Moderating Role Of Entrepreneurial Orientation On The Relationship Between Information Technology Competence And Firm Performance In Kenya

Authors

  • Stanley Ndungu JKUAT
  • Kenneth Wanjau Karatina University
  • Robert Gichira JKUAT
  • Waweru Mwangi JKUAT

DOI:

https://doi.org/10.26668/businessreview/2017.v2i2.59

Keywords:

Information Technology, Information Technology Competence, SMEs, Firm Performance, Information Technology Investments

Abstract

This study explored moderating role of entrepreneurial orientation on the relationship between Information Technology Competence and firm performance in Kenya. The impact of IT on FP remains debatable to-date because some results of previous studies have had high variations resulting from diversities in the conceptualization of the key constructs and their interrelationship, coupled with the exclusion of intangible effect of IT on performance. In Kenya, SMEs employ about 85 percent of the workforce. The need to link ITC with FP has become vital for firms striving to achieve superior performance. However, limited attention has been paid to the link and more so to the moderating role of EO on ITC- FP relationship model. To better understand this relationship, this paper adopted a mixed methods research guided by cross-sectional survey design. Quantitative and qualitative techniques were employed to analyze the collected data using SPSS, Ms-Excel, AMOS, SmartPLS, STATA, R-GUI and ATLAS.ti analytical softwares. Analyses were conducted using a two-phase process consisting of CFA and SEM models. The theoretical models and hypotheses were tested based on empirical data gathered from 94 SMEs in the 2013 Top 100 Survey. The study found that ITC had a positive relationship with FP. The results also revealed that EO did not significantly moderate the relationship between ITC and FP in Kenya. However, when run with the interaction term, the Technical (ITC and ISRA)*EO was statistically significant at 10% α-level. This study will enhance the skill set in Kenyan SMEs and produce a more sustainable solution.

Downloads

Download data is not yet available.

References

Abetti, P. A. (1992). Planning and building the infrastructure for technological entrepreneurship. International Journal of Technology Management, 7, 129-139.

Anderson, B. S., Kreiser P. M., Kuratko, D. F., Hornsby, J. S., & Eshima Y. (2015). Reconceptualizing entrepreneurial orientation. Strategic Management Journal, 36, 1579-1596.

Anderson, J. C. & Gerbing, D. W. (1988). Structural equation modeling in practice: a review and recommended two-step approach. Psychological Bulletin, 103(3), 411-423.

Antoncic, B., & Hisrich, R. D. (2001). Intrapreneurship: Construct refinement and cross-cultural validation. Journal of Business Venturing 16(5), 495–527.

Argyrous, G. (2005). Statistics for research: With a guide to SPSS. London: Sage

Ashurst, C., Cragg, P., & Herring, P. (2011). The role of IT competences in gaining value from e-business: An SME case study. International Small Business Journal, 30(6), 640-658.

Basso, O., Alain, F., & Bouchard, V. (2009). Entrepreneurial orientation: The making of a concept. International Journal of Entrepreneurship and Innovation, 10(4), 313-321.

Bengtsson, M., Boter, H., & Vanyusyn, V. (2007). Integrating the internet and marketing operations: A study of antecedents in firms of different sizes. International Small Business Journal, 25(1), 27-48.

Bingham, C., Eisenhardt, K. M. & Furr, N. (2007). What makes a process a capability? Heuristics, strategy and effective capture of opportunities. Strategic Entrepreneurship Journal, 1, 27-47.

Bordens, K. S., & Abbott, B. B. (2014). Research design and methods: A process approach (9th ed.). San Francisco: McGraw Hill.

Caldeira, M., & Ward, J. (2003). Using resource-based theory to interpret the successful adoption and use of information systems and technology in manufacturing small and medium-sized enterprises. European Journal of Information Systems, 12(2), 127-141.

Callahan, M. C., Gabriel, E. A., & Smith R. E. (2009). The Effects of Inter-Firm Cost Correlation, IT Investment, and Product Cost Accuracy on Production Decisions and Firm Profitability. Journal of Information Systems, 23(5), 51-78.

Chang, H. J., & Lin, S. J. (2011), Entrepreneurial intensity in catering industry: A case study on Wang Group in Taiwan. Business and Management Review, 1(9), 1-12.

Chang, S. E., & Ho, C. B. (2006). Organizational factors to the effectiveness of implementing information security management. Industrial Management & Data Systems, 106(3), 345-361.

Chun, H., Kim, J., Morck., R., & Yeung, B. (2007). Creative destruction and firm-specific performance heterogeneity. Journal of Financial Economics, 18(2), 64-128

Cooper, D. R., & Schindler, P. S. (2011). Business Research Methods. (11th ed.). New York: McGraw-Hill.

Costello, A. B. & Osborne, J. (2005). Best practices in exploratory factor analysis: four recommendations for getting the most from your analysis. Journal of practical assessment, research & evaluation, 10(7), 173-178.

Covin, J. G., & Lumpkin, G. T. (2011). Entrepreneurial orientation theory and research: Reflections on a needed construct. Entrepreneurship Theory and Practice, 35(5), 855-872.

Covin, J. G., & Slevin, D. P. (1988). The influence of organization structure on the utility of an entrepreneurial top management style. Journal of Management Studies, 25(3), 217-234.

Covin, J. G., & Slevin, D. P. (1991). A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory & Practice, 15(1), 7-24.

Covin, J. G., & Slevin, D. P. (2002). The entrepreneurial imperatives of strategic leadership. Oxford: Blackwell Publishers.

Crawford, J., Leonard, L. N. K., & Jones, K. (2011). The human resource’s influence in shaping IT competence. Industrial Management & Data Systems, 111(2), 164-183.

Davis, J. M. (2013). Leveraging the IT competence of non-IS workers: social exchange and the good corporate citizen. European Journal of Information Systems 22(4), 403-415.

Davis, J. M., Kettinger, W. J., & Kunev, D. G. (2009). When users are IT experts too: the effects of joint IT competence and partnership on satisfaction with enterprise-level systems implementation. European Journal of Information Systems 18(1), 26-37.

Dess, G. G., & Picken, J. C. (1999). Beyond productivity: How leading companies achieve superior performance by leveraging their human capital. New York: AMACOM.

Dibrell, C., Davis, P. S., & Craig, J. (2008). Fueling innovation through Information Technology in SMEs. Journal of Small Business Management, 46(2), 203-218.

Dojkovski, S., Lichtenstein, S., & Warren, M. J. (2007). Fostering Information Security Culture in Small and Medium Size Enterprises: An Interpretive Study in Australia. 15th European Conference on Information Systems (pp. 1560-1571). St. Gallen, Switzerland.

Dorf, R. C., Byers, T. H., & Nelson, A. J. (2011). Technology Ventures. From Idea to Enterprise. New York: McGraw-Hill.

Drucker, P. F. (2002). Innovation and entrepreneurship. Oxford: Butterworth-Heineman.

Farhanghi, A. A., Abbaspour, A., & Ghassemi, R. A. (2013). The Effect of Information Technology on Organizational Structure and Firm Performance: An Analysis of Consultant Engineers Firms (CEF) in Iran. Procedia - Social and Behavioral Sciences, 81(3), 644-649.

Fillis, I., & Wagner, B. (2005). E-business development: An exploratory investigation of the small firm. International Small Business Journal, 23(6), 604-634.

Fisher, R. A. (1926). The arrangement of field experiments. Journal of the Ministry of Agriculture of Great Britain, 33, 503-513.

Fraser, S. W., Conner, M. & Yarrow, D. (2003). Thriving in Unpredictable Times: A Reader on Agility in Health Care. Chichester: Kingsham Press.

Gans, J. S. & Stern, S. (2003). The product market and the market for ‘ideas’: commercialization strategies for technology entrepreneurs. Research Policy, 32, 333-350.

Gartner. (2010, January 21). Gartner Says Worldwide IT Spending To Grow 4.6 Percent in 2010. Retrieved from Gartner: http://www.gartner.com/newsroom/id/1284813

Graham, D. J. & Midgley, N. G. (2000). Graphical representation of particle shape using triangular diagrams: an Excel spreadsheet method. Earth Surface Processes and Landforms, 25(13), 1473-1477.

Hendrickson, D. (2009). The Business Value of Information Technology is Now a Competitive Differentiator. Chicago: IEEE Reliability Society.

Hesterberg, T. (2003). Bootstrap methods and permutation tests. New York: W. H. Freeman and Company.

Hindle, K. & Yencken, J. (2004). Public research commercialisation, entrepreneurship and new technology based firms: an integrated model. Technovation, 24, 793-803.

Institute of Certified Public Accountants of Kenya (ICPAK) (2015, 11 05). Top 100 Mid-sized Companies - What Top 100 is all about. Retrieved 12 07, 2016, from ICPAK: https://www.icpak.com/top-100-mid-sized-companies-what-top-100-is-all-about/

Israel, G. D. (2012, 06 12). Sampling: Determining sample size. Retrieved 05 13, 2013, from University of Florida IFAS Extension: http://edis.ifas.ufl.edu/pd006

Karimi, J., Somers, T. M., & Bhattacherjee, A. (2007). The role of information systems resources in ERP capability building and business process outcomes. Journal of Management Information Systems, 24, 221-260.

Kimwele, M., Mwangi, W., & Kimani, S. (2010). Adoption of Information Technology Security Policies: Case Study of Kenyan Small and Medum Entreprises (SMEs). Journal of Theoretical and Applied Information Technology, 18 (2), 1-11.

Kluge, J., Meffert, J., & Stein, L. (2000). The German road to innovation. The McKinsey Quarterly, 2(5), 99-105.

Kothari, C. R. (2009). Research Methodology: Methods and Techniques (5th ed.). New Delhi: New Age International.

Kroon, B., Voorde, K., & Timmers, J. (2013). High performance work practices in small firms: a resource-poverty and strategic decision-making perspective. Small Business Economics, 41(1), 71-91.

Kuratko, D. F., & Hodgetts, R. M. (2001). Entrepreneurship: A Contemporary Approach. Texas: Harcourt College Publishers.

Liang, T., You, J., & Liu, C. (2010). A resource-based perspective on information technology and firm performance: a meta analysis. Industrial Management & Data Systems, 110(8), 1138-1158.

Lumpkin, G.T. & Dess, G.G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172.

Lumpkin, G. T, & Dess, G. (2001). Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle. Journal of Business Venturing, 16(5), 429-451.

Madsen E. L. (2007). The significance of sustained entrepreneurial orientation on performance of firms - a longitudinal analysis.

Entrepreneurship and regional Development, 19(6), 185-204.

Makadok, R. (2001). Towards a Synthesis of the Resource-based and Dynamic-capability Views of Rent Creation. Strategic Management Journal, 22(5), 387-401.

Makumbi L., Miriti, E. K., & Kahonge, A. M. (2012). An Analysis of Information Technology (IT) Security Practices: A Case Study of Kenyan Small and Medium Enterprises (SMEs) in the Financial Sector. International Journal of Computer Applications (IJCA), 57(18), 33-36.

McAfee, A., & Brynjolfsson, E. (2008). Investing in the IT that makes a competitive difference. Harvard Business Review, 86, 98-107.

Mertens, D. M. (2010). Research & Evaluation in Education and Psychology: Integrating Diversity with Quantitative, Qualitative & Mixed Methods. London: Sage Publications.

Miller, D. (1983). The Correlates of Entrepreneurship in three Types of Firms. Management Science. 29(7), 770-791.

Montgomery, D. C., Peck, E. A., & Vining, G. G. (2001). Introduction to Linear Regression Analysis (3rd ed.). New York: John Wiley.

Morris, M. H. (1998). Entrepreneurial Intensity: Sustainable Advantages for Individuals, Organizations and Societies. Westport, CT: Quorum Books.

Morris, M. H., Kuratko, D. F., & Covin, J. G. (2008). Corporate entrepreneurship and innovation. Cincinnati, OH: Thomson/SouthWestern Publishers.

Muchiri, M., & McMurray, A. (2015). Entrepreneurial orientation within small firms: A critical review of why leadership and contextual factors matter. Small Enterprise Research, 2(1), 17-31.

Ndung’u, S. I. (2014). Moderating role of entrepreneurial orientation on the relationship between information security management and firm performance in Kenya. (Unpublished doctoral dissertation, Jomo Kenyatta University of Agriculture & Technology). Retrieved from http://ir.jkuat.ac.ke/handle/123456789/1577.

Ndung’u, S. I., Wanjau, K. L., Gichira, R., & Mwangi, W. (2014). Moderating Effect of Entrepreneurial Orientation on the Relationship between Human-Related Information Security Issues and Firm Performance in Kenya. Asian Academic Research Journal of Social Sciences & Humanities, 1(26), 311-334.

Ong, J. W., & Ismail, H. B. (2008). Sustainable Competitive Advantage through Information Technology Competence: Resource-Based View on Small and Medium Enterprises. Communications of the IBIMA, 1(7), 62-70.

Petti, C., & Zhang, S. (2011). Factors influencing technological entrepreneurship capabilities: Towards an integrated research framework for Chinese enterprises. Journal of Technology Management in China, 6(1), 7-25.

Petti, C., & Zhang, S. (2013). Technological entrepreneurship and absorptive capacity in Guangdong technology firms. Measuring Business Excellence, 17(2), 61-71.

Prahalad, C. K. & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79-91.

Ray, G., Muhanna, W. A., & Barney, J. B. (2005). Information Technology and the Performance of the Customer Service Process: A resource-based Analysis. MIS Quarterly, 29(4), 625-651.

Sarasvathy, S. D., & Venkataraman, S. (2011). Entrepreneurship as method: open questions for an entrepreneurial future. Entrepreneurship Theory and Practice, 35, 113-135.

Schiendel, D. E., & Hitt, M. A. (2007). Issues in Strategic Entrepreneurship. Strategic Entrepreneurship Journal, 9(3), 425-453.

Schumpeter, J. A. (1942). Capitalism, Socialism and Democracy. New York: Harper & Bros.

Shane, S., & Venkataraman, S. (2003). Guest editors’ introduction to the special issue on technology entrepreneurship. Research Policy, 32, 181-184.

Slevin, D. P., & Terjesen, S. A. (2011). Entrepreneurial orientation: Reviewing three papers and implications for further theoretical and methodological development. Entrepreneurship Theory and Practice, 35(5), 973-987.

Snedecor, G. W. & Cochran, W. G. (1967). Statistical methods (6th ed.). Ames, Iowa: Iowa State University Press.

Stam, W., & Elfring, T. (2008). Entrepreneurial orientation and new venture performance: The moderating role of intra- and extra- industry social capital. Academy of Management Journal, 51(1), 97–111.

Tabachnick, B. G., & Fidell, L. S. (2013). Using multivariate statistics. (6th ed.). Boston: Pearson.

Tang, J., Tang, Z., Marino, L. D., Zhang, Y., & Li, Q. (2008). Exploring an inverted U-shape relationship between entrepreneurial orientation and performance in Chinese ventures. Entrepreneurship Theory and Practice, 32(1), 219-239.

Vij S., & Bedi H. S. (2012). Relationship between entrepreneurial orientation and business performance: A review of literature, Journal of Business Strategy, 9(3), 17-31.

Wainwright, D., Green, G., Mitchell, E., & Yarrow, D. (2005). Towards a framework for benchmarking ICT practice, competence and performance in small firms. Performance Measurement and Metrics, 6(1), 39-52.

Wales, W., Gupta, V. K., & Mousa, F. (2011a). Empirical research on entrepreneurial orientation: An assessment and suggestions for future research. International Small Business Journal, 31(4), 357-383.

Wang, C. L. (2008). Entrepreneurial orientation, learning orientation, and firm performance. Entrepreneurship: Theory & Practice, 32(4), 635-657.

Wiklund, J. & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium sized businesses. Strategic Management Journal, 24, 1307–1314.

Wójcik-Karpacz, A. (2016). The Researchers’ Proposals: What is the Entrepreneurial Orientation? Managing Innovation and Diversity in Knowledge Society Through Turbulent Time (pp. 247-255). Timisoara, Romania: TIIM.

Yao, L. J., Sutton, S. G., & Chan, S. H. (2010). Wealth creation from information technology investments using the eva. Journal of Computer Information Systems, 50, 42-48.

Zehir,C., Muceldili, B., Akyuz, B., & Celep, A. (2010). The Impact of Information Technology Investments on Firm Performance in National and Multinational Companies. Journal of Global Strategic Management, 4(1), 143-154.

Zhang, K., Li, H., & Ziegelmayer, J. L. (2009). Resource or capability? A dissection of SMEs’ IT infrastructure flexibility and its relationship with IT responsiveness. Journal of Computer Information Systems, 50, 46-53.

Downloads

Published

2017-12-27

How to Cite

Ndungu, S., Wanjau, K., Gichira, R., & Mwangi, W. (2017). Moderating Role Of Entrepreneurial Orientation On The Relationship Between Information Technology Competence And Firm Performance In Kenya. International Journal of Professional Business Review, 2(2), 1–22. https://doi.org/10.26668/businessreview/2017.v2i2.59