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51 ENTREPRENEURIAL ORIENTATION AND BUSINESS PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES OF WESTERN PROVINCE IN SRI LANKA W.A.D.S. WIJETUNGE Department of Commerce and Financial Management Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka [email protected], [email protected] DR. M.D. PUSHPAKUMARI Department of Business Administration Faculty of Management Studies and Commerce University of Sri Jayewardenepura Sri Lanka [email protected] Abstract The economic growth of developing countries can be sustained by the expansion of private sector, as they are the engine of growth. Many scholars have argued that Entrepreneurial Orientation is one of the salient factors which contribute to the performance of SMEs. However, the recent literature provides contradictory findings about the relationship between Entrepreneurial Orientation and performance. Accordingly this study aimed at investigating the level of Entrepreneurial Orientation (EO) of owner(s)/manager(s) of SMEs and the relationship between EO and business performance of manufacturing SMEs in Western province. This study adopted deductive approach and used both descriptive and inferential statistical tools in analyzing the collected data. Findings revealed that the Entrepreneurial Orientation (EO) among owner/managers of manufacturing SMEs in Western province is at high level. Among the dimensions of EO, innovativeness shows high influence on business performance. Key words: Entrepreneurial Orientation, business performance, SMEs, innovativeness, economic growth
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52 Introduction Today SME sector spread worldwide plays a significant role in the economy (Philip, 2010 and Islam et al ., 2011). At present the vibrant SME sector is identified as engine of growth playing a significant role in economic growth, innovation, employment generation and poverty reduction (Stokes, 2003 and Prasad, 2004).According to the banking survey done by International Finance Corporation (IFC) in 2006/2007 of the SME Market, in Sri Lanka, SMEs constitute 80-90 percent of total establishments and 20 percent of industrial value added and around 70 percent of employment opportunities have been generated. Further the contribution of SME sector has been increased from 40 percent in 2010 to 52 percent in 2011(Ministry of Finance and Planning, Annual Report, 2011).Several factors influenced in the development of SMEs in Sri Lanka; shortage of capital, less infrastructure, labour intensive nature of the sector, potential to mobilize and divert financial resources in the economy, promote balanced regional development, nurtures entrepreneurial talents and play a complementary role to large industries through sub-contracting and facilitating the linkage between the formal and informal sector (Gamage, 2003). Thus as shown as above, are very important. Some of the entrepreneurial talents are described by Entrepreneurial orientation.
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  • Spring '14
  • Management, Correlation and dependence, Pearson product-moment correlation coefficient, Spearman's rank correlation coefficient, entrepreneurial orientation

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