International Journal of Academic Research in Business and Social Sciences

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Entrepreneurial Orientation, Access to Finance and Business Performance: A Preliminary Analysis

Open access
Small and Medium Enterprises (SMEs) can be a cushion for unstable economic condition. They are believed to be able strengthen the economic development of a country. The statistics shows that they are accounted for more than 95 per cent of enterprises across the world. Acknowledging the importance of various contributions of SMEs business performance to an economy, many studies on internal and external factors affecting business performance including entrepreneurial orientation and access to finance has been done. Business performance, however, requires more than resources. To cope with these situations, they must have enough financial access in order to finance their business development. Despite its increasing importance to the economy and individual entrepreneurs, SMEs struggle hard to access to finance. Unfortunately, there is limited study to prove that entrepreneurial orientation would increase access to finance and ultimately increase performance. Therefore, the purpose of this study is to test the relationship of entrepreneurial orientation and access to finance on SMEs performance and unearth whether access to finance can be a mediator in the relationship between entrepreneurial orientation and business performance. For start-up, this study employed a primary data set drawn from 30 SMEs and using regression analysis to test all hypotheses. By testing the mediator effect, this study advances the previous works on this area which considers this effect on business performance simultaneously. The main findings indicate that entrepreneurial orientation and access to finance are positively significant on business performance and entrepreneurial orientation would help business to get access to capital and hence its performance could be improved. Since this study is preliminary stage, the small sample size was the major limitation of this study which inhibited the comparison of the results between industry sectors. A study of this nature is vitally-important to highlight the stakeholder such as government, private bodies, NGOs, policy maker and entrepreneurs on the important of entrepreneurial orientation and accessibility to finance on business performance.