Firm level entrepreneurship and firm performance: with special reference to the hotel industry in Sri Lanka
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Date
2015
Journal Title
Journal ISSN
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Publisher
Uva Wellassa University of Sri Lanka
Abstract
According to the central bank of Sri Lanka, country has been experiencing a higher economic
growth over the past few years and is still growing at a healthy rate due to improvements of few
key performing industries such as hotel industry and such industries need to be more
entrepreneurial at the firm level and have strong strategic outlook to face competition and rapid
growth. Firm level entrepreneurship (FLE) has been defined using various terminologies such as
strategic posture, corporate entrepreneurship (CE) and entrepreneurial orientation (EO) and this
term measures the extent to which a firm is entrepreneurial (Davis, 2007). EO and CE are two
commonly used constructs of FLE (Hosseini et al., 2012).EO includes the entrepreneurial
tendency of top management of a firm, (Hosseini et al., 2012)and CE is identified as actual
entrepreneurial actions of the firm (Mokaya, 2012). Both CE and EO lead to have higher levels of
firm performance (FP) Hosseini et al., (2012). However, as to Hosseini et al, (2012) and Fis and
Cetindamar (2009) FLE it is not only the entrepreneurial intensity of the top management
personals but also the actual entrepreneurial actions undertaken by the firm although many
researches had related either EO or CE with FP in their researches. Thus, it seems that
conceptualizing FLE by using either EO or CE creates a blind picture of entrepreneurship
phenomenon. Therefore, the objectives of this study were to assess the level of FLE, EO and CE
of the firms in the Sri Lankan hotel sector to identify the relationship between FLE and FP. Thus,
EO was conceptualized as innovativeness, risk taking, proactiveness, competitive aggressiveness
and autonomy (Lumpkin & Dess, 1996) and CE was conceptualized as management support,
work discretion, rewards, time availability and organizational boundary (Kuratko et al.,2007).
Moreover, FP was measured in terms of the perceptual measurements on market share growth,
ROI growth, sales growth and cash flow growth.
Methodology
The population of this study was Colombo district hotels those have got registered under Sri
Lanka Tourism Development Authority (SLTDA) and that included 40. However, only 37 firms
responded making the response rate of 92.5 percent. Data was collected by using a structured
questionnaire and CE was measured by using Corporate Entrepreneurship Assessment Instrument
- CEAI (Kuratko et al., 1990) and EO was measured by using self-developed questionnaire. The
reliability of questionnaire was measured by using Cronbach’s Alpha and the results confirmed
that all the constructs were well above the acceptable level of 0.7 and hence executed for data
collection. In assessing the level of EO and CE of the firms, mean, standard deviation and
percentages were used while in order to identify the relationship between EO & CE and FP, a
multiple linear regression was employed and can be specified as: FP = β0 + β1
EO+β2CE +ε.
Results and discussion
The average levels of CE and EO were 3.607 and 4.11 respectively confirming a higher level of
EO with compared to CE. However, the difference standard deviation further evident that it is a
slight difference. Nevertheless, as to the Table 1, majority of the firms (60%) was at the high level
of CE while 86% of the firms were demonstrating a high level of EO. Interestingly, a negligible
level of firms was at the low level of CE (3%) and EO (Nill) implying that the Colombo District
hotels are seemingly maintaining a fair level of high CE and EO level.
The statistically significant (P<0.01) strong positive correlation values of CE (0.715) and EO
(0.688) confirmed that there is a positive association between CE & EO and FP. Regression
assumptions of Normality, Homoscedasticity (Pattern-less scatter), Multicolinearity (Table 2-c)
and Auto-correlation (Table 2-a) were checked and got confirmed that data meet all the blue
properties.
Description
Keywords
Management, Entrepreneurship and management, Entrepreneurship, Hotel Industry, Hotel Management, Hospitality, Tourism and Events Management