativeness represents a firms'

propensity to involve into creative processes, experiments, and support novel ideas and these

kinds of activities would create and facilitate new and innovative methods, opportunity

recognition, processes and technologies (Runyan et al., 2006). Runyan et al. (2006) further stated

that a small firm's owner might apply innovative techniques for enhancing their firm's

performance.

Risk-taking

This concept, long associated with entrepreneurship describes the willingness of entrepreneurs to

engage in calculated business related risks (Brockhaus, 1980; 1982).The varying and conflicting

findings in the studies of risk-taking behavior does not negate the rich conceptual discussions

involving it. Thus, risk-taking seems to be an attribute of entrepreneurship (Stewart et al, 1998).

Firms with an EO typically display risk-taking behavior derived from its readiness to incur large
and risky resources commitments to uncertain but novel and promising business (Brockhaus,

1980; Miller and Freisen, 1978; Miller, 1983; Lumpkin and Dess, 1996). Risk-taking tendency

measures the inclination to invest the potential amount of resources to the opportunities which

would possess a rational likelihood of both success and failure (Altinay & Wang, 2011). Firms

with high risk-seeking tendency tend to obtain superior growth and profitability in the long run

(Wang &Poutziouris, 2010).

Pro-activeness

This concept has received less attention from entrepreneurial scholars. Two main attributes of

pro-activeness are posited: 1) aggressive competitive behavior directed to rival firms (being

ahead of competitors) and 2) the organizational pursuit of favorable business opportunities

(Lumpkinand Dess, 1997; Stevenson and Jarillo, 1990). Thus, this concept can be broken into

two separate dimensions (Lumpkin and Dess, 1996; 1997). In this conceptual study, Lumpkin

and Dess (1996) suggest the inclusion of competitive aggressiveness and autonomy to a postulate

or a corollary of EO. Autonomy refers to actions undertaken by individuals or teams intended to

establish a new business concept, idea, or vision. In fact, they suggested that pro-activeness is a

response to opportunities referring to "how firms relate to market opportunities by seizing

initiative and leading in the market place". Whereas competitive aggressiveness is a response to

threats referring to "how firms react to competitive trends and demands that already exist in the

marketplace" (Lumpkin andDess,1997). Pro-activeness demonstrates a firm's anticipatory action

in the future market demand to gain competitive advantages over its market competitors,

followed by opportunity scanning (Wales et al., 2016). According to Zahra & Covin (1995),

proactive business firms are able to capitalize first mover lead and dominate over market

distribution channel.
 Autonomy:

Opportunity (Lumpkin & Dess, 1996,) Autonomy deals with the predisposition towards suitable

condition for development and the subsequent implementation culture that promotes new

initiatives without hindering individual creativities could be considered autonomy. Autonomy is

also defined as "individuals in dependent action of conveying a vision or an idea, which allows

them to demonstrate their competencies required for smoothing the path to a successful

entrepreneurship" (Al Mamun & Faza;, 2018, p. 384). Autonomy can enable particular

"entrepreneur competencies" among auxiliaries of worldwide organizations (Dimitratos et al.,

2014). A study was done in Indonesia by Musa and Ramli (2017) where researchers collected

data from 93 SMEs owners by using convenient sampling technique and found that high job

autonomy exhibits better competency level entrepreneurs, this study also highlighted that a

certain level of autonomy will lead to better performance of SMEs.

Rauch et al. (2009) found a positive relationship between a firm's performance and

autonomous attitude.

Competitive Aggressiveness:

Competitive Aggressiveness represents a business firm's degree of responsiveness to its rivals

(Runyan et al., 2006). Lumpkin & Dess (1996) described aggressiveness as a firm's proclivity to

straightaway challenge its market competitors and to surpass the rivals. Covin & Covin (1990)

exhibited that high performing firms are likely to be more aggressive in a hostile environment.
 Going further in this study, we will want to see how each of this Dimension plays a vital

role in the performance of SMEs especially in a positive way and how they can bring about

enormous changes to how businesses or SMEs operate if only they apply this dimensions

accordingly to their activities to help them bring about growth, development and a new road to

the success of many businesses not just in Jos North Local Government Area of Plateau State but

also in Nigeria and the international communities. This study argues that EO is an important

variable in SMEs performance in emerging economies and most especially on relating it to

SMEs in Jos North Local Government Area of Plateau State.

2.2.3 The Concept of Small and Medium Enterprises (SMEs)

The notion of small and medium enterprises (SMEs) was introduced into the development
landscape as early as the late1940s, and the primary aim was to improve trade and
industrialization in the present developed and developing nations. The definitions of SMEs are
usually derived in each country, based on the role of SME in the economy, policies and programs
designed by particular agencies or institutions empowered to develop SMEs. Moreover, the
definition of SMEs also varies overtime from agencies or developing institutions to another,
depending on their policy focus.

The above variation notwithstanding, SMEs can be defined based on certain including,

turnover, number of employees, profit, capital employed, available finance, and market share and

relative size within the industry. The definition can be based on either some quantitative or

qualitative variables. Quantitative definitions mainly express the size of enterprises, mainly in

monetary terms such as turnover, asset value, profit, as well as quantitative index like number of

employees. As examples, the 1975 companies Act in the United Kingdom stated that an

enterprise with a turnover of less than £ 1.4 million was small, those with turnover between £1.4

andf5.7million were medium, while those enterprises having turnover above £5.7 million were
large. It also went further to classify the enterprises based on number of employees-those with

fewer than 50 workers being mall, between 50 and 250 workers being medium and those

employing above 250 workers were described as being large. However, the asset base criterion is

more commonly used in Nigeria. The Central Bank of Nigeria, in its 2005 guideline on Small

and Medium Enterprise Investment Scheme (SMEIS), described SME as any enterprise with a

maximum asset base of 200million naira (excluding land and working capital) with no lower or

upper limit of staff. Using quantitative indices alone to define SMEs have proven unsatisfactory

in many respects. This is because such indices are characterized by periodic alterations due to

inflation and thus can sometimes be misleading. Noteworthy is the point that the CBN's

definition of SME above may not accommodate many small businesses in Nigeria, which may be

known as micro-enterprises. Also misleading is the fact that some enterprise may be labor

intensive and so may be large in terms of number of workers employed, while on the other hand,

a capital intensive firm may be large in terms of asset base but have fewer employees.

The SME sector comprises very different types of businesses across a wide range of

economic sectors. There are essentially two categories: those that are growth-oriented, and those

small and micro enterprises that operate at the subsistence level to provide employment and

income mainly for their owners and a relatively small number of external employees.

Subsistence enterprises represent the vast majority of SMEs in developing countries. On the

other hand, the growth-oriented type are innovative type of businesses which usually operate in

growing markets, as well as businesses that are efficiency-oriented and/or network-intensive,

which tend to grow through acquisition.

 SMEs Performance

The concept of performance has been captured in numerous areas of research as a measure for

the success of any business venture overtime. Usually, performance viewed from different

perspective based on context with diverse indicators (Lumpkin & Dess, 1996; Stam, Souren, &

Elfring, 2013). From firm’s perspectives, performance explains the value deliver to customers

and shareholders (Wu & Zhao, 2009). There are various indicators used to measure performance.

Effendi, Hadiwidjojo and Noermijati (2013) identify five indicators used for measuring

performance which are; Ability to build and maintain relationship with customers, provision of

quality product, product at affordable price for customers, adequate inventory and effective and

efficiency in product/service delivery. One point to note from the reviewed literature is that

performance indicator is grouped into subjective and objective performance measure. Subjective

measures are based on the managers’ views about the business position on profitability, market

share, employee’s growth as opposite to competitors in the same industry (DeepBabu & Manalel,

2016). While objective measures are published profitability and market share figures of

businesses in any industry. This information is release without any resistance from the

organization and made available for public consumption.

2.2.4 Nature of SMES in Jos North Local Government Area of Plateau State

Jos North LGA is found in Plateau state, North-central Nigeria and has its headquarters in

the town of Jos. Jos North LGA is bordered by Bassa, Jos east and Jos South LGAs and by parts

of Bauchi state. The LGA is made up of several districts, towns, and villages which include

Tudun wada, Ahwol, Gangare, Kabong, Naraguta, Tafawa Balewa,Mazah and Jenta Adamu. The

estimated population of Jos North LGA is 289,436 inhabitants with the area hosting members of

diverse ethnic affiliations due to its cosmopolitan nature. Jos North LGA covers a total area of
291square kilometers. Some of the notable commercial places are Terminus, satellite market and

Katako markets where a variety of commodities are bought and sold. SMEs in Jos North Local

Government Area of Plateau state have grown over the years to become a major contributor to

growth and development as it has contributed immensely to revenue generation of the state

because of the number of SMEs in that locality and also the huge number of commercial

activities taking place in that terrain. The importance of SMEs in Jos North Local Government

Area of Plateau state cannot be over emphasized as they have added value to economic activities.

Over the years, the Government of Plateau State have put in place various programs and have

created some agencies that continues to support and encourage the activities of this sector. Some

Numbers of SMEs in Jos North have continued to increase because of their level of survival

compared to other parts of the state this is as a result of favorable business environment and

opportunities that lies around (even though there are lots of challenges like crises that occurs in

that axis). In this case, one could argue that for their continual survival it depends on how the

apply EO to their strategic planning which will change and better their performance going

forward.
Entrepreneurial Orientation (EO)

Figure 1: Conceptual frame work

2.3 Theoretical Review

2.3.1 Dynamic Capabilities Theory

Dynamic capabilities have gained significant prominence in strategic management

research(Laaksonen & Peltoniemi, 2016; Rashidirad, & Salimian,2020).The dynamic capabilities

theory was propounded by Teece, Pisano and Shuen (1997), empowered through the efforts of

Prahaladand Hamel (1990). Teece (2017) noted that ordinary capabilities are mostly about

businesses doing the right thing, while dynamic capabilities were about doing the thing right in

terms of new product(and system) growth, unique management orchestration process, change-

oriented organizational culture, and accurate assessment of business climate and technology
trends at the right time. Therefore, strong, dynamic capabilities are indeed owned by few, not by

many (Teece, 2017).

Dynamic capabilities and strategic management examine how the firm can go beyond

sustainable competitive advantages, especially in times of change and uncertainty. Findings by

Salunke et al., (2011) has shown that businesses intentionally use, develop, expand and

adjust10processesestablish and develop essential dynamic capabilities. Dynamic capabilities can

be effectively separated into three central clusters of actions other than for application purposes

such as"(i) identification, development, co- development and assessment of technological

opportunities in relation to customer needs (sensing); (ii) mobilization of resources to address

needs and opportunities, and to capture value from doing so (seizing); and (iii) continued

renewal(transforming)"(Teece, 2017b). In terms of technology orientation, the dynamic

capabilities view acknowledges that technological know-how is not easy to access, but instead

results of value-creation actions, such as research and development, continuing to learn and

managerial asset orchestration process. Therefore, in this study, relating dynamic capabilities

theory with the innovation elements of organizational culture, strategic orientation, technology

orientation and strategic business model alongside innovation competitive advantage and

sustainable growth of SMEs would be necessary.

2.3.2 Contingency Theory

Contingency theory discussed that firms can continue strategic matching which correspond with

the external environment and uncertainties to gain the appropriate competitiveness, business

growth, performance and sustainability. Contingency theory is the key theoretical lens used to

view the firm (Dentchev et al., 2018).The basic principle of the dichotomy of contingency theory
would be that organizational effectiveness results from the adaptation of organizational factors,

such a structure and contingencies that reflect the organizational situation (Bagnoli & Giachetti,

2015; Penning1992). Environment (Burns & Stalker,1961), organizational size (Child,1975) and

organizational strategy (Chandler, 1962) include contingency plans (McAdam ctal, 2019),.

Because the appropriate contingency of strategic choices results in higher performance, the

organization hopes to confirm fits (Van Looy & Van den Bergh, 2018). As a result, contingency

plans are transforming the company as they need to be adapted to prevent productivity losses.

The theory of contingencies therefore includes the notion of fit that influences performance and,

in turn, drives initiatives of adaptive change and sustainable business growth (Dobbs &

Hamilton, 2007). The contingency theory argues that the organizational structure needs to be

modified to fit three contingencies, such as the environment, size and strategy (Donaldson,

2006). The theory of contingency believes that innovation is indeed the level of novelty or the

volume of new products per unit of time targeted by mangers increases the interconnection

between the business units associated with making innovation happen (McAdam, Miller &

MeSorley, 2016). Evidence from Maletic, Maletič and Gomišček (2018) acknowledged the use

of a contingency lens to revisit sustainability and organizational performance practices.

Accordingly, the adoption of a contingency approach to support the sustainable growth of small

and medium enterprises would be the most innovative problem-solving culture and

interdependence that directly impacts the supply of new products, meeting the needs of

customers, stakeholders, the public, social, economic and environmental segments (Pratono, Al-

Mashari & Del Giudice, 2016).

2.3.3 Diffusion of Innovation (DOI) Theory

From the perspective of innovation and technology orientation, Rogers(1995) proposed

the Diffusion of Innovations (DOI) theory in order to explain the concept by which innovation

could be transferred between different people over certain periods of time by different means.

The process of introducing a new innovation has been investigated for more than 30 years

(Rogers, 2003;Rogers,1983) Rogers' theory as noted by(AI Mamun,2018) describes, among the

most popular models of adopting in his book "Diffusion of Innovations" and has used the model

as a framework for many studies from a wide range of subjects.

The diffusion of innovation theory has been used in several fields, such as strategic

management, political science, management, public health, communications, accounting, history,

economics, technology,, innovation and entrepreneurship, ete. (Johnson, 2015; Stuar, 2000), In

addition, Rogers' theory has been widely used in the theoretical framework in the field of

technology adoption and innovation diffusion. Rogers' growth in innovation theory is perhaps

best suited to exploring the technology orientation in small and medium enterprises and

insightful ecosystems (Li&Asim, 2019;Parisot, 1995; Medlin, 2001). Diffusion of innovation,

research usually involves technological innovation and Rogers (2003) typically used the word

"technology" or "innovation “as synonyms. Rogers refers to the diffusion as "a process in which

innovation is thoroughly communicated between members of the social system through certain

channels over time". Innovation, communication channels, time and social structure are the four

basic elements of diffusion of innovation (Chege & Wang, 2020). Previous research has revealed

that organizational culture encourages innovation (Do, Mazzarol, Soutar, Volery & Reboud,

2018, Petdersen, GwozdzHvass 2018).

 According to Fagerberg, Mowery and Nelson (2004) SMEs with higher innovations have

significantly better ratios of income and employment than SMEs that are less innovative and

creative.

Rogers (2003)) defined innovation as an idea, practice of project considered to be specific

to an entity or to a number of other adoption components. The diffusion involves establishing the

capabilities of innovation cultures that promote the effectiveness of innovation competitive

advantages that support sustainable growth of small and medium enterprises in a new market

dynamic.

2.4 Empirical Review

2.4.1 Entrepreneurial Orientation and SMES Performance

Entrepreneurial orientation has been evaluated as an important antecedent in companies that

positively impacts on performance. There is vast of knowledge about this subject to understand

the relationship, a group of studies on potential moderating variables are also found and another

group of scholars explores the magnitude of the relationship between EO and organizational

performance (Shan et al., 2016). According to Kraus, Rigtering, Hughes and Hosman, (2012)

performance is frequently measured in one or a combination of the following dimensions;

perceived financial, perceived non-financial and archival financial. The likely measures to

evaluate the mentioned dimensions of performance are; return on assets, debt to equity, and

population of employees, sales growth and current ratio. More emphasis is laid on financial

performance of organizations and the common measures includes; profitability, efficiency,

leverage, growth and liquidity (Carton &Hofer, 2006). However, extant studies (Messersmith &

Wales, 2013; Wiklund and Shepherd, 2003) have used perceived performances measures to

assess business performance. Perceived performance measures are based on subjective views of
the business owners about the firms' market position as opposite to competitors in terms of

growth in market shares and profitability. Although this form of performance measure is open to

inaccuracy as only the business owner decides to make vailable the true performance position of

the business. This is does mean that subjective form of performance Jumtunen, Puumalainen,

Sarenketo & Kyläheiko, 2018; Wall, Mitchie, Paterson, Wood, Sheehan, Ckegs&West, 2019)

have revealed strong positive correlation between subjective and objective performance

indicators. Considering the focal business of this study, obtaining an objective performance

measures will be difficult, because published profitability and market share report are not made

available for public consumption due to the small nature of the business. Also, most small

businesses are reluctant to disclose financial information of their business. Therefore, subjective

(perceived financial and non-financial) performance indicators will be used to measure the

business performance. Going by previous studies entrepreneurial orientation (EO) is a significant

contributor to a firm's success. Covin and Slevin (1991) developed a model that associate

entrepreneurial posture to organizational performance. It was revealed that entrepreneurial

orientation was positively related to firm performance. Both conceptual and empirical studies

(DeepaBabu &Manalel, 2016; Al Swidi & Mahmood, 2011; Krauss, Frese, Fredrick & Unger,

2005) provided reasonable body of evidence regarding the link between entrepreneurial

orientation and firm performance. However, the study by Lumpkin and Dess (1996) suggest that

the relationship between entrepreneurial orientation and business performance is context specific

which indicates that the relationship can change independently in different business context.

This means each dimension of entrepreneurial orientation impact business performance

differently. As captured in a study by Kraus et al., (2012), innovativeness and Risk-taking,

autonomy, competitive aggressiveness dimension of entrepreneurial orientation are significantly

associated with business performance as much as how Pro-activeness is significantly and

positively associated with business performance. Also, the study by Lee and Lim, (2009)

revealed that competitive aggressiveness has a significant impact on business performance than

autonomy, innovativeness and Risk-taking dimensions of entrepreneurial orientation. Hence,

each dimensions of entrepreneurial orientation have different impact on business performance.

This study employed the five dimensions of entrepreneurial orientation because it is the

combined presence of innovation, Pro-activeness, autonomy, competitive aggressiveness, and

risk-taking in a firm that leads an organization to have entrepreneurial orientation (Deepa Babu

& Manalel, 2016). Drawing from review of related literature, it is obvious that this area of

research is attracting the attention of academics and practitioners from different fields of

professions because entrepreneurship has become the prerequisite for an economic growth and

development in the 21 century.

To give direction to this study the conceptual framework linking entrepreneurial

orientation and business performance is developed based on the review of literature.

This model of conceptual firework shows the relationship between EO dimension such as

autonomy, competitive aggressive, innovativeness, risk taking, pro-activeness and it relationship

with SMEs performance based on reviewed literature. These proposed frameworks are presented

below.

2.5 Research Gap

SMEs are the bedrock of many economies and with their continual activities; they consistently

add value towards the growth and development at these economies. For these SMEs to even

perform better there is need that they have knowledge of EO and it dimension and also apply it
for their improved performances but how they do that is the gap that this research work intends

to fill. This study give an insight on EO and it dimension to enable us have an in-depth

knowledge on EO. Previous studies conducted on similar research topic focused on effect of

entrepreneurial orientation (EO) on organizational growth and development by using just a few

dimensions of EO on how that can be achieved but these study has gone further to use all five

dimension of EO which includes Autonomy, Innovativeness, Pro-activeness, Competitive

aggressiveness, risk-taking and how each of this dimension affects SMEs performances in Jos

North Local Government Area Plateau State. To further fill these gap questions will be asked on

how each dimension affects SMEs performance in Jos North LGA, Plateau State and also how

SMEs are related to EO. Responses gotten will give a clear picture of what role does these

dimension play in SMEs performance in Jos North Local Government Area after certain data

analysis and interpretation.

2.6 Summary of Literature Review

In the foregone discussion in this chapter, various works were reviewed with much emphasis on

current literature work. Beginning with the conceptual review of entrepreneurial orientation (EO)

we were able to know that Khandwalla (1977) and Miller (1983) were one of the first pioneers of

the concept EO which was developed by many other scholars. We further saw how EO has been

imperative in the performance of SMEs. These chapter also looked at dimension of EO which

includes Autonomy, Competitive aggressiveness, Risk-taking, Innovativeness and Pro-activeness

with detail explanation about them. This looked at the concept of SMEs and how it originated

down to it performance and contributors to nation’s economy. This chapter also ad capture of

SMEs performances in Jos North LGA Plateau State. A conceptual frame work was also

developed in the course of the study by the researcher to further explain EO dimension which are
independent and SMEs performances that are dependent on them. They studies also introduced

some theory which explain how EO is related to SMEs performance and they include, dynamic

capability theory, contingency theory and Diffusion of innovativeness (DOI) theory. These

studies also captured empirical review of past work done on similar topic and result gotten.

Finally the research had discussion on the research gap which one imported aspect of the

research. This chapter has to an extent succeeded in giving us a clear picture of the research

work.