The Effect of Corporate Entrepreneurship on Firm Performance: The Role of Environmental Uncertainty as Moderator variable in the Case of Ethiopian Microfinance Sector
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Date
2019-06
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Addis Ababa University
Abstract
Corporate entrepreneurship is one interesting area of research in business strategy and entrepreneurship disciplines in the last few decades, as it is influential concept in successful business performance. Although a number of related researches have been conducted in different parts of the world, only limited were in Ethiopia. This research, thus, aims to address this gap by taking 34 study populations from Microfinance Institutions operating within the territory of Ethiopia. The sampling technique is used census method. By using SPSS V20 statistical tool descriptive, correlation and regression techniques were used to analyze the relationship between the independent variable CE and dependent variable FP. Both direct CE–Performance relationship and interaction effects of environmental uncertainty (EUC) as moderator variable was examined in this relationship. Moderated hierarchical regression has been applied to see how Corporate entrepreneurship (CE) as independent variable and environmental uncertainty (EUC) as moderator influence Microfinance Institutions’ performance. From the analyses it is confirmed that corporate entrepreneurship has positive and statistically significant (p<0.01) effect on Microfinance Institutions’ performance. Environmental uncertainty is also found to moderate highly the relationship between corporate entrepreneurship and performance but negatively against the hypothesized direction (p<0.01). Based on the findings, it is concluded that corporate entrepreneurship (CE) is a beneficial strategic posture for Microfinance Institutions in resources constrained environments to pursue it to be effective and competitive. Besides, though existence of environmental uncertainty is hypothesized to influence corporate entrepreneurship on performance positively on the basis of previous literatures and research results, in the case of Ethiopian microfinance sector, it is learned that existence of environmental uncertainty as moderator variable does negatively influence corporate entrepreneurship and firm performance. Thus, as the research result suggests that, to have corporate entrepreneurship a positive influence on performance of the Institution, existence of stable environment could be a mandatory and pre-request condition, which looks like a rational and acceptable argument.
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Keywords
Contingency framework, Contingency theory, Corporate entrepreneurship, Environmental uncertainty