The Effect of Entrepreneurial Orientation on Business Performance: The Case of Selected Private Commercial Banks in Ethiopia

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2023-06-07

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A.A.U

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The purpose of this research was to study the Effect of Entrepreneurial Orientation on Business Performance in Selected Private Commercial Banks in Ethiopia”. The study employed explanatory research design. Both primary and secondary data have been collected and the analysis was made by using the qualitative and quantitative approaches. The total number of targeted population was 281 and the total sample size was 100 with response rate of 80%. Descriptive, Pearson correlation and multiple regression analysis have been applied to analyze the dimensions of Entrepreneurial Orientation (Bank Innovation, Risk-Taking, Pro-activeness, Competitive Aggressiveness, and Autonomy) on Business Performances. The result of the analysis showed the perception of respondents for both independent and dependent variables were significant with at least moderate level of correlation. As per the regression analysis, the independent variables predicted only 42% and the remaining 58% of business performance was predicted by other extraneous variables. The linear regression analysis has also indicated that among the five independent variables, the relationship of innovation with business performance was negative. The hypothesis test showed that most of them were rejected except for H4 and H6 of the study. The study also revealed that among the selected six private commercial banks, the level of entrepreneurial orientation in Abyssina and Hibret banks was in low. The study further suggested each bank to design a strategy for investment, market share growth in deposit and profit. The strategy would be helpful to maximize returns on investment, to cope up the challenges for market share seizing opportunities in the market and optimize their profitability considering the aggressiveness of other banks. Lastly, the researcher recommends to carryout similar study using mixed methods of research supported with interviews and focus group discussions, or a comparative study on different types of bank tiers, or an in-depth study on each of the entrepreneurial orientation dimensions on business performance.

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