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THE ASSUMPTION UNIVERSITY LIBRAll~
Determinants of SMEs' (Micro and Small Firms) Performance in the Context of Kyaing Tong, Eastern Shan State, Myanmar
Mr. Han Min Oo
A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Business Administration
Graduate School of Business Assumption University Academic Year 2013
Copyright of Assumption University
Thesis Title
By
Major
Thesis Advisor
Academic Year
Determinants of SMEs' (Micro and Small Firms) Performance in
the Context ofKyaing Tong, Eastern Shan State, Myanmar
Mr. Han Min Oo
General MBA
Assistant Professor Sirion Chaipoopirutana, Ph.D.
2013
The Graduate School of Business, Assumption University, has approved this thesis
as a partial fulfillment of the requirements for the Degree of Master of Business Administration in
General MBA.
Dean of the Graduate ~~~~~~~~~~~~~
School of Business
(Kitti Phothikitti, Ph.D.)
THESIS EXAMINATION COMMITTEE
~ ~ Chairman ~~~~~~~~~~~~~
(Assistant Professor Kriengsin Prasongsukarn, Ph.D.)
~1evi ~Thesis Advisor (Assistant Professor Sirion Chaipoopirutana, Ph.D.)
(Charnchai Athichitskul, Ph.D.)
II
ABSTRACT
In general, SMEs (micro and small firms) play significant role of national economic
and world trade. Besides, SMEs are exceptionally imperative in contributing economic
growth of all countries. In this study, the researcher intended to investigate the correlation
between entrepreneurial competencies, external factor, firm characteristics, location, market
orientation and the performance of SMEs in the area of Kyaing Tong, Myanmar.
In this research, survey method and self administered questionnaire have been applied
to collect the data from respondents. The target population of the present study was the
owners of SMEs who run their firms with less than 50 workers in the town of Kyaing Tong,
Myanmar. Although the sample size of the study was 400 respondents, only 331 participants
returned completed and usable questionnaires for this study. Non probability sampling
technique and SPSS (Statistical Package for Social Science) program were utilized in order to
collect and analyze the data for this research. Moreover, Pearson Correlation Coefficient
analysis tool was employed to test the hypotheses of the research.
In this study, the researcher has found supports for most of the research hypotheses.
Result of the study indicated that organizing competencies, strategic competencies,
commitment competencies, external factor, nature of firm, firm knowledge, location,
customer orientation, competitor orientation, inter-functional orientation play influential roles
and also have a positive impact on the performance of SMEs (micro and small firms) from
Kyaing Tong, Myanmar. Nevertheless, the results of four hypotheses reported that no
association has been found between opportunity competencies, relationship competencies,
conceptual competencies, size of firm and SMEs (micro and small firms) performance.
Furthermore, the findings of this study provided some useful and important
implications for the owners of SMEs from Kyaing Tong, Myanamar to understand the
correlation between independent variables and dependent variable which can assist them in
boosting their firm performance. The researcher also offered some suggestions or
recommendations for the owners, local authorities and policy makers of Kyaing Tong,
Myanmar. In addition, the discussions of some directions for future research were provided at
the end of the study.
III
ACKNOWLEDGMENTS
First and foremost, I thank to Almighty God for all of his blessings during this
project, for my opportunities for education and for the knowledge he has given me. I have
benefitted greatly by the many contributions of several people including family, friends, and
brilliant educators, would be an understatement.
It has been an amazing opportunity to work with Asst. Prof. Dr. Sirion
Chaipoopirutana, as my advisor. She is such a great example of what it means to be a hard
worker, to be dedicated and passionate about one’s career, and to influence students’ lives
and help them to succeed. I freely acknowledge the numerous hours Dr. Sirion has devoted in
helping and guiding me through my thesis. I sincerely thank her for her obvious desire to see
me grow and progress. I am impressed with her knowledge and grateful that she has been
very effective in teaching me and guiding me according to my needs. I have developed a
great deal of admiration and respect for her.
I also would like to take this opportunity to express my genuine appreciation and
gratitude to other members of my thesis committee: Asst. Prof. Dr. Kriengsin Prasongsukarn,
Dr. Aaron Loh, Dr. Charnchai Artitchitskul and Assoc. Prof. Wirat Sanguanwongwan for the
valuable suggestions, input, thoughtfulness, and time which they have put into helping me to
my thesis.
I am indebted to all the firms from Kyaing Tong, Myanmar which made it possible to
conduct my research.
I cannot express thoroughly my appreciation and gratefulness to my beloved parents
U Khin Maung Tun and Daw Natalina for the upbringing, love, strength, support and the best
education I have been able to gain through the years. My parents always support me to
acquire more knowledge. And I thank to my uncle Dr. Fr. Stephen Ano for supporting and
continuing to ask about my progress, giving me his wisdom and thoughts, and for being
genuinely interested in my work. Furthermore, I sincerely thank and recognize the
unconditional support I have received from my sibling, Me Nu Nu Tun and my girlfriend,
Htway Htway. Without their love, support, and patience I might not have been able to reach
this goal.
May Almighty God bless me to repay all of them.
Han Min Oo
IV
TABLE OF CONTENTS
Page No.
TITLE I
ABSTRACT II
ACKNOWLEDGEMENT III
TABLE OF CONTENTS IV
LIST OF TABLES VIII-XI
LIST OF FIGURES XII
CHAPTER I: Generalities of the Study
1.1 Introduction of the Study……………………………………………………………..…….1
1.1.1 SMEs definition………………………………………………………………..……2
1.1.2 SMEs (Global Overview)…..………………………..……………………..………3
1.1.3 SMEs in Myanmar ………………………………………………………………….5
1.1.4 SMEs in Kyaing Tong, Eastern Shan State………………………………….…...6
1.2 Research Objective………………………………………………………………………..…7
1.3 Statement of Problem …………………………………………………………………….…8
1.4 Scope of Research……………………………………………………….……………….…..9
1.5 Limitation of Research………………………………………………………..….………….9
1.6 Significant of the Study…………………………………………………..…..…...………..10
1.7 Definition of Terms……………………………………………………....…………….…..10
CHAPTER II: Review of Related Literature and Studies
2.1 Relevant Theories……………………………………………………….…………………14
V
2.1.1 Firm Performance…………………………………………………………………14
2.1.2 Entrepreneurial Competencies……………………………………...……………15
2.1.3 External Factor………………………………………………………………….…18
2.1.4 Firm Characteristics………………………………………………………………19
2.1.5 Location……………………………………………………………………………20
2.1.6 Market Orientation………………………………………………………..………21
2.2 Related Literature Review……………………………………...…………………………24
2.3 Previous Studies……………………………………………………………………………28
CHAPTER III: Research Framework
3.1 Theoretical Framework……………………………………………………………………31
3.2 Conceptual Framework……………………………………………………………………35
3.3 Research Hypotheses ………………………………………………………...……………36
3.4 Operationalization of the Variables………………………………………………………38
CHAPTER IV: Research Methodology
4.1 Method of Research Used…………………………………………………………………47
4.2 Respondents and Sampling Producers………………………………...…………………48
4.2.1 Population……………………………………………………………….…………48
4.2.2 Sampling Unit …………………………………………………………...…………51
4.2.3 Sampling Size …………………………………………………………..…………52
4.2.4 Sampling Producer……………………………………………………..…………53
4.3 Research Instrument/Questionnaire………………………………………...……………55
VI
4.4 Pretest ………………………………………………………………………………………58
4.5 Collection of data/gather procedures…………………………….………………………60
4.6 Statistical Treatment of Data……………………………………………………...………60
CHAPTER V: Presentation of Data and Critical Discussion of Results
5.1 Descriptive Analysis ……………………………………………………..…………....…...64
5.1.1 Descriptive Analysis for Demographic Factors ………………….…………….64
5.1.2 Descriptive Analysis of Mean and Standard Deviation……………………….70
5.2 Reliability Test………………………………….………………………………………….85
5.3 Hypothesis Testing………………………………………………………………………...86
CHAPTER VI: Summary of Findings, Conclusion and Recommendation
6.1 Summary of Findings……………………………….…………………………………….103
6.1.1 Summary of Demographic Factors…………………..………..………………..103
6.1.2: Summary of Hypotheses Testing……………………………….………………104
6.1.3: Discussion and Implications…………………………………….………………106
6.2 Conclusion………………………………………….……………………………………...110
6.3 Recommendation………………………………………………………………………….111
6.4 Further Study………………………………………………………………………………116
VII
Bibliography …………………………………………….…………………………………………………117
Appendix A………………………………………………….……………….………………….…130
Appendix B……………………………………………………………….………….…………….140
VIII
LIST OF TABELS
Page No.
Table 1.1: Definition of Business Size (AUS, US, EU)……………………,,,,,……………... 2
Table 1.2: SMEs Categorization in Myanmar ………………………………………………… 3
Table 1.3: Contribution of SMEs in EU-27, 2012 (estimates)……………….…………...…..4
Table 1.4: Registered Firms in Myanmar in 2004 ……………………………………………..6
Table 4.1: SMEs categorization in Myanmar ……………………………..…………………...51
Table.4.2: Questionnaire distribution ………………………………………..………………….54
Table 4.3: Summary of Questionnaire ……………………………………….………..……… 57
Table 4.4: The value of Reliability Analysis ……………………………………..…………... 59
Table 4.5: r-value and measure the strength of association ……………………….....………. 61
Table 4.6: Summary of Hypotheses Testing and Statistical Analysis ………………..………61
Table5.1: The analysis of demographic factors by using frequency and
percentage……………………………………….………………………………….65
Table 5.2: Analysis of parents’ own business by using
frequency and percentage…………………………..……………………………66
Table 5.3: Analysis of formal training received by using frequency and
percentage……………………………………………….……………………….…67
Table 5.4: Analysis of relevant work experience by using
frequency and percentage………………………………….………..…………….67
IX
Table 5.5: Analysis of business start-up experience by using
frequency and percentage.…………………….…………………………………68
Table 5.6: Analysis of average working hours spent by using
frequency and percentage……………………….….……………………………68
Table 5.7: The analysis of number of years of the business
by using frequency and percentage…………………………….………………69
Table 5.8: The analysis of full-time employee by using
frequency and percentage…………………………….…………..………………69
Table 5.9: The analysis of other businesses by using frequency
and percentage………………………………………….…………..………………70
Table 5.10: The analysis of opportunity competencies by using
average mean and standard deviation…………………….…….…...……………71
Table 5.11: The analysis of relationship competencies by
using average mean and standard deviation………….…..……...………………71
Table 5.12: The analysis of conceptual competencies by using
average mean and standard deviation………….…..……..……..…...…..………72
Table 5.13: The analysis of organizing competencies by using
average mean and standard deviation………….…..…..…..………..…..………73
Table 5.14: The analysis of strategic competencies by using
average mean and standard deviation………….…..……….……….…..………74
X
Table 5.15: The analysis of strategic competencies by using
average mean and standard deviation………….…..………...…………..………75
Table 5.16: The analysis of external factor by using average
mean and standard deviation………….…..……..……..…………..……..………76
Table 5.17: The analysis of nature of firm by using average mean
and standard deviation………….…..…..…..………………..…………....………77
Table 5.18: The analysis of size of firm by using average mean
and standard deviation………….…..……....………………..…………....………78
Table 5.19: The analysis of firm knowledge by using average
mean and standard deviation………….…..……..…..……………..…....………79
Table 5.20: The analysis of location by using average mean
and standard deviation………….…..……..………………....…………....………80
Table 5.21: The analysis of customer orientation by using
average mean and standard deviation………….…..……..….………....………81
Table 5.22: The analysis of competitor orientation by using
average mean and standard deviation………….…..……..…….……....………82
Table 5.23: The analysis of inter-functional orientation by
using average mean and standard deviation………….…….………....………83
Table 5.24: The analysis of smes’ (micro and small firms) performance
by using average mean and standard deviation………….…………....………84
XI
Table 5.25: Alpha Test………….……….........................................................................………85
Table 5.26: Correlation (r-value) and Interpretation.....................................................………86
Table 5.27: Correlation between opportunity competencies and firm performance………87
Table 5.28: Correlation between relationship competencies and firm performance…....…88
Table 5.29: Correlation between conceptual competencies and firm performance…..……89
Table 5.30: Correlation between organizing competencies and firm performance…......…90
Table 5.31: Correlation between strategic competencies and firm performance…......……91
Table 5.32: Correlation between commitment competencies and firm performance…..…92
Table 5.33: Correlation between external factor and firm performance…....................……93
Table 5.34: Correlation between nature of firm and firm performance….....................……94
Table 5.35: Correlation between size of firm and firm performance….........................……95
Table 5.36: Correlation between firm knowledge and firm performance…..................……96
Table 5.37: Correlation between location and firm performance…...............................……97
Table 5.38: Correlation between customer orientation and firm performance.............……98
Table 5.39: Correlation between competitor orientation and firm performance..........……99
Table 5.40: Correlation between inter-functional orientation and firm performance……100
Table 5.41: Summary of hypotheses testing…................................................................……101
Table: 6.1: Summary of demographic factors…............................................................……104
Table 6.2: Summary of hypotheses testing…...............................................................……104
XII
LIST OF FIGURES
Page No.
Figure 3.1: The Model of Market Orientation and ……………………………………..……32
Business Performance
Figure 3.2: The Model of Entrepreneurial Competencies ..........................................................33
on Small Firm Performance
Figure 3.3: The Model of the Effect of Location on …………………………………....………34
Performance of Small Firms
Figure 3.4: Conceptual Framework of the Effect of Entrepreneurial ………………....……...35
Competencies, External Factor, Firm Characteristics
and Location on SMEs’ (Micro and Small Firms) Performance
Figure 4.1: Location of Shan State, Myanmar ……………………………….………...………..49
Figure 4.2: Location of Kyaing Tong, Eastern Shan State, Myanmar ………………………..49
1
CHAPTER I
GENERALITIES TO THE STUDY
1.1 Introduction of the study
Generally, measuring the performance of firm is a kind of practice and has now
become extremely imperative for every organization regardless of whether they are private,
public, non government, government and etc to identify opportunities for improvement and
constraints. Trkman (2009) asserted that the requisite for measuring performance of the firm
is really paramount for every business in order to determine business success or failure
especially for entrepreneurial, micro and small firms. Measuring firm performance also
provides information and means to accomplish sustainable growth for business. Moreover, it
drives a company to the positive changes which can lead it to enhance the growth in dynamic
business environment. The evaluation of firm performance is commonly implemented for the
purpose of improvements such as to grab improvement opportunities within and outside the
company, to redesign proper improvement strategies or action plans, to obtain overall
business performance and capabilities improvements and to acquire competitive advantages
in the long run.
Hundreds of factors may affect the performance of a firm. Some researchers and
practitioners stated that chosen strategies and effective implementation of these strategies
influence firm performance, while the others argued that human resource management
practices are the determinants of firm performance. Factors affecting performance of a firm
are still controversial among academic researchers. Factors that influence firm performance
may also be mixed from one study to another depending on the elements such as different
context, different scope and so forth. Therefore, classifying the contributing factors to growth
and superior performance is indeed essential for all businesses. The aim of this study is to
explore the affecting factors on firm performance in the context of Kyaing Tong, Eastern
Shan State, Myanmar. However, this researcher will only focus on the independent variables
of present study namely entrepreneurial competencies, external factor, firm characteristics,
location and market orientation in this research.
2
Entrepreneurial competencies are the drivers of firm performance because the
competencies of owners fundamentally decide the success and failure of the firm as
suggested by Sanchez (2012) and Man et al. (2002). Man et al. (2002) categorized
entrepreneurial competencies into six major competency areas: (1) opportunity, (2)
organizing, (3) strategic, (4) relationship, (5) commitment, and (6) conceptual competencies.
Moreover, Minai and Lucky (2011) asseverated that external factor, firm characteristics in
term of (nature of firm, firm knowledge, size of firm) and location are also affected firm
performance. Additionally, market orientation in relation to customer orientation, competitor
orientation and inter-functional orientation has a strong relationship with the firm
performance according to (Mamat and Ismail, 2011). Hence, it is obvious that the dependent
variable which is firm performance has an association with independent variables which are
entrepreneurial competencies, external factor, firm characteristics, location and market
orientation. In this study, researchers chose to evaluate the performance of SMEs (micro and
small firms) from Kyaing Tong, Eastern Shan State.
1.1.1 Definition of SMEs
It is impossible to overlook the classification of micro and small firms while
discussing about SMEs. The classification of SMEs may differ in each country due to the
level of economic status differences between those countries. There are basically 2 to 5
criteria to identify size of business. One of the most common ways of classifying MSEs is the
number of staff employed by an enterprise. Generally, the firm operating with less than 10
workers can be considered as a micro enterprise. And the small enterprise is classified under
the circumstance of headcount between 11 to 50 employees. The following table 1.1 shows
the classification of enterprise by number of workers in Australia, America and European
Nation.
Table 1.1: Definition of business size
AUS US EU
Minute/Micro 1-2 1-6 <10
Small <15 <250 <50
3
Medium <200 <500 <250
Large <500 <1000 <1000
Source: http://en.wikipedia.org/wiki/Small_business, accessed on 23th March, 2013.
Moreover, there are four criteria which are horse power, number of employees, the
amount of capital invested and production value per annum in categorizing the size of
enterprise in Myanmar according to the Industrial Enterprises Law 1990. Nonetheless, the
current study only considers and takes account of the employees’ headcount in classifying
firm size because power (HP) used, capital outlay and production value per annum are
inapplicable or unrealistic for today’s business environment in Myanmar. Besides, SMEs in
this research will emphasize only on micro and small firms since there are very few firms
operating with more than 50 employees in Kyaing Tong. Hence, SMEs (micro and small
firms) in present study can be described as the firms with less than 50 staffs. The following
table 1.2 demonstrates classification of firms in Myanmar.
Table 1.2: SMEs categorization in Myanmar (Private Industrial Enterprises Law 1990)
Definition of Criteria Micro Small Medium Large
Power (HP) used Less than 3
Hp
3 to 25 26 to 50 Over 50
No of workers Less than
10
10 to 50 51 to 100 Over 100
Capital Outlay (Kyat million) Up to 1 Over 1 to 5 Over 5
Production Value per year
(Kyat million)
Up to 2.5 Over 2.5 to
10
Over 10
Source: Directory of Outstanding ASEAN SMEs 2011 (assessed on April 5, 2013)
1.1.2 SMEs (Micro and Small firms) Global Overview
The concept of these SMEs (micro and small enterprises) create terrific
opportunities and benefits for national economy has been existed since a long time ago
(Snodgrass and Biggs, 1996). SMEs (micro and small enterprises) are widely
acknowledged as contributors of economic growth in both developed countries and
4
developing countries in particular for the reasons of employment creation, contribution to
gross domestic product (GDP). Correspondingly, Schumacher (1973) claimed that micro
and small enterprises play a crucial role in the economic growth and poverty reduction of
all countries. Regardless of the most to the least developed countries across the world,
micro and small firms account for the highest percentage in term of number.
In the United States, SMEs (micro and small firms) provide employment for half of
private sector workforce. They contribute over 50 percent of the non-farm private GDP (US
department of Commerce; Kobe, 2007). Moreover, SMEs are the backbone of European
Union economy which accounted for 98.7 percent in 2012. Along with this, they contributed
over half of total employment and almost half to Gross Value Added (GVA). The following
table reveals the contribution of SMEs in European Union countries.
Table 1.3: Contribution of SMEs in EU-27, 2012 (estimates) Micro Small Medium Large Total
Number of Enterprises
Number 19,143,521 1,357,533 226,573 43,654 20,771,281
% 92.2 6,5 1,1 0,2 100
Employment
Number 38395819 26771287 22310205 42318854 129796165
% 29,6 20,6 17,2 32,6 100
Gross Value Added
EUR Millions 1307360,7 1143935,7 1136243,5 2591731,5 6179271,4
% 21,2 18,5 18,4 41,9 100
Source: Euro stat/National Statistics Offices of Member States/Cambridge
Econometrics/Ecorys (Annual report on small and medium-sized enterprises in the EU,
2011/12)
In contrast, SMEs’ (micro and small firms) contribution to manufacturing sector of
Japan, Taiwan (China) and Korea was nearly half of their total output in 1990 (UNCTAD
1998). Nabil (2001) affirmed that MSEs from Taiwan accounted for over 90 percent and
5
contributed more than 60 percent of total employment in 1993. SMEs (micro and small firms)
of ASEAN also provide domestic employment to almost 70 percent (Thitapha, 2003).
Moreover, Tybout (2000) mentioned that SMEs (micro and small firms) employ a huge
percent of workforce in developing economies which focus on the production of small-scale.
In Indonesia, micro firms which have less than 5 workers employ half of the Indonesian
workforce and small firms which have less than 20 workers employ two-thirds of workers
(Berry, Rodriguez and Sandee, 2002). Micro and small enterprises generate more than half of
overall employment in most Latin American countries (ILO, 2003). In addition, two research
papers highlighted that SMEs (micro and small firms) contribution to overall employment as
well as to the economic output of nation (Kantis, Angellini, and Koenig, 2004; Simmons,
2004). According to SMEDA (2002) the contribution of SMEs on Pakistan’s GDP is about
11 percent. Moreover, SMEs (micro and small firms) contribute around 31 percent of overall
GDP in the Dominican Republic (IDB, 1998). Furthermore, SMEs (micro and small firms)
from Kenya generate 13 percent of GDP in accordance with (Gamser, 2003; and Daniels,
1999).
1.1.3 SMEs in Myanmar
Myanmar was known as Burma in the past. The population of Myanmar is over 60
million. It is the second largest country in Southeast Asia after Indonesia. Although Myanmar
is blessed with a variety of natural resources, it can be considered as the least developed
country in the region as it has approximately 2.9 percent of growth rate per year (Asia
Development Bank, 2009). In accordance with the Ministry of Industry (1) Myanmar, there
were 33,863 registered small enterprises in 2004 which accounted for the largest percentage
in terms of number in Myanmar (Mandal, 2007 and Kyaw, 2008).
For the enterprises which operate with less than 10 workers, micro or cottage industries were
exempted from registration at that time. However, even small business alone contributed
around 80 percent of employment and 60 percent of the total output (Ministry of Industrial
(1) Myanmar, 2004; and Kyaw, 2008). Than (2007) affirmed that SMEs (micro and small
firms) in Myanmar play a vital role for Myanmar economy which account for nearly 90
percent of the industrial sector and over 90 percent of the manufacturing sector. Table 1.3
indicates the number of registered firms by the end of 2004 in Myanmar.
6
Table 1.4: Registered Firms in Myanmar in 2004
Category (Workers)
Number
Share (%)
Small (10-50)
33,863
78.0
Medium (50-100)
6,359
14.6
Large (100+)
3,213
7.4
Total
43,435
100.0
Source: Ministry of Industries (1) Myanmar.
1.1.4 SMEs (Micro and Small firms) in Kyaing Tong, Eastern Shan State
Shan State is a mountainous area and the largest State among seven States and seven
Divisions of Myanmar. Shan State is divided into three sub-states namely Northern, Southern
and Eastern State. Kyaing Tong is the main town of the Eastern Shan State. Although Kyaing
Tong is an important town of Eastern Shan State, the existing economic condition of the town
is slightly poor according to a government official (Myint, 2012). The majority of aborigines
are farmers, gardeners and some of them are micro and small business owners. Promoting
SMEs (micro and small firms) sector in Kyaing Tong is truly in need of assistance from both
local inhabitants and the nation as a whole. This is one of the reasons that motivate the
researcher to conduct this study. It is hope that this research paper may provide some useful
information for the development of SMEs in the context of Kyaing Tong.
As a whole, the role of SMEs (micro and small firms) is really important not only for
developed countries but also for developing countries. It is even more critical for the least
developed countries in particularly Myanmar. It can be conceptualized in such a way that
there is an association between development of the country and the performance of SMEs
(micro and small firms) since they contribute and offer employment, GDP and poverty
reduction. Thus, research relating to SMEs’ (micro and small firm) performance is a needy
topic because of the significant role they played from multiple dimensions in developing the
nation. Most importantly the researches on the various factors that affect micro and small
7
firm’s performance are essential since there are very few researches regarding to SMEs
(micro and small firms) in Southeast Asia. Furthermore, the present research would become
the first research in the context of Kyaing Tong. Therefore, the researcher believes that this
research paper will cater some ideas and information for the group or individual who involves
in the process of promoting SMEs (micro and small firms) in Myanmar.
1.2 Research Objective
The purpose of this research is to investigate the factors that influence the
performance of SMEs (micro and small firms) from Kyaing Tong, Myanmar. In this study,
the researcher will emphasize on the relationship between entrepreneurial competencies,
external factor, firm characteristics, location, market orientation and the performance of
micro and small firm. The objectives of the research are as follows:
1. To test the relationship between entrepreneurial competencies and SMEs (micro and
small firms) firm performance.
2. To examine the relationship between external factor and SMEs (micro and small
firms) firm performance.
3. To analyze the relationship between firm characteristics and SMEs (micro and small
firms) firm performance.
4. To conceptualize whether location influences SMEs (micro and small firms) firm
performance or not.
5. To evaluate the relationship between market orientation and SMEs (micro and small
firms) firm performance.
8
1.3 Statement of Problem
SMEs represent the majority of private sector businesses and they are the key players
in the Myanmar economy. The agreement upon the creation of trade bloc among ASEAN
countries in 2015 fosters Burmese SMEs (micro and small firms) promoting their products
and services quality in order to take advantage of the opportunities and survive in a new era.
The economic integration through trade liberalization and deregulation in the ASEAN urges
micro and small enterprises to analyze the strategies as well as the other factors which may
have an impact on the overall performance of their firms. Nowadays, most of the businesses
are striving to boost their performance by investing billions of capital budgets. The increase
of highly competitive of SMEs (micro and small firms) leads each firm to consider not only
the quality of services and products they provided but also the additional elements that may
influence the enterprise’s overall performance. It is therefore truly attractive to study the
critical factors that can facilitate commendable performance of SMEs (micro and small
firms). Kyaing Tong requires determining the level of its SMEs’ (micro and small firms)
performance upon the current situation due to some reasons, in particular, Kyaing Tong is
located in the notorious area (Golden Triangle which is one of the biggest opium producers in
the world) and is also one of the least developed towns in Myanmar.
This study is to classify and investigate the factors affecting SMEs (micro and small
firms) performance in Kyaing Tong, Myanmar. The followings are problem statements of the
research:
1. Is there a relationship between entrepreneurial competencies and SMEs (micro and
small firms) performance?
2. Is there a relationship between external factor and SMEs (micro and small firms)
performance?
3. Is there a relationship between firm characteristics and SMEs (micro and small firms)
performance?
4. Is there a relationship between location and SMEs (micro and small firms)
performance?
5. Is there a relationship between market orientation and SMEs (micro and small firms)
performance?
9
1.4 Scope of research
This paper is a descriptive research that determines what boosts the overall
performance of SMEs (micro and small firms) from Kyaing Tong, Myanmar. The
investigation will focus on the factors that influence SMEs’ (micro and small firms)
performance. As the researcher described in the conceptual framework, this study consists of
dependent variables and independent variables.
The independent variables are entrepreneurial competencies (which comprises of five
competencies such as opportunity, organizing, strategic, relationship, commitment and
conceptual), external factor, firm characteristics (which include nature of firm, firm
knowledge and size of firm), location and market orientation with three sub variable which
are customer orientation, competitor orientation and inter-functional orientation whereas the
dependent variables is the SMEs’ (micro and small firms) firm performance.
As the researcher aforementioned, SMEs in this study will only be micro and small
firms which operate their firms with less than 50 workers. It means that medium and large
firms are excluded from this study. Therefore, the population of this study is SMEs (micro
and small businesses) owners regardless of gender and age who did the registration of their
firms under the State government of Kyaing Tong, Myanmar and the research will be
implemented in the town of Kyaing Tong, Eastern Shan State, Myanmar. Moreover, the
researcher will utilize questionnaire survey (Likert Scale) as a key research instrument to
collect data. In this study, the researcher applied the research based on Sanchez (2012), Minai
and Lucky (2011) and Mamat and Ismail (2011).
1.5 Limitation of the Research
The research may have some limitations since this study emphasizes only on service
industry which the result cannot represent other industries. This study may not represent the
whole SMEs (micro and small) industry from Myanmar by the reason of dissimilar locations.
According to the limitations of finance and other relating factors, some of the criteria might
be absent.
Additionally, it is unachievable for the researcher to study all independent variables
that may affect firm performance due to time limitation of this research. Thus, the researcher
10
has decided to focus on examining the relationship between entrepreneurial competencies,
external factor, firm characteristics, location and market orientation and firm performance. In
addition, the factors affecting firm performance may change overtime because of the speedy
changes occurring in Myanmar. Hence, the outcomes of this research may not be generalized
for other period of times.
1.6 Significance of the Study
The contribution of this research is introducing participation into SMEs’ research.
This research will provide valuable information for micro and small enterprises’ owners. The
result of this study will prove the factors that influence the dependent variable which is micro
or small firm performance. The information from this research can also be useful for micro or
small firms’ owners in order to develop better strategies to be more competitive in the
industry.
Furthermore, SMEs’ (micro and small firms) owners can strengthen their existing
marketing plans and strategies through the results of this research. The results of this study
will assist the SMEs (micro and small firms) from Kyaing Tong in shaping their strategies to
enhance an overall admirable performance. Similarly, the researcher believes that this
research will provide the useful information for the local authorities and policy makers who
are striving to promote SMEs of Myanmar. The research will also offer some ideas for
individuals who are interested in initiating micro or small firm in the context of Kyaing Tong,
Myanmar. In addition, the study of micro and small firms’ performance would become the
first research in the context of Kyaing Tong. Finally, this study may contribute as a reference
for the future researches in relation to SMEs’ (micro and small firms) performance.
1.7 Definition of Terms
Kyaing Tong, Eastern Shan State, Myanmar
Shan State is the largest State of the 7 States and 7 Divisions of Myanmar in term of
land size and the State is generally divided into three sub-states (Northern, Southern and
Eastern Shan State). Kyaing Tong is the main town of Eastern Shan State, Myanmar.
11
SMEs (Micro and Small firms)
SMEs (micro and small firms) in this study represent the firms which are operating
with less than 50 employees (Private Industrial Enterprises Law 1990, Myanmar).
Firm performance
Porter (1980) defined good performance as the above-average rate of return sustained
over a period of years. In accordance with Wiklund (1999), firm performance consists of
measuring growth and profitability of the organization.
Entrepreneurial competencies
Man et al. (2002) defined that entrepreneurial competencies are the abilities of
entrepreneur such as high level of personality traits, skills and knowledge which can perform
a successful job.
Opportunity Competencies
Opportunity competencies are competencies related to recognizing and developing
market opportunities through various means (Man et al, 2002).
Relationship Competencies
Relationship competencies are competencies related to person-to-person or
individual-to-group-based interactions, e.g., building a context of cooperation and trust, using
contacts and connections, persuasive ability, communication and interpersonal skill (Man et
al, 2002).
12
Conceptual Competencies
Conceptual competencies are competencies related to different conceptual abilities,
which are reflected in the behaviors of the entrepreneur, e.g., decision skills, absorbing and
understanding complex information, and risk-taking, and innovativeness (Man et al, 2002).
Organizing Competencies
Organizing competencies are competencies related to the organization of different
internal and external human, physical, financial and technological resources, including team-
building, leading employees, training, and controlling (Man et al, 2002).
Strategic Competencies
Strategic competencies are competencies related to setting, evaluating and
implementing the strategies of the firm (Man et al, 2002).
Commitment Competencies
Commitment Competencies are the competencies which drive the entrepreneur to
move ahead with the business (Man et al., 2002).
External Factor
Mohd (2005) has defined external factor as factor that is capable of dictating the
failure and success of the entrepreneurial firms.
Firm Characteristics
Firm characteristics are just firm personalities or attributes that tend to define a firm
or tell us about the firm. Three major areas (nature of firm, firm knowledge and size of firm)
were categorized to represent firm characteristics in their study (Lucky 2012).
Nature of Firm
Nature of firm could mean type of firm (e.g marketing firm, service, advertising firm
etc) or the business the firm is into (Lucky, 2012).
13
Firm Knowledge
Owner’s adequate knowledge of the firm in order to effectively manage business
(Lucky, 2012)
Size of Firm
Size of firm (whether small, medium, or large) or the sector the firm belongs or
conducting its business (Lucky, 2012)
Location
Orloff (2002) defined location as economic situation, density of entrepreneur’s per
capita, composition of local communities etc.
Market Orientation
Narver and Slater (1990) defined market orientation as an organizational culture.
Customer Orientation
Narver and Slater (1990) defined that the heart of market orientation is its customer
focus. For companies to be customer oriented, they need to find out what customer needs are,
now and in the future, in order to create a value-added benefit (Slater and Narver, 1994).
Competitor Orientation
Narver and Slater (1990) defined that forms should understand and identify the short-
term strengths and weaknesses and long-term capabilities and strategies of both current and
future competitors.
Inter-functional Coordination
Every department has an important role to play in satisfying customers (Shapiro,
1988).
14
CHAPTER II
LITERATURE REVIEW
The chapter explains the theories and related literatures for various researchers in
relation to the current study which comprises three sections. The first section includes
defining theories and concepts of both dependent and independent variables. And the second
section in this chapter discusses the related literature review. In the last part, the previous
studies from different contexts or fields are discussed.
2.1 Theory
2.1.1 Firm Performance
Porter (1980) defined firm performance as the above-average rate of return sustained
over a period of years. Firm performance could mean the success level of the firm in the
market which operates. Performance of the firm could also be described as the ability of the
firm in creating commendable profit. According to Trkman (2009), regardless of the size of
the firm, firm performance evaluation is very crucial to monitor success or failure of the firm
as to take proper actions to ensure competitive advantage. By measuring firm performance,
company could identify its strengths and weaknesses and hence could set a mean to further
growth of the firm. The reasons of firm performance measurement normally takes place to
upgrade the extant performance in terms of seeking new opportunities internally or
externally, redesigning a better strategies or action plans, obtaining overall business
performance and capabilities improvements and acquiring sustainable growth in the long run.
The tools for measuring firm performance have always been controversial among
various researchers since there is the lack of universal tools for it. In some previous studies,
researchers used growth of the firm to measure firm performance (Brush and Vanderwerf,
1992; Chandler and Hanks, 1993; Fombrun and Wally, 1989; and Tsai et al., 1991). They
argued that measuring firm performance with its growth is more logical and accurate than
accounting or financial measurement. But some researchers measured firm performance by
using non-financial while the others measured by applying financial. In accordance with
Wiklund (1999), firm performance consists of measuring growth and financial performance
15
of the organization. As a matter of fact, considering only one measurement approach is
inadequate for firm performance. Thus, there is a requisite to take account not only financial
but also non-financial performance measuring as recommended by (Venkatraman et al.,
1986; and Panigyrakis et al., 2007). For that reason, researcher applied both growth and
profitability in current study.
2.1.2 Entrepreneurial Competencies
Hoffmann (1999) stated that there are numerous definitions for entrepreneurial
competencies in the literature. Bird (1995) defined entrepreneurial competencies as
fundamental characteristics namely traits, self-image, motives, social roles, skills and
knowledge that drive the growth of the organization. This is in line with Kiggundu (2002)
that “the total sum of entrepreneurs’ attributes such as attitudes, beliefs, knowledge, skills,
abilities, personality, expertise and behavioral tendencies needed for successful and
sustaining entrepreneurship”. Entrepreneurial competencies are the characteristics of
individual that contain attitude and behavior which provide the entrepreneur to accomplish
business success. According to Boyatzis (1982), self-image, motives, entrepreneurial traits,
behavior, skills, attitude and knowledge are involved in entrepreneurial competencies.
Moreover, Baum et al. (2001) defined entrepreneurial competencies as “individual
characteristics such as knowledge, skills, and/or abilities required to perform a specific job”.
Man and Lau (2005) affirmed in their study of entrepreneurial competencies that it can
basically be divided into two parts. The first part includes the elements relating to
entrepreneur’s background such as traits, personality, attitudes, self image, and social roles.
And the second part involves the components which can normally be learned from theory and
practice like skills, experience and knowledge.
Competencies are the keys to successful entrepreneurship. Man and Chan (2002)
stated since entrepreneurial competencies are considered as crucial components for business
growth and success, understanding on the nature and role of these competencies can have an
impact on the outcomes of business. Shane et al. (2003) asserted that competencies are
learnable through the system which involves input (antecedent of competence), process (task
or behavior that lead to competence) and output (achieving a standard of competence in the
field of functional). The recommendation from Man (2001) indicated that the factors to
16
measure entrepreneurial competencies are opportunity, relationship, learning, strategy,
conceptual, commitment and personal. In addition, entrepreneurial competencies can be
defined as the abilities of entrepreneur to perform the successful entrepreneurship or business
success. Iandoli (2007) defined entrepreneurial competencies as the capability of
entrepreneurs to face effectively a critical situation by making sense of environmental
constraints and by activating relational and internal specific resources. Some of the
components such as formal education, personal life, experience and career are the factors that
can strengthen entrepreneurial competencies (Brownell, 2006).
Furthermore, Boyatzis (1982) affirmed that entrepreneurial competencies are strongly
associated with managerial competencies. And the concept of entrepreneurial competencies is
related to performance of individual level. In accordance with Bird (1995), competencies are
behaviors and visible characteristics of entrepreneur. Behaviors are closer to performance
than other entrepreneurial characteristics such as traits and motivations (Herron and
Robinson, 1993; Gartner and Starr, 1993). The role of entrepreneurial competencies plays as
a link between individual level characteristics and firm level performance. Mitchelmore and
Rowley (2010) mentioned that the investigations of entrepreneurial competencies are
astonishingly limited. However, competencies in this research are defined as the total
capability of the entrepreneur to perform a job role successfully (Lau et al., 1998). The
studies and relevant literature of various researchers such as Adam & Chell, 1993; Baum,
1994; Chandler and Jansen, 1992; Chandler and Hanks, 1994; Durkan et al., 1993; Lau et al.,
1998; McClelland, 1987; Mitton, 1989; Snell and Lau, 1994) have been reviewed for this
study. The classification of entrepreneurial competencies into six major areas by (Man and
Lau, 2000) is applied in present study. These are opportunity competencies, organizing
competencies, strategic competencies, relationship competencies, conceptual competencies
and commitment competencies.
- Opportunity Competencies
Opportunity related competency is one of the most distinguishing competencies for
the entrepreneur. McClelland (1987) defined that to seek and take action on opportunities is
the critical competency for successful entrepreneurs. The ability to recognize and envision
taking advantage of opportunities are really crucial abilities for successful entrepreneurs
according to Chandler and Jansen (1992). These competencies are really important in the
17
process of entrepreneurship. It includes two main parts which are spotting the opportunities
and developing the opportunities.
- Relationship Competencies
The competencies relate to communication skills likewise interactions between
person-to-person and individual-to-group. In accordance with Man et al. (2002), this group of
competencies consists of cooperation and trust building, using business networks effectively,
persuasive ability, communication and interpersonal skill which are similar to the concept of
McClelland (1987) and Lau et al. (2000). Research findings revealed that the success of the
small firm depend mainly on the networks of business (Ramsden and Bennett, 2005; Ritter
and Gemunden, 2004). Possession of relationship competencies in communication,
persuasion and trust building abilities is really critical for entrepreneur. The effective usage of
contacts and networks is also important for both inside and outside of the firm.
- Conceptual Competencies
Conceptual competencies, the important competencies for entrepreneurial success are
sometime a bit hard to identify. These competencies group involves abilities such as
cognitive, analytical thinking, learning, decision making, problem solving, sustaining
temporal tension, innovating, coping with uncertainty and risk (McClelland, 1987; Bird,
1995). Man et al., 2002 articulated that conceptual competencies are a high level of
conceptual activities in relation to entrepreneur’s behaviors such as a shorter-term
perspective, resolving instant events, or requiring intuitive responses.
- Organizing Competencies
The concept of organizing competencies is slightly the same as managerial
competencies such as ability to lead, control, monitor, organize, and develop the external and
internal resources to ensure the firm’s capabilities in accordance with (Boyatzis, 1982).
McClelland (1987) suggested that to be able to keep efficient firm operation, high quality of
work, and monitoring should be the required competencies in managing various functional
areas. Chandler and Jansen (1992) also articulated the importance of managerial roles of an
entrepreneur in human competence.
18
- Strategic Competencies
Setting a direction for the whole firm is the major responsibility for every entrepreneur or
business owner. These competencies are really imperative for entrepreneurs to be able to set
the smart objective for their firms from a broader and long term perspective. Strategic
competencies include setting vision, mission, goal, objective, and strategies. Implementation
and evaluation of those are also some parts of strategic competencies. These actions are
generally taken and implemented by entrepreneurs, owner/managers for the purpose of firm’s
sustainable growth for instance; McClelland’s (1987) systematic planning, and Lau et al.’s
(2000) strategic planning competencies.
- Commitment Competencies
These competencies are compulsory in maintaining the effort of entrepreneur for the
business or particular aims. Basically, characteristics of successful entrepreneurs are diligent,
committing, determining dedicating, initiative and proactive orientation which is stated by
(Chandler and Jansen, 1992; McClelland, 1987). As a whole, commitment competencies are
the elements which force the entrepreneur to move ahead with the business.
2.1.3 External Factor
Many researchers described external factor in several ways. Mohd (2005) defined
external factor as the determinant which contributes to the success or failure of
entrepreneurial firms or entrepreneurs themselves. To be simply defined external
environmental factors, are the outside factors affecting the performance of the business
enterprises. Arowomole (2000) and Van De Ven (1993) stated that any entrepreneurship
research without external factor might be regarded as insufficient and inadequate.
Furthermore, external factor has a strong impact on entrepreneurial competencies and
performance (Arowomole, 2000; Kuratko and Hodgetts, 2004). The situations faced by
entrepreneurs in any economy can generally be defined as the external environment (Aldrich
et al., 1999). The survival and growth of the firm, the likelihood of additional venture start-
ups in that environment mainly rely on external environment (Colvin and Slevin, 1989).
External environment has been widely recognized as a critical component contributing firm
19
performance. Personality, attitudes and motivation of the entrepreneurs are also dependent on
environment (Gartner, 1985).
Some studies defined external factor as situation in the environment whereas the other
studies described it as the condition found in the entrepreneurial environment. It is
undoubtedly that external factor that plays a critical role in acquiring firm performance. Most
importantly in competitive and turbulent environment, external factor is commonly accepted
as the determinant of firm performance and survival. Analysis of external factor versus firm
performance by numerous studies can be found in the literature. Van de Ven (1993)
suggested that every research in the field of entrepreneurship should take account of the
external circumstances to be able to explain entrepreneurial process in a more appropriate
way. Moreover, Arowomole (2000) noted that the various factors driving external factor may
be the constraints or opportunities to entrepreneurs and thus can impact significantly on the
entrepreneurial competencies and entrepreneurs’ performance. Kuratko and Hodgetts (2004)
also articulated that entrepreneurial decisions are primarily influenced in direct or indirect
ways by external factors and consequently affect performance. According to Kader et al.
(2009), it is unfeasible to fully cover the multiple dimensions of external factor in a single
study. In order to ensure a fruitful outcome, it is really crucial sticking on a few dimensions
such as economic and environmental components rather than everything into one single
factor. Therefore, in this study, the researcher concentrates on economic and environmental
factors which are only some of the external factors mentioned in previous studies.
2.1.4 Firm characteristics
Firm characteristics are defined as firm personalities or attributes that tend to describe
a firm or tell us about the firm. Three major areas (nature of firm, firm knowledge and size of
firm) were categorized to represent firm characteristics in their study (Lucky, 2011). As
micro or small businesses owners are the heads of their particular enterprises, having a good
understanding of the firm’s nature, firm size and firm knowledge is very imperative for them
to manage their firms effectively (Lucky and Minai, 2011). Nature of firm could mean type
of firm (e.g marketing firm, service, advertising firm etc) or the business the firm is into
(Lucky, 2012). Along with this, he defined firm knowledge as owner’s adequate knowledge
in terms of customers, suppliers, employees and other stakeholders of the firm in order to
effectively manage business (Lucky, 2012). Moreover, the definition of size of firm defined
20
by Lucky (2012) was that (whether small, medium, or large) or the sector the firm belongs or
conducting its business. The most widely used measurement tool for firm size, number of
workers is applied in present study. Kimberley (1967) and Child (1973) affirmed that more
than 80 percent of academic researchers used number of employees in measuring firm size.
Wiklunda and Shepherd (2005) defined the characteristics of an entrepreneurial firm
as the one that engage in product market, innovation, undertakes somewhat risky ventures,
and is first to come up with proactive actions. Dean et al (2000) also reported that size affects
a firm’s marketing capabilities, attitudes, needs, practices etc which are important
determinants of firms’ performance and success. Size of firm reveals the size of an enterprise
in employment terms. The study of McMahon (2001) indicated that size of firm affects
significantly on firm performance and larger firm seems to have a better performance.
However, Dean et al. (2000) asserted that the association between firm size, which is one of
the elements of firm’s characteristics and entrepreneurial performance, is a debate in the field
of research.
Wiklunda and Shepherd (2005) noted that firms which are able to align certain firm
attributes with the characteristics seem to possess better performance. Failing to complete
such alignment in the firm may cause the bad consequences and finally be collapsed. Mohd
(2005) alleged that characteristics of firm are the key determinants of firm performance and
correspondingly can determine entrepreneurship development of the country. In order to
illustrate proportion of high performing firms, a limited number of configurations of firm and
environmental attributes can be used (Wiklunda and Shepherd, 2005).
2.1.5 Location
Orloff (2002) defined location as economic situation, density of entrepreneur’s per
capita, composition of local communities etc. Possibly the strategic location is the most
important factor of entrepreneurship and small business development of the business which
may involve availability of raw material, accessibility to business premises, good road
network, busyness of the area of the business etc (Ilian and Yasuo, 2005; Kala et al., 2010;
Yancy and Christian, 2010). Thus, definition of location can be described as nearness and
accessibility of the firm to raw materials, infrastructures, busyness of the location and
accessibility of location for the customers.
21
Ilian and Yasuo (2005) defined location as the selection mean of entering business
and observed location in relation to type that might be both local and international. Also,
Kala et al., (2010) defined location as choice of where a business is to be located (small,
medium and large cities or urban or rural locations). This definition is similar to Esteban,
Yancy and Christian (2010) that they defined it as the individual’s choice upon his or her
business location whether in the rural or urban center. Location has been widely recognized
as an indispensible component in shaping and determining the success, failure and
effectiveness of business activities and entrepreneurship (Lucky, 2011). Lucky and Minai,
(2011) argued in their studies that strategic location is very important for firms, policy
makers and entrepreneurs or business owners due to the key role it played in strengthening
the effectiveness of the firms. And Kala et al. (2010) also affirmed that strategic location of
the local firms support and aid them in accomplishing not only goals but also sustainable
growth of their firms. Furthermore, Orloff (2002) recognized the key role of location in
entrepreneurship with his studies evidence. According to Greening, Barringer, and Macy
(1996), although most of the studies neglect the important role of location in their researches,
it is undoubtedly the crucial factor impacting firm performance.
2.1.6 Market Orientation
There exist numerous definitions of market orientation which have been defined by
various researchers. Narver and Slater (1990) stated that market orientation can generally be
defined as organizational culture that concentrates on the value creation for customers which
was similar to Deshpande and Webster (1989) who conceptualized and stated that market
orientation is an organizational culture that practices customer based approach in planning.
Nonetheless, they went for the further argument that emphasizing only on customers may not
be adequate, the need of focusing on rivals also has to take under consideration in market
orientation. Narver and Slater (1990) also described in their studies that competitor
orientation as well as inter-functional coordination are similarly as essential as customer
orientation. Inter-functional coordination is the effective and efficient collaboration across the
entire organization to achieve the objectives. Conversely, Soerensen (2009) reported his
opinions that market orientation elements which are customer and competitor orientation are
not equally important for the firms with different strategies in different business environment
which was similar to Lukas and Ferrell (2000), Day and Wensley (1988) who argued that it is
22
not true for every case for instance; depending on the firms’ chosen strategies (such as cost
leadership, differentiation and focus), the usage of resources may vary from one another.
In this study, researcher applied the concept of market orientation defined by Narver
and Slater (1990) that the market orientation contains three behavioral elements which are
customer orientation, competitor orientation and inter-functional orientation. Market oriented
firm can grab opportunities ahead of its competitors and hence build up customer loyalty
which may have a positive impact on firm performance by generating profitability and
market share. As the researcher aforementioned, the three components involving in the theory
of market orientation are equally important in investigating the effect on firm performance.
- Customer Orientation
Deshpande et al. (1993) defined that customer orientation is prioritizing the interest of
customers first. Generally, firms practicing customer orientation approach seem to process
the abilities of identifying, analyzing, understanding and answering customers’ needs.
Narver and Slater (1990) proposed their perception that putting emphasis to customers is the
key in market orientation. To be able to obtain benefit from value added creation,
considering short and long term needs and wants of its customers is central for customer
oriented firm (Narver and Slater, 1990; Slater and Narver, 1994). This concept is in line with
the perspective of (Kohli and Jaworski, 1990) that the first priority of the firms is to identify
needs of their customers and fulfill them. Nevertheless, Narver and Slater (1990) further
suggested that while fulfilling customers needs, there are some options on the other hand to
be selected by customer oriented firm that of improving quality, reducing cost of the products
or combination of these two alternatives. Focusing on service delivery and spending time
with the customers are the core task of customer oriented firms (Narver and Slater, 1994).
Customer orientation method may provide the firms with the information regarding the
customers by learning needs, perceptions and attitudes of target group.
- Competitor Orientation
Competitor orientation is another element included in market orientation. Narver and
Slater (1990) defined competitor orientation as having an understanding of competitors’
23
strengths and weaknesses and taking the appropriate actions to keep ahead of the competition.
Competitor oriented firms can identify and understand strengths and weaknesses of existing
or potential rivals in a short or long run (Narver and Slater, 1990). Sharing competitors’
information within the organization is the major responsibility for every staff in competitor
oriented firms and thus can generate benefits for them (Narver and Slater, 1994). Competitor
orientation is also really important in market orientation concept. Striving to gain competitive
advantage is the goal of competitor oriented firms.
- Inter-functional Coordination
Inter-functional coordination or orientation is one more component of market
orientation. Inter-functional orientation is defined as the cooperation and collaboration
between various departments in the organization to satisfy customers’ needs. The concept
comes from Shapiro (1988) who mentioned that market orientation idea is differ from
marketing orientation and it does not mean that marketing department plays the vital role.
Sensitivity, responsiveness and integration between all functions are a must in inter-
functional oriented firms. Narver and Slater (1990) defined that inter-functional coordination
is the coordination among all departments and the utilization of common resources in
creating a better values. Creating interdependent system for all functions is needed in inter-
functional oriented firms. Narver & Slater (1990) and Gatignon & Xuereb, (1997) asserted
that inter-functional coordination improves the communication and the system of exchanging
information between various departments. Therefore, inter-functional orientation is the
system which strengthens cooperation among different departments (Gatignon & Xuereb,
1997).
24
2.2 Related Literature Review
2.2.1 The Related Literature Review of Entrepreneurial Competencies and Firm
Performance
The performance of the micro or small firm is generally influenced by the
competencies of individual who plays the role as both owner and manager. Having the
knowledge of entrepreneurial competencies would offer means to ensure firm performance
for business owners. Ahmad et al. (2010) suggested that business owners from small and
micro firms should emphasize in developing their entrepreneurial competencies. They also
reported in their study that entrepreneurial competencies are determinants of business success
not only in stable environment but also under the circumstance of turbulence for Malaysian
small and medium enterprises. Moreover, this is synonymous to Man et al.’s (2002) finding
from their studies that business success is strongly influenced by the entrepreneurial
competencies. Positive or negative firm performance relies extremely on the competencies of
individuals who manage the firm (Zoysa and Herath, 2007). In addition, the study of
Mohamad et al., (2012) revealed that firm performance and entrepreneurial competencies are
positively related.
In order to ensure firm performance, the role of entrepreneurial competencies is very
important (Man et al., 2002). Numerous empirical studies reported that there is a strong
association between firm performance and entrepreneurial competencies. One of the findings
from Chandler and Jansen’s (1992) studies indicated that the correlation between firm growth
and entrepreneurial competencies is strong and positive. Chandler and Hanks (1994) also
affirmed that the growth of the firm and entrepreneurial competencies have a strong
relationship. Furthermore, Baum et al. (2001) and Sony and Iman (2005) confirmed in their
respective studies that entrepreneurial competencies have a significant and positive impact on
firm growth. The meaning of these entrepreneurial competencies affect significantly on firm
performance is that of the higher the owner’s entrepreneurial competencies, the better the
firm performance. Therefore, the owners of micro or small firms need to have
aforementioned competencies suggested by Man et al. (2002) which are opportunity
competencies, organizing competencies, strategic competencies, relationship competencies,
conceptual competencies and commitment competencies to ensure firm performance.
25
2.2.2 The Related Literature Review of External Factor and Firm Performance
External factors influence significantly on the performance of the firm and
entrepreneurial development in accordance with Van de ven (1993), Arowomole (2000),
Kuratko et al. (2004), Hashim (2005), Radiah, Mohd and Ab (2009), Covin and Slevin
(1991), Venkatraman and Prescott (1990) and Zahra (1993). Any research without
considering the effect of external factor in the field of entrepreneurship can be considered as
the research with low reliability or accuracy. External factors play a significant role in
enhancing firm performance particularly in unstable time. It can also provide the answers in
relation to failure and success of the firms.
According to Arowomole (2000), any factor involved in external variable could
generate opportunities or threats for entrepreneurs. Thus, it affects on the decisions of the
entrepreneurs and consequently on the firm performance (Arowomole, 2000). Moreover, the
idea was supported by Kuratko and Hodgetts (2004) that external factor influences
entrepreneur’s decisions and finally affects on the firm performance. Firms that exploit the
opportunities on the basic of current market knowledge performance better than firms those
exploit the opportunities on the basic of new market knowledge (Samundsson and
Dahlstrand, 2005). Wiklund et al. (2007) stated that the changes in politics, market, society
and technology create more opportunities for the firms to attain a better performance.
Furthermore, external environments have an impact on firm performance and growth (Pelham
& Wilson, 1996; Covin & Slevin, 1990; and Kolvereid, 1992).
2.2.3 The Related Literature Review of Firm Characteristics and Firm Performance
There exist a lot of studies which examine the relationship between firm
characteristics and performance of the firm. Mohd (2005) reported that firm characteristics
play a vital role in acquiring overall firm performance which was similar to (Dean, Bulent
and Christopher, 2000) that firm characteristics are crucial in determining performance and
success of the firms. A number of empirical studies documented that firm performance is
influenced by firm characteristics (Hashim, 2005; and Dean et al., 2000). And there is a
positive correlation between these two variables. The research done by (Lucky and Minai,
26
2011) found that firm characteristics in terms of the nature of firm, firm knowledge and size
of firm affect significantly on firm performance.
On the other hand, size of the firm, one component included in firm characteristics
affects performance and success of the firms in accordance with Dean, Bulent and
Christopher (2000). Moreover, Cubbin and Leech (1986) found the similar results in their
works and reported that the association between firm’s size and firm performance is positive.
In addition, Dobson and Gerrard (1989) also found a positive relationship between firm
performance and firm’s size in their studies. However, the relationship between firm
performance and size of firm is a debate among academic researchers and practitioners due to
the mixed findings occurred in that field.
2.2.4 The Related Literature Review of Location and Firm Performance
The choice to locate a firm in rural or urban area is really important for micro or small
businesses as the location basically affects on the performance of the firm. Urban and rural
locations vary in that of availability of resources and competition. Rural locations seem to
have low competition whereas urban locations may have high competition (Stearns, Carter,
Reynolds and Williams, 1995). According to Lucky and Minai (2011), the strategic location
of the business is the most important factor for micro and small businesses. Strategic location
means good road network, busyness of area, convenient and near to raw material and etc.
Orloff (2002) mentioned that location is the factor that should not be neglected because it
shapes the performance of the firm.
Greening, Barringer and Macy (1996) asserted that considering the important role of
location is imperative to attain a positive performance of the firm. And Kala et al. (2010)
have noted that there is a positive relationship between firm performance and firm’s location.
They further stated that the strategic location of the firm helps the firm to obtain positive
performance and strengthen in the area of firm’s sustainability. Additionally, Orloff (2002)
proved the positive effect of location on firm performance with his studies’ evidence.
27
2.2.5 The Related Literature Review of Market Orientation and Firm Performance
Market orientation is the organizational culture which drives firm to create value for
its customers for the purpose of enhancing a better firm performance (Narver and Slater,
1990). Three behavioral components (customer orientation, competitor orientation, and inter-
functional coordination) are involved in market orientation. In accordance with the several
empirical studies, the correlation between firm performance and market orientation seems to
have the mixed findings. Despite the fact that some researchers namely Jaworski and Kohli
(1990), Green et. al. (2008), Narver and Slater (1990) and Slater and Narver (1995) found the
positive relationship between firm performance and market orientation, the others failed to
accept positive correlation between these two variables in their studies (Diamantopoulos and
Hart, 1993; Han et. al., 1998; Greenley, 1995; and Harris, 2001). Nevertheless, most of the
researches’ findings highlighted the significant relationship between firm performance and
market orientation (Idar and Mahmood, 2011; Verhees & Meulenberg, 2004; and Bigne &
Blesa, 2003)
Over the past few years, the research topic of investigating association between
market orientation and firm performance has been popular among academic researchers.
Pulendran et al. (2000) have proved in their study that market oriented firms likely to have a
better performance than the firms those neglected market orientation concept. It is pretty
obvious that market orientation factor contributes the business success of the firms.
According to empirical studies, it also has a positive impact on the competitive position of the
firms (Deshpande & Farley, 1998; Deng & Dart, 1994; Kohli, Jaworski, and Kumar, 1993).
As the researcher mentioned before, the idea that market orientation influences firm
performance is mostly agreed among researchers, whereas there are still some constraints in
the literature itself. Regarding to the topic firm performance versus market orientation, total
of 29 researches were listed by (Singh, 2004) and found that 10 studies showed no
association between these two variables. Similarly, the same findings were reported in (Wong
and Sanders (1993) and Nwokah’s (2008) studies which were conducted under the context of
Japan and Nigeria.
28
2.3 Previous Study
Sarwoko et al. (2013) conducted the research to investigate the effect of
entrepreneur’s competencies and characteristics on performance of small and medium
enterprises. The study applied survey method to collected data from 147 owners in Malang
regency East Java Indonesia. The researchers used the Structural Equation Modeling in
analyzing collected data. The aim of the research was to empirically analyze the effect of
entrepreneurial competencies and characteristics on the performance of firm. The findings of
this research suggested that entrepreneurial competencies mediate the association between
firm performance and entrepreneurial characteristics whereas performance of the firm is
significantly affected by entrepreneurial characteristics. The researchers also found that
entrepreneurial competencies play a vital role in obtaining firm performance. The business
owner who has the higher entrepreneurial competencies can lead his/her firm to attain better
performance. Besides, the higher entrepreneurial characteristics of owner influence the firm
performance. High or low competencies of owner can classify with the entrepreneurial
characteristics. The findings of their study is consistent with the several previous studies
which suggested that the business small and medium enterprises’ owners are the key of the
firm performance (Lee and Tsang, 2001; Blackman, 2003; Solichin, 2005; Street and
Cameron, 2007; Zoysa and Herath, 2007; and Nimalathasanm, 2008). Solichin (2005) stated
that entrepreneurial characteristics influence the growth of the firm which is similar to
Nimalathasam (2008) that characteristics of entrepreneurs and business performance have
positive relationship. In relation to entrepreneurial competencies, Herron & Robinson (1993)
mentioned that owner’s experience, qualification, training received and family background
affect strongly on individual’s entrepreneurial competencies. These competencies also have
an impact on performance of the firm. Supporting this, Man et al. (2002) and Ahmad et al.
(2010) proved in their respective studies that entrepreneurial competencies have significant
influence on the business performance.
Asikhia (2010) studied the correlation between customer orientation and firm
performance to identify the relationship between these two variables and to examine the
moderating effect of marketing information system and managerial attitudes on the
association between firm performance and customer orientation among small and medium
enterprises from Nigeria. 222 participants who own small and medium businesses in Nigeria
29
involved in this research. Survey instrument and self administered questionnaire were used in
this study. The findings of the research indicated that the positive and strong relationship was
revealed between firm performance and customer orientation among Nigerian small and
medium enterprises. The outcomes of the study also highlighted that marketing information
system and managerial attitude also moderated the relationship between firm performance
and customer orientation. The results of the study provides valuable information for small
and medium firms from developing countries to be able to survive in dynamic business
environment and to develop competitive strategies which can drive the firm to accomplish
customer advantage. Moreover, the study pinpointed the important role of customer
orientation, marketing information system and managerial attitudes for small and medium
businesses in Nigeria to alleviate from failure.
Idar and Mahmood (2011) conducted the research among small and medium
enterprises in Malaysia aiming to test the relationship between firm performance and
entrepreneurial orientation and to find out the effect of market orientation on that
relationship. The researchers suggested that market orientation and entrepreneurial
orientation are the critical factors of small and medium enterprises in Malaysia. Survey
approach was applied in this study and questionnaires were distributed through email. The
target population of the research was the owners/managers of registered small and medium
enterprises from Malaysia. Although the total number of 2000 questionnaires was distributed
via the email, only 356 completed questionnaires were responded for this research.
Researchers discussed that the low response rate was due to the weakness of mail survey
method. Thus, the response rate was sufficient for this study. The questionnaire for this study
was adopted from the work of Covin and Slevin (1989) and Narver and Slater (1990). The
results of this study showed that both market orientation and entrepreneurial orientation have
a strong relationship with firm performance. Yet, market orientation mediates only to some
extent on the relationship between entrepreneurial orientation and firm performance. In order
to survive in the highly competitive environment, it is indispensable for firms to be
entrepreneurial and market oriented. Furthermore, the researchers recommended that
entrepreneurial oriented firms which attempt to sustain their firms ought to practice market
orientation to attain superior performance. Similarly, market oriented firms should integrate
entrepreneurial orientation approach to do so.
30
The study of Lucky (2012) investigated joint moderating effect of location and culture
on external factor, firm characteristics and individual determinants in Lagos, Nigeria. Cross
sectional study and survey method were utilized in this study. The researcher collected the
data from 182 entrepreneurs, owner/managers of small firms with the used of self-
administered questionnaires. The study tested the hypotheses by using regression analysis.
Entrepreneurs, owner/managers from service and manufacturing industries involved in this
study. The results of the research revealed that location and culture did not moderate the
association between firm characteristics, external factor and individual determinants.
Inconsistent findings were found in this study which was opposite to the result of (Hui et al.,
2009) that culture was an important moderator in his study. And the same outcomes were
indicated in the studies of Light (1980) and Carroll and Rhee (2000) who found that the
culture was insignificant in their studies. According to Okpara et al. (2007) and Sekeran et al.
(2001), the findings may vary from one another due to differences in context and culture.
Nevertheless, location moderated significantly in this research. Thus, the finding was in line
with the Orloff (2002) and Jennifer et al.’s (2000) results that location was a determinants of
firm performance. Reversely, the findings in the study of Lucky (2012) suggested that
location and culture should not be studied as jointly factors. Moreover, researcher stated that
entrepreneurs, owner/managers of small firms should consider individually in obtaining
superior firm performance. In addition, researcher mentioned that location and culture
contributed differently in acquiring performance of small firm.
Gow and Micheels (2012) did the research among the firms in beef industry to
investigate the effect of alternative market orientation strategies on firm performance. The
objective of the research was to analyze the importance of market orientation in the Illinois
beef industry. Survey method was applied in their study. The means of questionnaire
distribution was via the email. 269 beef producers responded with completed and usable
questionnaire. From findings of the research, the researchers suggested that firms should
consider the important role of customers as well as competitor rather than emphasizing on a
single factor. These findings indicated the similar results of Han et al. (1998) and Slater &
Narver’s (1995) works which reported that market orientation and innovation were the
drivers of firm performance. Market orientation approach is a very powerful tool for the firms
to observe opportunities incurred and to create value added for their customers. Tajeddini
(2010) affirmed in his study with Swiss hotels that the components of market orientation are
paramount.
31
CHAPTER III
RESEARCH FRAMEWORK
The chapter discusses the research framework which consists of theoretical
frameworks, the conceptual framework, research hypotheses and operationalization of the
variables. In order to develop the conceptual framework of this study, the researcher utilized
the three previous studies. The conceptual framework is a framework which was designed
and conceptualized for the specific needs of the study. The hypotheses were set to test the
relationship between each variable in the conceptual framework. Additionally, operational
variables is specified to present a clear picture of the research framework and all related
variables in this study.
3.1 Theoretical Framework:
In this study, the conceptual framework was developed by applying the concept of
three previous research models. The first model was created by Mamat and Ismail (2011)
with the title of relationship between market orientation and business performance. The study
emphasized on the three components of market orientation and small business performance.
And the second model has been developed by Sanchez (2012) which was about the study of
entrepreneurial competencies influence on small firm performance. The research aimed at
evaluating the relationship between entrepreneurial competencies, organizational capability,
competitive scope and small firm performance. Moreover, the third research model,
investigating the effect of location on performance of small firm was developed by Minai and
Lucky (2011). The research was conducted to find out association between individual
determinants, external factor, firm characteristics, location and small firm performance. The
followings are the details of these three research models.
32
Figure 3.1: The Model of Market Orientation and Business Performance
Source: Mamat, M., and Ismail, A., (2011) Market Orientation and Business Performance.
American International Journal of Contemporary Research, 1(3), 88-98.
Mamat and Ismail (2011) conducted the research under the topic of the relationship
between market orientation and business performance amongst Bumiputera furniture
entrepreneurs from Malaysia. Researchers implemented the study to expose what extend
Bumiputera manufacturers operated with a market-oriented perspective and how it affected
their business performance. The participants of this research were Bumiputera furniture
manufacturers, wholesalers and retailers from Kelantan, Malaysia. A total of 88 completed
questionnaires were returned and used to analyze this study.
The findings highlighted that there exists strong relationship between three
independent variables (customer orientation, competitor orientation, inter-functional
orientation) and dependent variable (business performance). Correspondingly, researchers
found that the association between business performance and customer orientation is medium
positive. Besides, competitor orientation and performance of the business are strongly and
positively correlated which means that competitor orientation is a driver of firm performance.
In addition, there is an average positive relationship between inter-functional orientation and
business performance. To be concluded, businesses which operated with the concept of
market orientation enhance a better business performance in Malaysia Bumiputera furniture
industry.
33
Figure 3.2: The Model of Entrepreneurial Competencies on Small Firm Performance
Source: Sanchez, J., (2012) The Influence of Entrepreneurial Competencies on Small Firm
Performance. Revista Latinoamericana de Psicología, 44(2), 165-177.
In respect to this research, Sanchez (2012) studied the influence of entrepreneurial
competencies on small firm performance. The aim of this research was to find out the
relationship between entrepreneurial competencies, organizational capability, competitive
scope and small firm performance. Conceptual framework of this study was developed based
on a theoretical frame of SME competitiveness Man et al. (2002) due to its
comprehensiveness. The research was implemented in Spain. And 450 business owners
participated in answering the questionnaires for this study.
Consequently, Sanchez (2012) found that entrepreneurial competencies play a vital
role in strengthening firm performance. In other words, those competencies affect firm
performance directly as well as indirectly. Besides, entrepreneurial competencies influence
strongly on both competitive scope and organizational capability. Organizational capability
also affects positively on firm performance whereas moderately on entrepreneurial
competencies. And it has positive contribution to competitive scope. In contrast, competitive
scope does not have an impact on the growth of business, yet it is a significant element of
performance such as relative and efficiency.
34
Figure 3.3: The Model of the Effect of Location on Performance of Small Firms
Source: Minai, S. M., and Lucky, O. E., (2011) The Conceptual Framework of the Effect of
Location on Performance of Small Firm. Asian Social Science, 7(12), 110-118.
The research paper posited location as a critical factor in the development of
entrepreneurial and business. One of the uniqueness of this study is that it is the first study to
treat location as a moderating variable in the relationship between entrepreneurial factors
(such as individual determinants, external factors and firm characteristics) and firm
performance. The research was performed by two researchers who are Minai and Lucky
(2011). The overall goal of the study is to provide imperative information about location
factor to the entrepreneurs and authorities in making decision regarding to their business and
entrepreneurial policies.
The data was collected from 182 entrepreneurs or business owners of both service and
manufacturing industries. Moreover, a cross-sectional approach was used in this study.
Minai and Lucky (2011) studied about the effect of location on performance of small firms.
Consequently, the findings pointed out that location strongly moderate the relationship
between both external factors and firm characteristics with firm performance. Additionally,
Individual Determinants, External Factor and Firm Characteristics impact strongly on Firm
Performance. Although location moderates significantly in relation to external factors, firm
characteristics and firm performance, it does not moderate the correlation between firm
performance and individual determinants.
35
3.2 Conceptual Framework
The conceptual framework of this research has been constructed based on the
previous studies and related theories to describe various variables affecting small firm
performance. In this study, researcher emphasized studying on independent variables namely
entrepreneurial competencies, external factor, firm characteristics, location, market
orientation and dependent variable small firm performance. The following is the conceptual
framework of this research.
Figure 3.4 Conceptual Framework of the Determinants of SMEs’ (Micro and Small Firms)
Performance
Entrepreneurial Competencies - Opportunity Competencies
- Relationship Competencies
- Conceptual Competencies - Organizing Competencies
- Strategic Competencies
- Commitment Competencies
Market Orientation
- Customer Orientation - Competitor Orientation - Interfuntional Coordination
H12, H13, H14
External Factors SMEs (Micro and
Small Firms)
Performance
Firm Characteristics
- Nature of Firm - Size of Firm
- Firm Knowledge
Location
H1, H2, H3, H4, H5, H6
H8, H9, H10
H7
H11
36
3.3 Research Hypothesis
The research hypotheses have been developed to investigate correlation among
various variables described in the conceptual framework. Zikmund (2003) suggested that the
objective of hypothesis is to test which one is correct. In order to answer the research
questions, the followings hypotheses were developed for this study.
Hypothesis 1
H1o: There is no relationship between entrepreneurial competencies in terms of opportunity
competencies and SMEs’ (micro and small firms) performance.
H1a: There is a relationship between entrepreneurial competencies in terms of opportunity
competencies and SMEs’ (micro and small firms) performance.
Hypothesis 2
H2o: There is no relationship between entrepreneurial competencies in terms of relationship
competencies and SMEs’ (micro and small firms) performance.
H2a: There is a relationship between entrepreneurial competencies in terms of relationship
competencies and SMEs’ (micro and small firms) performance.
Hypothesis 3
H3o: There is no relationship between entrepreneurial competencies in terms of conceptual
competencies and SMEs’ (micro and small firms) performance.
H3a: There is a relationship between entrepreneurial competencies in terms of conceptual
competencies and SMEs’ (micro and small firms) performance.
Hypothesis 4
H4o: There is no relationship between entrepreneurial competencies in terms of organizing
competencies and SMEs’ (micro and small firms) performance.
H4a: There is a relationship between entrepreneurial competencies in terms of organizing
competencies and SMEs’ (micro and small firms) performance.
37
Hypothesis 5
H5o: There is no relationship between entrepreneurial competencies in terms of strategic
competencies and SMEs’ (micro and small firms) performance.
H5a: There is a relationship between entrepreneurial competencies in terms of strategic
competencies and SMEs’ (micro and small firms) performance.
Hypothesis 6
H6o: There is no relationship between entrepreneurial competencies in terms of commitment
competencies and SMEs’ (micro and small firms) performance.
H6a: There is a relationship between entrepreneurial competencies in terms of commitment
competencies and SMEs’ (micro and small firms) performance.
Hypothesis 7
H7o: External factor does not affect SMEs’ (micro and small firms) performance.
H7a: External factor affects SMEs’ (micro and small firms) performance.
Hypothesis 8
H8o: Firm characteristic in term of firm’s nature is not associated with SMEs’ (micro and
small firms) performance.
H8a: Firm characteristic in term of firm’s nature is associated with SMEs’ (micro and small
firms) performance.
Hypothesis 9
H9o: Firm characteristic in terms of firm’s size is not associated with SMEs’ (micro and small
firms) performance.
H9a: Firm characteristic in terms of firm’s size is associated with SMEs’ (micro and small
firms) performance.
Hypothesis 10
H10o: Firm characteristic in terms of firm knowledge is not associated with SMEs’ (micro
and small firms) performance.
H10a: Firm characteristic in terms of firm knowledge is associated with SMEs’ (micro and
small firms) performance.
38
Hypothesis 11
H11o: Location does not influence SMEs’ (micro and small firms) performance.
H11a: Location influences SMEs’ (micro and small firms) performance.
Hypothesis 12
H12o: There is no relationship between market orientation relative to customer orientation
and SMEs’ (micro and small firms) performance.
H12a: There is a relationship between market orientation relative to customer orientation and
SMEs’ (micro and small firms) performance.
Hypothesis 13
H13o: There is no association between market orientation in terms of competitor orientation
and SMEs’ (micro and small firms) performance.
H13a: There is an association between market orientation in terms of competitor orientation
and SMEs’ (micro and small firms) performance.
Hypothesis 14
H14o: There is no correlation between market orientation in terms of interfunctional
orientation and SMEs’ (micro and small firms) performance.
H14a: There is a correlation between market orientation in terms of interfunctional orientation
and SMEs’ (micro and small firms) performance.
3.4 Operationalization of the variables
An abstraction must be made operational in order to be measured before the statistical
process and analytical result. An operational definition defines the characteristic of each
variable for research in order to measure the relationship and effects of the variables
(Zikmund, 1997). This section represents the operational of variables, concepts of variables,
operational components, and measurement of scale.
39
Variable Concepts of Variables Operational components Measurement
Scale
Entrepreneurial Competencies
Man et al. (2002) defined
entrepreneurial
competencies as the abilities
of entrepreneur such as high
level of personality traits,
skills and knowledge which
can perform a successful
job. Researchers classified
entrepreneurial
competencies into six
competency areas (1)
opportunity, (2) organizing,
(3) strategic, (4)
relationship, (5)
commitment, and (6)
conceptual competencies.
Interval Scale
Opportunity
Competencies
Competencies related to
recognizing and developing
market opportunities
through various means
(Man et al, 2002)
- Identify goods or services
customers want.
- Perceive unmet consumer
needs.
- Actively look for products
or services that provide real
benefit to customers.
- Seize high-quality business
opportunities.
Interval Scale
Relationship
Competencies
Competencies related to
person-to-person or
individual-to-group-based
interactions, e.g., building a
context of cooperation and
- Develop long-term trusting
relationships with others.
- Negotiate with others.
- Interact with others.
- Maintain a personal
Interval Scale
40
trust, using contacts and
connections, persuasive
ability, communication and
interpersonal skill (Man et
al, 2002).
network of work contacts.
- Understand what others
mean by their words and
actions.
- Communicate with others
effectively.
Conceptual
Competencies
Competencies related to
different conceptual
abilities, which are reflected
in the behaviors of the
entrepreneur, e.g., decision
skills, absorbing and
understanding complex
information, and risk-
taking, and innovativeness
(Man et al, 2002).
- Apply ideas, issues, and
observations to alternative
contexts.
- Take reasonable job-related
risks.
- Look at old problems in
new ways.
- Explore new ideas.
- Treat new problems as
opportunities.
Interval Scale
Organizing
Competencies
Competencies related to the
organization of different
internal and external human,
physical, financial and
technological resources,
including team-building,
leading employees, training,
and controlling (Man et al,
2002).
- Plan the operations of the
business.
- Keeps organization running
smoothly.
- Organize resources.
- Coordinate tasks.
- Supervise subordinates.
- Lead subordinates.
- Organize people.
- Motivate people.
- Delegate effectively.
Interval Scale
Strategic
Competencies
Competencies related to
setting, evaluating and
implementing the strategies
of the firm (Man et al,
- Determine long-term
issues, problems, or
opportunities.
- Aware of the projected
Interval Scale
41
2002). directions of the industry
and how changes might
impact the firm.
- Prioritize work in
alignment with business
goals.
- Redesign the department
and/or organization to
better meet long-term
objectives and changes.
- Monitor progress toward
strategic goals.
- Evaluate results against
strategic goals.
- Determine strategic actions
by weighing costs and
benefits.
Commitment
Competencies
Competencies that drive the
entrepreneur to move ahead
with the business (Man et
al, 2002).
- Dedicate to make the
venture work whenever
possible.
- Possess an extremely
strong internal drive.
- Commit to long-term
business goals.
Interval Scale
External Factor
Mohd (2005) has defined
external factor as factor that
is capable of dictating the
failure and success of the
entrepreneurial firms.
- Infrastructure and facilities
contribute to my business
performance
- The domestic economic
conditions contribute to my
business performance
- Government policy
contributes to my business
Interval Scale
42
performance
- The availability of raw
materials
- Supply contributes to my
business performance
- Power supply contribute to
my performance
*Firm
Characteristics
Firm characteristics are just
firm personalities or
attributes that tend to define
a firm or tell us about the
firm. Three major areas
(nature of firm, firm
knowledge and size of firm)
were categorized to
represent firm
characteristics in their study
(Lucky 2011).
Interval Scale
*Nature of Firm
Nature of firm could mean
type of firm (e.g marketing
firm, service, advertising
firm etc) or the business the
firm is into. (Lucky 2011)
- I consider my
product/service is very
unique in the market.
- I consider my
product/service is big well
accepted by the customers
due to the quality
- I found my product/service
strength is due to the
pricing
Interval Scale
*Size of Firm
Size of firm (whether small,
medium, or large) or the
sector the firm belongs or
conducting its business.
- I have full control of my
employees
- I have full control of my
finance
Interval Scale
43
(Lucky 2011) - I have full control of my
production process
*Firm Knowledge
Owner’s adequate
knowledge of the firm in
order to effectively manage
business. (Lucky 2011)
- I have adequate knowledge
to explain my customers
- I have adequate knowledge
to lead my employees
- I have adequate knowledge
of my suppliers
- I have adequate knowledge
of my creditors/debtors
- I have adequate knowledge
to distribute products or
services
- I have adequate knowledge
to operate my firm
- I have adequate knowledge
to market my products or
services
Interval Scale
Location
Orloff (2002) defined
location as economic
situation, density of
entrepreneur’s per capita,
composition of local
communities etc.
- My firm is located in the
busy area.
- My business location is
suitable in such a way that
it assists my firm to
perform at the level I
wanted.
- The electricity supply is
constant to aid my business
performance
- The good road network is
considered adequate
- The location is near from
technological reach
Interval Scale
44
- My firm is located near to
the source of raw
materials/suppliers
Market Orientation
Narver and Slater (1990)
defined market orientation
as an organizational culture.
Researchers posited market
orientation includes three
behavioral elements: 1)
customer orientation, 2)
competitor orientation and
3) inter-functional
orientation.
Interval Scale
Customer Orientation
Narver and Slater (1990)
defined that the heart of
market orientation is its
customer focus. For
companies to be customer
oriented, they need to find
out what customer needs
are, now and in the future,
in order to create a value-
added benefit (Slater and
Narver, 1994).
- We give close attention to
after-sales service.
- We constantly monitor our
level of commitment and
orientation to serving
customers’ needs.
- Our business objectives are
driven primarily by
customer satisfaction.
- We measure customer
satisfaction systematically
and frequently.
Interval Scale
Competitor Orientation
Narver and Slater (1990)
defined that forms should
understand and identify the
short-term strengths and
weaknesses and long-term
capabilities and strategies of
both current and future
- Our salespeople regularly
share information within
our organization
concerning competitors’
strategies.
- We rapidly respond to
competitive actions that
Interval Scale
45
competitors. threaten us.
- Top management regularly
discusses competitors’
strengths and strategies.
Inter-functional Coordination
Every department has an
important role to play in
satisfying customers.
(Shapiro (1988).
- Our managers understand
how everyone in our
business can contribute to
creating customer value.
- All of our business
functions (e.g.,
marketing/sales,
manufacturing, etc.) are
integrated in serving the
needs of our target markets.
- All the departments in our
company are responsive to
one another’s needs and
requests.
- Our top managers from
across the company
regularly visit our current
and prospective customers.
Interval Scale
SMEs (Micro and
Small Firms)
Performance
Porter (1980) defines good
performance as the above-
average rate of return
sustained over a period of
years.
- I recorded a commendable
nature of growth in sales
since in the last 2 years
- I recorded increment in
market share.
- Growth in profit in last 3
years
- Commendable profit after
tax on sales
- My over all business
Interval Scale
46
performance and success is
commendable
- I am quite satisfied with the
sufficient level of income
from my business and my
business size.
- I ensure that my business
income is sufficient for me
and my family
- I am concern with the
quality of life for myself
and for my family
- Profit is my top priority
- I am more concern about
the sustainability of my
business and its growth.
Note: ( * ) The definition of firm characteristics (nature of firm, firm knowledge and size of firm) was
provided by Dr. Lucky to the researcher through the email.
Esuh Ossai-Igwe Lucky, PHD
College of Business, University Utara Malaysia.
Tel: +60104617732, E-mail: [email protected]
47
CHAPTER IV
RESEARCH METHODOLOGY
This chapter covers research methodology comprising research method used,
respondents and sampling procedures, research instruments/ questionnaire, pretests,
collection of data/gather procedures and statistical treatment of data. There are four sub
sections under respondent and sampling procedures part which are population, sampling unit,
sample size and sampling procedures. Besides, the researcher divided research instrument
and questionnaire part into eight parts. Part one through part eight is demonstrated
sequentially: general information, entrepreneurial competencies, external factor, firm
characteristics, location, market orientation, firm performance and demographic. In sum, the
chapter explains how the research was implemented as well as how the data were collected
and analyzed.
4.1 METHODS OF RESEARCH USED
Descriptive research is applied in this study as the method of research used. The
meaning of descriptive research defined by Churchill (1999) was that it can be used to assess
the proportion of people in a specified population who behaves in a certain way. In order to
provide an image of a situation as it naturally happens, descriptive research has been
designed in accordance with (Burns and Grove, 2003). This is in line with (Gay et al., 2006
and Zikmund, 2004) that it expresses the characteristics of a population and phenomenon.
Accordingly, descriptive research method provides the answer regarding to what, when, who,
where and how questions (Gay et al., 2006).
Besides, the most popular method for generating primary data is a survey. Therefore,
the sample survey method is utilized in this research by distributing questionnaire to find out
the factors affecting micro or small firm performance in the context of Kyaing Tong, Eastern
Shan State, Myanmar. Pinsonneault and Kraemer (1993) defined a survey as a “means for
gathering information about the characteristics, actions, and opinions of a large group of
48
people” (p. 77). Moreover, surveys are inclusive in the types and number of variables that can
be studied, require minimal investment to develop and administer (Bell, 1996, p. 68). This is
in line with Zikmund (2003) who stated that survey technique itself provides less time,
inexpensive, efficient and accurate means of assessing information about the population.
Additionally, the researcher used self-administered questionnaire in collecting the
primary data. In accordance with Zikmund (2004), respondents need to complete questions
including in a self-administered questionnaire themselves rather than interviewers.
Furthermore, (Zikmund, 2004) suggested that the technique requires the clear and simple
written words rather than the skill of the interviewer. In this study, the questionnaire was first
developed in English and followed by Burmese translation. One of the linguistic from
Myanmar assisted in translating questionnaire to maintain the existing accuracy rate of each
question. Both of those versions are attached in Appendices A and B.
4.2 RESOPNDENTS AND SAMPLING PROCEDURES
4.2.1 TARGET POPULATION
The target population of the research is SMEs (small or micro business) owners who
run their firms with less than 50 subordinates from Kyaing Tong area, Eastern Shan State,
Myanmar. Shan State is the largest State of the 7 States and 7 Divisions of Myanmar in term
of land size which has an area of 60,155 square miles. It is a hilly plateau area surrounded by
the North-South valley of the Salween River. Moreover, Shan State is generally divided into
three sub-states (Northern, Southern and Eastern Shan State) (Figure 4.1).
On the other hand, Kyaing Tong is the largest town of Eastern Shan State and is
located in the area of golden triangle (the area which is infamous for opium production and
trafficking). It has an area of 12,000 square miles (Wyatt, 1982). Currently, Kyaing Tong is
considered as the core town in the Eastern Shan State of the Republic of the Union of
Myanmar. It is the most mountainous area with an average height from 5,000 feet to
maximum of 7,000 feet and it lies between two famous rivers which are the Mekhong and the
Salween (Scott, 1906). The location of Shan State and Kyaing Tong are revealed in figure 4.1
and 4.2.
49
Figure 4.1: Location of Shan State, Myanmar.
Source: http://en.wikipedia.org/wiki/Shan_State (assessed on April 5, 2013)
Figure 4.2: Location of Kyaing Tong, Eastern Shan State, Myanmar.
Source: https://maps.google.co.th/maps?hl=en&q=kyaing%20tong%20location&psj=1&bav
=on.2,or.r_qf.&bvm=bv.44770516,d.bmk&biw=1280&bih=699&um=1&ie=UTF8&sa=N&t
ab=wl (assessed on April 5, 2013)
Shan State
Kyaing Tong
Northern Shan
Southern Shan
Eastern Shan
50
Figure 4.2 presents the location of Kyaing Tong, Eastern Shan State, Myanmar. In the
past few years, Kyaing Tong was known as Keng Tung. Tung refers to the founder and Keng
Tung means walled city of Tung (Hess and Peter, 2007). According to the Siamese
(Thailand) history, this kingdom was known as Sawakamala. The capital of the kingdom was
Krung and also known as Kiang which was changed to be Keng and presently Kyaing
(Hallett, 1980). Since Kyaing Tong is located in the lower portion and very remote from the
commercial city of Myanmar (Yangon), the current economic situation of the town can be
considered as below average according to a government official (Myint, 2012).
There is a need to promote the existing economic status of Kyaing Tong to alleviate
from development related issues. The creation of opportunities which encourage SMEs’
expansion and growth are also really critical in this area. There is no dispute about that for all
countries in the world SMEs play a vital role for the growth of their economy. Likewise, the
role of SMEs is even more essential in the least developed countries as they mainly create job
opportunities and increase national productivity. SMEs offer both economic growth and
social benefits for the country in accordance with (Suzuki, 2001). Hence, this study can
contribute as part in promoting SMEs of Myanmar.
Potential respondents were enlisted through Kyaing Tong state commercial directory.
The researcher chose the target population because business owners are the brains of their
respective firms and also they are the people who play leadership role to ensure the growth
and profitability of their firms. The criterion for respondents in this research was that of
micro or small business owners who registered their business under the state government of
Kyaing Tong. The research emphasized only on micro and small businesses for this study.
There exist four criteria categorizing the private sector enterprises of Myanmar in
accordance with the Industrial Enterprises Law 1990. Those criteria are identified in term of
assess to electricity regarding to horse power, number of employees, the amount of capital
invested and production value per annum. The following table demonstrates SMEs
classification of Myanmar.
51
Table 4.1: SMEs categorization in Myanmar (Private Industrial Enterprises Law 1990)
Definition of Criteria Micro Small Medium Large
Power (HP) used Less than 3
Hp
3 to 25 26 to 50 Over 50
No of workers Less than
10
10 to 50 51 to 100 Over 100
Capital Outlay (Kyat million) Up to 1 Over 1 to 5 Over 5
Production Value per year
(Kyat million)
Up to 2.5 Over 2.5 to
10
Over 10
Source: Directory of Outstanding ASEAN SMEs 2011 (assessed on April 5, 2013)
The system of classifying SMEs in Myanmar is a bit more intricate than the system of
those in other countries. Myanmar categorizes SMEs with four criteria whereas most
countries in the region classified SMEs by exercising only one or two criteria. In general,
some limitations of the system can be perceived from the table in particularly which is the
scarcity of meeting four criteria at the same time can lead confusion in identifying the size of
enterprises. For example that an owner-driver of a taxi needs to invest average cost of 15
million kyat for one car in Myanmar. In that case, there is a question to be answered in
relation to size of the business whether it is large or small. When the business is measured by
the amount of capital invested, it is a large scale business. Yet, if it is measured by number of
workers, it is a micro business. Most importantly the system generates vagueness in
classifying the industrial types of SMEs for instance; whether manufacturing, whole or retail,
etc. Due to the above mentioned constraints, researcher applied only number of workers to
classify the size of business in this study.
4.2.2 SAMPLING UNIT
According to Zikmund (2004), sampling unit is defined as a single element or group
of elements subject to selection in the sample. Thus, in this research, the researcher elected
sample from the population mentioned above. The data were collected from owners of small
and micro firms who listed their firm under Kyaing Tong state government.
52
4.2.3 SAMPLE SIZE
There are many ways to determine the sample size. Israel as cited in Theeraphong
(2004) suggested using a census for a small population, imitating a sample size of similar
studies, applying formulas to calculate a sample size, and using published tables. The current
research selected to use the calculation method to determine by using a formula developed by
(McClave and Sincich, 2006).
The researcher applied calculation technique because of the unknown population in
the service industry of Kyaing Tong. The total numbers of micro and small service firms in
the town of Kyaing Tong cannot be identify due to the local authority’s refusal of providing
related information to researcher. The researcher also used the population proportion to
define the sample size in this study. As McClave and Sincich (2006) suggested, the
population portion is using to determine the sample size which with the unknown population
(McClave and Sincich, 2006)
According to the statistic formula, the researchers decided to use p and q values of 0.5
which can give the maximum pq value, and with a sampling error of 0.05 and a confidence
level of 95% in the calculation. It means there are 95 out of 100 samples will have true
population within the specific level of precision.
n = Z2 pq
E2
n =(1.96)2(0.5)(0.5)
0.052
= 384.16
Where:
n= Number of sample size
Z2= The square of the confidence interval in standard error units
p= Estimated proportion of success
q= (1-p) or estimated the proportion of failures
53
E2= The square of the maximum allowance for error between the true proportion and sample
proportion.
From the calculation result, the value should be rounded up for the more reliable
sample size which will be adequate enough to achieve reliability (McClave and Sincich,
2006). Therefore, the sample size of this study will be 400.
4.2.4 SAMPLING PROCEDURE
In this study, the researcher applied non probability sampling. Non probability
sampling is defined as a technique that the units of the sample are selected on the basis of
convenience or probability of any particular member of the population being chosen is
unknown (Zikmund, 2003). The researcher applied judgment sampling to be step 1, quota
sampling to be step 2 and convenience sampling to be step 3. Details are as follows:
Step 1. Judgment sampling or purposive sampling
Judgment sampling is a non probability sampling technique which an experience individual
selects the sample on the basic of his or her own judgment about some required attributes of
the sample members (Zikmund, 2000). In this study, the researcher set the target sampling as
the owners of micro and small firms who registered their firms with the local authority from
Kyaing Tog, Eastern Shan State, Myanmar (Figure 4.1, 4.2).
Step 2. Quota sampling
According to Zikmund (2004), quota sampling is applied to ensure that the sample
represents the various subgroups with pertinent characteristics in a population which the
exact extent of the researcher desires. Kyaing Tong is formed with five wards which are ward
no.1, no. 2, no.3, no.4, and no.5 respectively. Thus, researcher distributed 80 questionnaires
to each ward for this research. (Table. 4.2)
54
Table.4.2: Questionnaire distribution
No. Ward Number of questionnaire
1. Ward No. 1 80
2. Ward No. 2 80
3. Ward No. 3 80
4. Ward No. 4 80
5. Ward No. 5 80
Total 400
Source: Created by the author for this study
Step 3. Convenience Sampling
According to Zikmund (2003), convenience sampling is applied to gather information needed
for respective research by attaining people who are most convenient and available.
Correspondingly, Castillo (2009) also stated that convenience sampling is employed because
respondents are selected depending on convenient-accessibility. Numerous researchers use
convenience sampling to acquire a huge number of completed questionnaires with less cost
and time. In this research, the questionnaires were distributed directly to entrepreneurs and
small business owners who have wiliness answering questions. Face to face method was used
in distributing questionnaires. Along with this, the researcher roughly explained how to fill
out the questionnaire to eliminate possible misinterpretation.
4.3 RESEARCH INSTRUMENT/QUESTIONNAIRE
In this research, researchers used questionnaire as an instrument. The researcher will
collect the primary data from the entrepreneurs and small business owners from Kyaing
Tong, Eastern Shan state, Myanmar. The questionnaire has been designed based on
conceptual framework to evaluate the relationship between entrepreneurial competencies,
external factor, firm characteristics, location, market orientation and small firm. Davis (2005)
55
stated that the questionnaire method is widely used for business research to predict or analyze
large units of sample with a less cost and time.
The closed ended questions were used to limit the alternative opinions of the
respondents. It is really convenient for participants as it provides advantages of time and cost
(Zikmund, 2003). Moreover, Davis (2005) affirmed that closed ended questions are easy to
manage and collect the data. Besides, the researcher applied five points Likert scale for this
research because it is suitable for multi-variable analysis and attitude measurement according
to Fournier (1998) and Zikmund (2004). It is also very simple and easy for respondents to
express perception and attitude with the evaluation of their agreement or disagreement level
upon the statements provided in the questionnaire.
The questionnaire comprises of eight parts which are general information,
entrepreneurial competencies, external factor, firm characteristics, location, market
orientation, firm performance and demographic. All questions are exposed as follows:
PART 1: General Information
In this part, the participants were asked general information with closed ended
question type which includes 6 questions such as their parents’ business, relevant training,
relevant work experience, start-up experience, working hours spent on their businesses and
other businesses. The questions are adopted from Li (2009).
PART 2: Entrepreneur Competencies
The respondents will be asked to express entrepreneurial competencies in term of
opportunity competencies, relationship competencies, conceptual competencies, organizing
competencies, strategy competencies and commitment competencies. The total of 40
questions contain in this part. Researcher evaluated this part by using five points Likert scale
where strongly disagree = 1, disagree = 2, neither agree nor disagree = 3, agree = 4, strongly
agree = 5. It represents the degree of disagreement / agreement from very low to very high.
The questionnaire of this part is adopted from Li (2009).
56
PART 3: External Factor
In this part, the respondents will be asked to express their perception toward external
factor. There are 8 questions in this part. This part was measured by using five points Likert
scale where strongly disagree = 1, disagree = 2, neither agree nor disagree = 3, agree = 4,
strongly agree = 5. It represents the degree of disagreement / agreement from very low to
very high. The questions from this section are adopted from Lucky and Minai (2011).
PART 4: Firm Characteristics
The questions will generate respondents’ information regarding firm characteristics
which consists of nature of firm, firm knowledge and size of firm. In this section, the
respondents were provided with 14 questions. This section was investigated with the used of
five points Likert scale where strongly disagree = 1, disagree = 2, neither agree nor disagree
= 3, agree = 4, strongly agree = 5. It represents the degree of disagreement / agreement from
very low to very high. In this part, questionnaire is adopted from the work of Lucky and
Minai (2011).
PART 5: Location
The respondents will be asked to express attitude toward their firm location in this
part. There are 8 questions under the topic of location. All of those questions were measured
by using five points Likert scale where strongly disagree = 1, disagree = 2, neither agree nor
disagree = 3, agree = 4, strongly agree = 5. It represents the degree of disagreement /
agreement from very low to very high. The questionnaire is adopted from Lucky and Minai
(2011).
PART 6: Market Orientation
In this part, the respondents will be asked information in relation to market orientation
which contains customer orientation, competitor orientation and inter-functional orientation.
11 questions were used in this section. The researcher evaluated this part with five points
Likert scale where strongly disagree = 1, disagree = 2, neither agree nor disagree = 3, agree =
57
4, strongly agree = 5. It represents the degree of disagreement / agreement from very low to
very high. The questionnaire of Aaron et al. (2009) was adopted in this part.
PART 7: Firm Performance
This part will inquire information related to respondents’ firm performance. There are
10 questions. All questions were measured with the use of five points Likert scale where
strongly disagree = 1, disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree =
5. It represents the degree of disagreement / agreement from very low to very high. In this
section, questionnaire is adopted from the work of Lucky and Minai (2011).
PART 8: Demography
This part will take respondents’ demography which comprises of 4 questions which
are age, sex, ethnicity, qualification. According to Kotler and Armstrong (2004),
demographic represents the population in term of sex, age, occupation, income and others.
Table 4.3: Summary of Questionnaire
Part Variables Question No.
One General Information Q1 – Q8
Two
Entrepreneurial
Competencies
Opportunity competencies Q9 – Q12
Relationship competencies Q13 – Q18
Conceptual competencies Q19 – Q23
Organizing competencies Q24 – Q32
Strategic competencies Q33 – Q39
Commitment competencies Q40 – Q42
External Factor Q43 – Q48
Firm Characteristics
Nature of firm Q49 – Q51
Firm size Q52 – Q54
Firm knowledge Q55 – Q61
Location Q62 – Q67
58
Market Orientation
Customer orientation Q68 – Q71
Competitor orientation Q72 – Q74
Inter-functional orientation Q75 – Q78
Firm Performance Q79 – Q88
Three
Demographic
Factors
Age Q89
Sex Q90
Ethnicity Q91
Qualification Q92
Source: Created by the author for this study
4.4 PRETEST
Before using the questionnaire, the need to make pretest is essential to collect the data
from the respondents (Saunders, et al., 2000). Pretest provides the answers in relation to the
research questionnaire whether it is easy to interpret for respondents, valid, or reliable
(Remenyi et. al, 1998). Pretest is applied tracing errors detected in the questionnaire to ensure
that the questionnaire would be correctly interpreted by respondents what research wants to
receive from participants (Cooper and Schindler, 1998).
Reliability test was conducted by mean of Cronbach’s Alpha Coefficient and the
Statistic Package Social Science or SPSS was used to determine the reliability of
questionnaire (Zikmund, 2000). A minimum of 25 cases should be considered in
implementing the process of pretest (Vanichbancha, 2001). Hence, in processing pretest for
this research, the researcher distributed 50 sets of questionnaires to respondents from Kyaing
Tong, Eastern Shan State, Myanmar. The test of reliability was made based on the 5 main
variables which were entrepreneurial competencies, external factor, firm characteristics,
location, market orientation and small firm. The reliability coefficient (Alpha) from the
pretest was .860 which is more than .6 mean that the questionnaire could be considered as
reliable.
59
Reliability Test
Table 4.4: The value of Reliability Analysis
Variables Alpha Test(α-test)
Entrepreneurial Competencies
Opportunity competencies .682
Relationship competencies .903
Conceptual competencies .796
Organizing competencies .926
Strategic competencies .840
Commitment competencies .763
External Factor .781
Firm Characteristics
Nature of firm .898
Firm size .797
Firm knowledge .923
Location .899
Market Orientation
Customer orientation .888
Competitor orientation .890
Inter-functional orientation .880
Firm Performance .885
Table 4.4 indicates that the Cronbach’s alpha outcomes of this research instrument are
greater than 0.06. Therefore, all questions are treated as acceptable and reliable variables in
this study. The results revealed that the Cronbach’s alpha levels of entrepreneurial
competencies, external factor, firm characteristics, location, market orientation and
SMEs’(micro and small firms) performance were .818, .781, .873, .899, .886, .885,
respectively. Thus, the research instrument or the questionnaire designed is reliable to conduct
this research.
4.5 PROCEDURES OF DATA COLLECTION
According to Saunders et al., (2000), there exist two options which are primary and
secondary data in gathering data to achieve the objective of research. The researcher used not
only primary data but also secondary data to gather information needed for this study.
60
Saunders et al., (2000) defined primary data as information of respondents that
researcher collected for specific research project. Correspondingly, (Zikmund, 2003)
articulated that primary data is usually collect and composed first hand for specific studies
which is the same as (Churchill, 1999) that researcher generates the primary data for the
reason of evaluation at hand. The researcher collected the primary data by distributing self
administered questionnaire to 400 respondents who are micro or small business owners from
Kyaing Tong, Eastern Shan State, Myanmar. The researcher used face to face questionnaire
distributing technique and explained the questions to overcome misunderstanding of
questionnaire.
Churchill (1999) affirmed that the advantage of secondary data is that of cost and
time. Furthermore, the elucidation of (Zikmund, 2004) regarding secondary data was that
data are previously gathered and assembled for some researches or projects rather than the
one at hand. In this study, the researcher gathered secondary data through websites, various
academic journals, textbooks and articles to support the study of small business performance.
4.6 STATISTICAL TREATMENT OF DATA
After collecting the data with survey instrument questionnaire from respondents, the
researcher used a Statistical Package for Social Science (SPSS) to analyze the data that can
be separated into interpretation and hypothesis test. The researchers will focus on 2 data
analysis techniques to use in this research which are Descriptive statistics and Pearson
Correlation.
The descriptive analysis used to describe the percentage, distribution and frequency of
the demographic factors of respondents. The descriptive research objective is to describe a
personal characteristic of respondents which are sex, age, occupation, education level. The
descriptive information was transformed raw data by interpret, rearrange, ordering and
manipulate to make easy understanding (Zikmund, 2000).
The Pearson Correlation was used to analyze the hypothesis testing in this research.
Researchers can use Pearson Correlation technique to find relationship between variables
(Zikmund, 2003). The Pearson Correlation can measure the strength of a linear relationship
61
between 2 variables. The correlation coefficient (r-value) is in a range of +1.0 to -1.0. If the
value (r) = 1.0 is a perfect positive linear association. If the value (r) = -1.0 is a perfect
negative linear association but if the value (r) = 0 is no correlation. The level of strength
association between variables is shown in Table 4.4.
Table 4.5: r-value and measure the strength of association
r-value The strength of association
.81 to .99 Very strong positive relationship
.61 to .80 Strong positive relationship
.41 to .60 Moderate positive relationship
.21 to .40 Weak positive relationship
.01 to .20 Very weak positive relationship
0 No relationship
-.01 to -.20 Very weak negative relationship
-.21 to -.40 Weak negative relationship
-.41 to -.60 Moderate negative relationship
-.61 to -.80 Strong negative relationship
-.81 to -.99 Very strong negative relationship
The summary of the statistical hypothesis testing in this research is showed in Table 4.6.
Table 4.6: Summary of Hypotheses Testing and Statistical Analysis
H1o: There is no relationship between entrepreneurial competencies in term of
opportunity competencies and SMEs’ (micro and small firms) performance.
H1a: There is a relationship between entrepreneurial competencies in term of
opportunity competencies and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H2o: There is no relationship between entrepreneurial competencies in term of
relationship competencies and SMEs’ (micro and small firms) performance.
H2a: There is a relationship between entrepreneurial competencies in term of
relationship competencies and SMEs’ (micro and small firms) performance.
Pearson
Correlation
62
H3o: There is no relationship between entrepreneurial competencies in term of
conceptual competencies and SMEs’ (micro and small firms) performance.
H3a: There is a relationship between entrepreneurial competencies in term of
conceptual competencies and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H4o: There is no relationship between entrepreneurial competencies in term of
organizing competencies and SMEs’ (micro and small firms) performance.
H4a: There is a relationship between entrepreneurial competencies in term of
organizing competencies and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H5o: There is no relationship between entrepreneurial competencies in term of
strategic competencies and SMEs’ (micro and small firms) performance.
H5a: There is a relationship between entrepreneurial competencies in term of
strategic competencies and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H6o: There is no relationship between entrepreneurial competencies in term of
commitment competencies and SMEs’ (micro and small firms) performance.
H6a: There is a relationship between entrepreneurial competencies in term of
commitment competencies and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H7o: External factor does not affect SMEs’ (micro and small firms)
performance.
H7a: External factor affects SMEs’ (micro and small firms) performance.
Pearson
Correlation
H8o: Firm characteristic in term of firm’s nature is not associated with SMEs’
(micro and small firms) performance.
H8a: Firm characteristic in term of firm’s nature is associated with SMEs’
(micro and small firms) performance.
Pearson
Correlation
H9o: Firm characteristic in term of firm’s size is not associated with SMEs’
(micro and small firms) performance.
H9a: Firm characteristic in term of firm’s size is associated with SMEs’ (micro
and small firms) performance.
Pearson
Correlation
H10o: Firm characteristic in term of firm knowledge is not associated with
SMEs’ (micro and small firms) performance.
H10a: Firm characteristic in term of firm knowledge is associated with SMEs’
(micro and small firms) performance.
Pearson
Correlation
H11o: Location does not influence SMEs’ (micro and small firms) performance.
H11a: Location influences firm characteristics in term of firm’s nature and
Pearson
Correlation
63
SMEs’ (micro and small firms) performance.
H12o: There is no relationship between market orientation relative to customer
orientation and SMEs’ (micro and small firms) performance.
H12a: There is a relationship between market orientation relative to customer
orientation and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H13o: There is no relationship between market orientation in term of competitor
orientation and SMEs’ (micro and small firms) performance.
H13a: There is a relationship between market orientation in term of competitor
orientation and SMEs’ (micro and small firms) performance.
Pearson
Correlation
H14o: There is no relationship between market orientation in term of inter-
functional orientation and SMEs’ (micro and small firms) performance.
H14a: There is a relationship between market orientation in term of inter-
functional orientation and SMEs’ (micro and small firms) performance.
Pearson
Correlation
64
CHAPTER 5
DATA ANALYSIS
In order to give the answers regarding to the research questions and hypotheses, the
research findings are presented in this chapter. The researcher used Social Sciences (SPSS)
program to analyze 331 completed and usable questionnaires for the study. The chapter is
divided into three parts. The first part explains the descriptive analysis of respondents’
characteristics and variables. The second part involves Cronbach’s Alpha Test results which
show the reliability of all variables for current study. Testing the research hypotheses by
using inferential analysis will be the last part for this chapter.
5.1 Descriptive Analysis
In this study, the instrument of summarizing basic characteristics data is descriptive
statistical method. The calculation of the average, the frequency distribution and the
percentage distribution are the most common forms of summarizing the data (Zikmund,
2003). This section consists of two parts. The first part is descriptive analysis of the
demographic factors which include age, gender, ethnicity and educational background and
general information of the respondents as shown in the questionnaire part eight under the
demographic factors and part one. The second part is the descriptive analysis of the five
variables which comprise of entrepreneurial competencies, external factor, firm
characteristics, location, market orientation and SMEs’ (micro and small firms) performance
as aforementioned in the research framework.
5.1.1 Descriptive Analysis for Demographic Factors
According to Zickmund (2003), the reason for using descriptive analysis is to generally
summarize and analyze the basic statistical information of a sample. The general information
and demographic factors of the respondents who are the owners of SME (micro and small)
firms will be analyzed in this part. The information such as frequency and percentage
distributions of demographic factors and general information of this study is revealed as
follows:
65
Table5.1: The analysis of demographic factors by using frequency and percentage
Variables Frequency (f) Percentage (%) Age:
30 or less
31-40
41-50
51 or above
26
169
107
29
7.9
51
32.2
8.8
Gender:
Male
Female
210
121
63.4
36.6
Ethnicity:
Burmese
Shan
Chinese
Others
50
158
24
99
15.1
47.7
7.3
30
Educational Background
Primary
Secondary
Post-secondary or
Diploma
Bachelor's degree
Master’s degree
8
57
95
162
9
2.4
17.2
28.7
48.9
2.7
Total 331 100
66
Demographic information which includes age, gender, ethnicity and educational
background of respondents are shown in table 5. According to the table, the highest
percentage of participants’ age was 51 percent (169) raging from 31 to 40, while the others
were 32.2 percent (107) of respondents from 41 to 50, 8.8 percent (29) of those aged 51 and
above and 7.9 percent (26) of respondents from 30 or less, respectively.
Moreover, the table shows that male participants were more than female participants in
this study. There were 210 (or 63.4 percent) males, while the rest of respondents were 121 (or
36.6 percent) females who involved in this research.
In relation to ethnic group, the highest percent of the respondents was 47.7 percent (or
158) of Shan, and others were 30 percent (99) of which represents the rest of the ethnic
groups, 15.1 percent (50) of Burmese, and 7.3 percent (24) of Chinese, respectively.
In addition, the highest percentage for education level of respondents was bachelor
degree with the percentage of 48.9 (162). The second highest education level of participants
was high school or diploma with 28.7 percent (95), while the others were secondary, master
degree and primary with 17.2 percent (57), 2.7 percent (9) and 2.4 percent (8),
correspondingly.
Table 5.2: The analysis of parents’ own business by using frequency and percentage
Does/did your father/mother own a business
Frequency Percent Valid Percent Cumulative
Percent
Valid
yes 123 37.2 37.2 37.2
no 208 62.8 62.8 100.0
Total 331 100.0 100.0
As shown in Table 5.2, there were 62.8 percent (or 208) respondents who gave the
answer “no” to the question “does/did your father/mother own a business?” while 123
respondents or 37.2 percent chose “yes”.
67
Table 5.3: The analysis of formal training received by using frequency and percentage
any formal training
Frequency Percent Valid Percent Cumulative
Percent
Valid
management training
before starting this
business
20 6.0 6.0 6.0
technical training before
starting this business 39 11.8 11.8 17.8
management training after
starting this business 32 9.7 9.7 27.5
technical training after
starting this business 19 5.7 5.7 33.2
none 221 66.8 66.8 100.0
Total 331 100.0 100.0
Regarding the question of respondents’ formal training received, Table 5.3 indicates
that the highest percentage of respondents’ answered “none” with 66.8 percent (221) and the
second highest group 11.8 percent (39) chose that they received technical training before
starting this business. Furthermore, 9.7 percent (or 32) respondents selected that they went for
management training after starting their businesses, while 6 percent (or 20) and 5.7 percent
(or 19) respondents picked that they received management training before starting the
business and technical training after starting the business, respectively.
Table 5.4: The analysis of relevant work experience by using frequency and percentage
did you have any relevant work experience
Frequency Percent Valid Percent Cumulative
Percent
Valid
yes 128 38.7 38.7 38.7
no 203 61.3 61.3 100.0
Total 331 100.0 100.0
According to the Table 5.4, 61.3 percent (or 203) owners of SMEs’ (micro or small
firms) did not have any relevant work experience. Nonetheless, 38.7 percent (or 128) owners
described that they had relevant work experience.
68
Table 5.5: The analysis of business start-up experience by using frequency and percentage
Do you have business start-up experience prior to this business
Frequency Percent Valid Percent Cumulative
Percent
Valid
yes 78 23.6 23.6 23.6
no 253 76.4 76.4 100.0
Total 331 100.0 100.0
Table 5.5 shows that the majority of the respondents 76.4 percent (or 253) do not have
business start-up experience, whereas 23.6 percent (or 78) respondents have business start-up
experience.
Table 5.6: The analysis of average working hours spent by using frequency and percentage
hours per week spent on this business
Frequency Percent Valid Percent Cumulative
Percent
Valid
20 hours or less 8 2.4 2.4 2.4
21-40 hours 61 18.4 18.4 20.8
41-60 hours 193 58.3 58.3 79.2
more than 60 hours 69 20.8 20.8 100.0
Total 331 100.0 100.0
As indicated in Table 5.6, the largest group of respondents spends 41 to 60 average
working hours per week on their businesses with the percentage of 58.3 (or 193). Besides, the
second highest percentage of respondents working hours was 20.8 percent (or 69) of the 60 or
more and the others were 18.4 percent (or 61) of 21 to 40 and 2.4 percent (or 8) of 20 or less,
correspondingly.
69
Table 5.7: The analysis of number of years of the business by using frequency and percentage
Number of years of this business
Frequency Percent Valid Percent Cumulative
Percent
Valid
less than 5 years 78 23.6 23.6 23.6
5-10 years 179 54.1 54.1 77.6
11-15 years 46 13.9 13.9 91.5
more than 15 years 28 8.5 8.5 100.0
Total 331 100.0 100.0
According to Table 5.7, the highest percentage of the respondents 54.1 percent (or
179) answered that their businesses have been existing for 5 to 10 years, whereas 23.6
percent (or 78), 13.9 percent (or 46) and 8.5 percent (28) respondents responded less than 5
years, 11 to 15 years and more than 15 years in that order.
Table 5.8: The analysis of full-time employee by using frequency and percentage
Number of full-time employee
Frequency Percent Valid Percent Cumulative
Percent
Valid
4 persons or less 62 18.7 18.7 18.7
5-9 persons 182 55.0 55.0 73.7
10-20 persons 78 23.6 23.6 97.3
20-49 persons 9 2.7 2.7 100.0
Total 331 100.0 100.0
In terms of full-time employee, Table 5.8 shows that most of the respondents 55
percent (182) hire 5 to 9 employees whilst the other respondents 23.6 percent (or 78), 18.7
percent (or 62) and 2.7 percent (9) employ 10 to 20, 4 or less and 20 to 49 workers,
respectively.
70
Table 5.9: The analysis of other businesses by using frequency and percentage
do you also own other businesses
Frequency Percent Valid Percent Cumulative
Percent
Valid
yes 46 13.9 13.9 13.9
no 285 86.1 86.1 100.0
Total 331 100.0 100.0
Table 5.9 obviously shows that there were more respondents who do not own other
businesses than respondents who own other businesses apart from their current business with
the percentage of 86.1 percent (or 285) and 13.9 (or 46), respectively.
5.1.2 Descriptive Statistics of Determinants of SMEs’ (micro and small firms)
Performance by using Average Mean and Standard Deviation
In this part, the researcher designed the questionnaire in order to ask the respondents’
level of agreement on 6 variables which are entrepreneurial competencies, external factor,
firm characteristics, location, market orientation and SMEs’ (micro and small firms)
performance. The reason for this investigation is to analyze the significances between each
variable for this study. Besides, the researcher utilized mean measurement for all these
factors. All of the variables in this study were tested on a five points Likert scale ranging
from strongly disagree to strongly agree. These are as follows:
5 points Likert scale Descriptive rating
1 Strong Disagree
2 Disagree
3 Neither Agree nor Disagree
4 Agree
5 Strongly Agree
71
Table 5.10: The analysis of opportunity competencies by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
identify goods or services customers
want 331 4.31 .573
Perceive unmet consumer needs 331 4.13 .837
Actively look for products or
services that provide real benefit to
customers
331 4.28 .609
Seize high-quality business
opportunities 331 4.32 .597
Valid N (listwise) 331
As shown in Table 5.10, there are four questions under the opportunity competencies
which have mean scores in the range between 4.13 and 4.32. The highest average mean is
“Seize high-quality business opportunities” with a mean score of 4.32 whereas the lowest
average mean score is 4.13 which is “Perceive unmet consumer needs” and it also has the
highest standard deviation of .817. In addition, the lowest level of standard deviation is .573
for “Identify goods or services customers want”.
Table 5.11: The analysis of relationship competencies by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Develop long-term trusting
relationships with others. 331 4.37 .553
Negotiate with others. 331 4.36 .578
Interact with others. 331 4.32 .583
Maintain a personal network of
work contacts. 331 4.32 .592
Understand what others mean by
their words and actions. 331 4.17 .684
Communicate with others
effectively. 331 4.21 .611
Valid N (listwise) 331
72
As shown in Table 5.11, there are six questions under the relationship competencies
which have the mean score in the range between 4.17 and 4.37. The highest average mean is
“Develop long-term trusting relationships with others” with a mean score of 4.37 and the
standard deviation of this question is the lowest at .553. In contrast, the lowest average mean
score is 4.17 which represents the question of “Understand what others mean by their words
and actions” and it also has the highest standard deviation of .684.
Table 5.12: The analysis of conceptual competencies by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Apply ideas, issues, and
observations to alternative contexts. 331 4.10 .682
Take reasonable job-related risks. 331 4.10 .672
Look at old problems in new ways. 331 4.12 .675
Explore new ideas. 331 4.09 .621
Treat new problems as opportunities. 331 4.11 .620
Valid N (listwise) 331
According to Table 5.12, there are five questions under the conceptual competencies
which have mean score in the range between 4.09 and 4.12. The highest average mean is
“Look at old problems in new ways” with a mean score of 4.12 whereas the lowest average
mean score is 4.09 which corresponds to “Explore new ideas”. Moreover, the lowest standard
deviation is .620 for “Treat new problems as opportunities” while the highest standard
deviation is .620 for “Apply ideas, issues, and observations to alternative contexts”.
73
Table 5.13: The analysis of organizing competencies by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Plan the operations of the business. 331 4.11 .560
Keeps organization running
smoothly. 331 4.21 .484
Organize resources. 331 3.86 .576
Coordinate tasks. 331 3.78 .580
Supervise subordinates. 331 3.89 .553
Lead subordinates. 331 4.05 .583
Organize people. 331 3.82 .828
Motivate people. 331 4.22 .626
Delegate effectively. 331 3.88 .638
Valid N (listwise) 331
According to Table 5.13, there are nine questions under the organizing competencies
which have mean score in the range between 3.78 and 4.22. The highest average mean is
“Motivate people” with a mean score of 4.22 whereas the lowest average mean score is 3.78
for “Coordinate tasks”. Moreover, the lowest standard deviation is. 484 for “Keeps
organization running smoothly” while the highest standard deviation is .828 for “Organize
people”.
74
Table 5.14: The analysis of strategic competencies by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Determine long-term issues,
problems, or opportunities. 331 3.77 .623
Aware of the projected directions of
the industry and how changes might
impact the firm.
331 3.59 .798
Prioritize work in alignment with
business goals. 331 3.76 .772
Redesign the department and/or
organization to better meet long-term
objectives and changes.
331 3.77 .608
Monitor progress toward strategic
goals. 331 3.83 .598
Evaluate results against strategic
goals. 331 3.69 .764
Determine strategic actions by
weighing costs and benefits. 331 4.21 .621
Valid N (listwise) 331
According to Table 5.14, there are seven questions under the strategic competencies
which have mean scores in the range between 3.59 and 4.21. The highest average mean is
“Determine strategic actions by weighing costs and benefits” with a mean score of 4.21
whereas the lowest average mean score is “Aware of the projected directions of the industry
and how changes might impact the firm” with a mean score of 3.59. On the other hand, the
lowest standard deviation is “Monitor progress toward strategic goals” at a standard deviation
of .598 while the highest standard deviation is .798 for “Aware of the projected directions of
the industry and how changes might impact the firm”.
75
Table 5.15: The analysis of strategic competencies by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Dedicate to make the venture work
whenever possible. 331 4.23 .649
Possess an extremely strong internal
drive. 331 4.19 .700
Commit to long-term business goals. 331 4.39 .595
Valid N (listwise) 331
Based on the Table 5.15, there are three questions under the commitment
competencies which have mean scores in the range between 4.19 and 4.39. The highest
average mean is “Commit to long-term business goals” with a mean score of 4.39 whereas
the lowest average mean score is “Possess an extremely strong internal drive” at the mean
score of 4.19. Moreover, the lowest standard deviation is “Commit to long-term business
goals” at a standard deviation of .595 while the highest standard deviation is .700 for
“Possess an extremely strong internal drive”.
76
Table 5.16: The analysis of external factor by using average mean and standard deviation
Descriptive Statistics
N Mean Std. Deviation
Infrastructure and facilities
contribute to my business
performance.
331 3.95 .688
The domestic economic conditions
contribute to my business
performance
331 4.04 .629
Government policy contributes to
my business performance. 331 3.97 .689
The availability of raw materials. 331 3.74 .859
Supply contributes to my business
performance. 331 4.14 .525
Power supply contributes to my
performance. 331 4.11 .664
Valid N (listwise) 331
Based on Table 5.16, there are six questions under external factor which have mean
scores in the range between 3.74 and 4.14. The highest average mean is “Supply contributes
to my business performance” with a mean score of 4.14 whereas the lowest average mean
score is 3.74 for “The availability of raw materials”. Moreover, the lowest standard deviation
is “Supply contributes to my business performance” at a standard deviation of .525 while the
highest standard deviation is .859 for “The availability of raw materials”.
77
Table 5.17: The analysis of nature of firm by using average mean and standard deviation
Descriptive Statistics
N Mean Std. Deviation
I consider my product/service is very
unique in the market. 331 3.79 .643
I consider my product/service is big
well accepted by the customers due
to the quality.
331 3.87 .549
I found my product/service strength
is due to the pricing. 331 3.73 .608
Valid N (listwise) 331
Based on Table 5.17, there are three questions under the nature of firm which have the
mean scores in range between 3.73 and 3.87. The highest average mean is “I consider my
product/service is big well accepted by the customers due to the quality” with the mean score
of 3.87 whereas the lowest average mean score is 3.37 “I found my product/service strength
is due to the pricing”. Moreover, the lowest standard deviation is “I consider my
product/service is big well accepted by the customers due to the quality” at a standard
deviation of .549 while the highest standard deviation is .643 for “I consider my
product/service is very unique in the market”.
78
Table 5.18: The analysis of size of firm by using average mean and standard deviation
Descriptive Statistics
N Mean Std. Deviation
I have full control of my employees. 331 4.11 .708
I have full control of my finance. 331 4.28 .606
I have full control of my day-to-day
operation process. 331 4.20 .739
Valid N (listwise) 331
In accordance with the Table 5.18, there are three questions under the size of firm
which have average mean scores in the range between 4.11 and 4.28. The highest average
mean is “I have full control of my finance” with a mean score of 4.28 whereas the lowest
average mean score is 4.11 for “I have full control of my employees”. Moreover, the lowest
standard deviation is.606 for “I have full control of my finance” while the highest standard
deviation is .739 for “I have full control of my day-to-day operation process”.
79
Table 5.19: The analysis of firm knowledge by using average mean and standard deviation
Descriptive Statistics
N Mean Std. Deviation
I have adequate knowledge to
explain my customers. 331 4.05 .496
I have adequate knowledge to lead
my employees. 331 3.99 .556
I have adequate knowledge about
my suppliers. 331 3.95 .535
I have adequate knowledge about
my creditors/debtors. 331 4.08 .548
I have adequate knowledge to
distribute my products or services. 331 3.97 .485
I have adequate knowledge to
operate my firm. 331 3.94 .497
I have adequate knowledge to
market my product. 331 3.88 .557
Valid N (listwise) 331
In accordance with the Table 5.19, there are seven questions under the firm
knowledge which have average mean scores in the range between 3.88 and 4.08. The highest
average mean is “I have adequate knowledge about my creditors/debtors” with a mean score
of 4.08 whereas the lowest average mean score is 3.88 for “I have adequate knowledge to
market my product”. Moreover, the lowest standard deviation is .497 for “I have adequate
knowledge to distribute my products or services” while the highest standard deviation is .557
for “I have adequate knowledge to market my product”.
80
Table 5.20: The analysis of location by using average mean and standard deviation
Descriptive Statistics
N Mean Std. Deviation
My firm is located in the busy area. 331 3.80 .766
My business location is suitable in
such a way that it assists my firm to
perform at the level I wanted.
331 3.76 .704
The electricity supply is constant to
aid my business performance. 331 3.51 .748
The good road network is
considered adequate. 331 3.89 .566
The location is near to technological
reach. 331 3.65 .859
My firm is located near to the
source of raw materials/ suppliers. 331 3.60 .907
Valid N (listwise) 331
In accordance with the Table 5.20, there are six questions under location variable
which have average mean scores in the range between 3.51 and 3.89. The highest average
mean is “The good road network is considered adequate” with a mean score of 3.89 whereas
the lowest average mean score is 3.51 for “The electricity supply is constant to aid my
business performance”. Moreover, the lowest standard deviation is .566 for “The good road
network is considered adequate” while the highest standard deviation is .907 “My firm is
located near to the source of raw materials/ suppliers”.
81
Table 5.21: The analysis of customer orientation by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
We give close attention to after-sales
service. 331 3.59 .705
We constantly monitor our level of
commitment and orientation to
serving customers’ needs.
331 3.53 .723
Our business objectives are driven
primarily by customer satisfaction. 331 3.60 .674
We measure customer satisfaction
systematically and frequently. 331 3.34 .803
Valid N (listwise) 331
As indicated in the Table 5.21, there are four questions under customer orientation
variable which have average mean scores in the range between 3.34 and 3.60. The highest
average mean is 3.60 “Our business objectives are driven primarily by customer satisfaction”
whereas the lowest average mean score is 3.34 for “We measure customer satisfaction
systematically and frequently”. Moreover, the lowest standard deviation is .674 for “Our
business objectives are driven primarily by customer satisfaction” while the highest standard
deviation is .803 for “We measure customer satisfaction systematically and frequently”.
82
Table 5.22: The analysis of competitor orientation by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Our salespeople regularly share
information within our organization
concerning competitors’ strategies.
331 3.76 .739
We rapidly respond to competitive
actions that threaten us. 331 3.91 .664
Top management regularly discusses
competitors’ strengths and strategies. 331 3.60 .788
Valid N (listwise) 331
As indicated in the Table 5.22, there are four questions under the competitor
orientation variable which have average mean scores in the range between 3.60 and 3.91. The
highest average mean is 3.91 for “We rapidly respond to competitive actions that threaten us”
whereas the lowest average mean score is 3.60 for “Top management regularly discusses
competitors’ strengths and strategies”. Moreover, the lowest standard deviation is .664 for
“We rapidly respond to competitive actions that threaten us” while the highest standard
deviation is .788 for “Top management regularly discusses competitors’ strengths and
strategies”.
83
Table 5.23: The analysis of inter-functional orientation by using average mean and standard
deviation
Descriptive Statistics
N Mean Std. Deviation
Our managers understand how
everyone in our business can
contribute to creating customer
value.
331 3.82 .677
All of our business functions (e.g.,
marketing/sales, etc.) are integrated
in serving the needs of our target
markets.
331 3.56 .678
All the departments in our company
are responsive to one another’s needs
and requests.
331 3.50 .694
Our top managers from across the
company regularly visit our current
and prospective customers.
331 3.29 .787
Valid N (listwise) 331
As described in the Table 5.23, there are four questions under the inter-functional
orientation variable which have average mean scores in the range between 3.29 and 3.82. The
highest average mean is 3.82 for “Our managers understand how everyone in our business
can contribute to creating customer value.” whereas the lowest average mean score is 3.29 for
“Our top managers from across the company regularly visit our current and prospective
customers”. Moreover, the lowest standard deviation is 6.77 for “Our managers understand
how everyone in our business can contribute to creating customer value” while the highest
standard deviation is .787 for “Our top managers from across the company regularly visit our
current and prospective customers”.
84
Table 5.24: The analysis of SMEs’ (micro and small firms) performance by using average
mean and standard deviation
Descriptive Statistics
N Mean Std. Deviation
I recorded a commendable nature of
growth in sales since in the last 2
years.
331 3.37 .650
I recorded increment in market share. 331 3.43 .640
Growth in profit in last 3 years. 331 3.62 .801
Commendable profit after tax on
sales. 331 3.50 .689
My over all business performance
and success is commendable. 331 3.71 .687
I am quite satisfied with the
sufficient level of income from my
business and my business size.
331 3.49 .932
I ensure that my business income is
sufficient for me and my family. 331 3.62 .809
I am concern with the quality of life
for myself and for my family. 331 4.11 .418
Profit is my top priority. 331 3.76 .796
I am more concern about the
sustainability of my business and its
growth.
331 4.25 .488
Valid N (listwise) 331
As described in the Table 5.24, there are ten questions under the firm performance
orientation variable which have average mean scores in the range between 3.37 and 4.25. The
highest average mean is4.25 for “I am more concern about the sustainability of my business
and its growth” whereas the lowest average mean score is 3.37 for “I recorded a
commendable nature of growth in sales since in the last 2 years”. Moreover, the lowest
standard deviation is .418 for “I am concern with the quality of life for myself and for my
family” while the highest standard deviation is .932 for “I am quite satisfied with the
sufficient level of income from my business and my business size”.
85
5.2 Reliability Test
According to Sekaran (1992), the range of Alpha coefficient for describing the reliability
of factors is between 0 and 1 (Sekaran, 1992).The variable would be treated as acceptable or
reliable variable in case the alpha results limit at greater than or equal to 0.06 to. In this
section, the reliability test would be applied to test the credibility of each variable question
through SPSS.
Table 5.25: Alpha Test
Variable Cronbach’s Alpha No of Items
Entrepreneurial Competencies
Opportunity competencies
Relationship competencies
Conceptual competencies
Organizing competencies
Strategic competencies
Commitment competencies
.717 4
.845 6
.747 5
.784 9
.777 7
.771 3
External Factor .644 6
Firm Characteristics
Nature of firm
Firm size
Firm knowledge
.699 3
.771 3
.811 7
Location .635 6
Market Orientation
Customer orientation
Competitor orientation
Inter-functional orientation
.853 4
.627 3
.789 4
Firm Performance .781 10
From Table 5.12, the Cronbach’s alpha outcomes of this research instrument showed that
all the variables are greater than 0.06. Therefore, all questions are to be treated as acceptable
and reliable variable in this study. The results revealed that the Cronbach’s alpha levels of
86
entrepreneurial competencies, firm characteristics, and SMEs’(micro and small firms)
performance were .818, .760 and .781, respectively. For the market orientation, the alpha
value of all dimensions is between .789 and .853. The lowest value of alpha coefficient is .644
and .635 which interpreted reliability of external factor and location. It indicated that they
have a lower reliability when compare with the other variables. Overall, the researchers can
conclude that the questionnaire designed is reliable.
5.3 Hypothesis Testing
The results of hypotheses testing are shown in this part. Hypothesis testing is a
method to prove if the probability of given hypothesis is true by using statistic (Lind et al.,
2005). In this study, there are seven hypotheses which are related to both independent and
dependent variables based on the conceptual framework. In this section the researchers will
find the relationship or correlation between these variables by using Pearson Correlation
(Bivariate). The hypotheses testing results are revealed as follows:
Table 5.26: Correlation (r-value) and Interpretation
Correlation ( r-value) Interpretation
.81 to .99 Very strong positive relationship
.61 to .80 Strong positive relationship
.41 to .60 Moderate positive relationship
.21 to .40 Weak positive relationship
.01 to .20 Very weak positive relationship
0 No relationship
-.01 to -.20 Very weak negative relationship
-.21 to -.40 Weak negative relationship
-.41 to -.60 Moderate negative relationship
-.61 to -.80 Strong negative relationship
-.81 to -.99 Very strong negative relationship
The summary of the statistical hypothesis testing in this research is showed in Table 4.2
87
Correlation Coefficient for hypotheses testing
Hypothesis 1
H1o: There is no relationship between entrepreneurial competencies in terms of opportunity
competencies and SMEs’ (micro and small firms) performance.
H1a: There is a relationship between entrepreneurial competencies in terms of opportunity
competencies and SMEs’ (micro and small firms) performance.
Table 5.27: The analysis of the relationship between entrepreneurial competencies in term
of opportunity competencies and SMEs’ (micro and small firms) performance by using
Pearson product moment correlation coefficient.
Correlations
meanopp meanfm
Meanopp
Pearson Correlation 1 -.012
Sig. (2-tailed) .827
N 331 331
Meanfm
Pearson Correlation -.012 1
Sig. (2-tailed) .827
N 331 331
The result of Pearson correlation analysis in Table 5.27 indicates that the significance
is equal to .827 which is greater than .01 (.827>.01). It means that the null hypothesis (H1o)
was failed to reject. Therefore, there is no correlation between opportunity competencies and
SMEs’ (micro and small firms) performance at the .01 significant levels.
88
Hypothesis 2
H2o: There is no relationship between entrepreneurial competencies in terms of relationship
competencies and SMEs’ (micro and small firms) performance.
H2a: There is a relationship between entrepreneurial competencies in terms of relationship
competencies and SMEs’ (micro and small firms) performance.
Table 5.28: The analysis of the relationship between entrepreneurial competencies in
terms of relationship competencies and SMEs’ (micro and small firms) performance by using
Pearson product moment correlation coefficient.
Correlations
meanrel meanfm
Meanrel
Pearson Correlation 1 .106
Sig. (2-tailed) .054
N 331 331
Meanfm
Pearson Correlation .106 1
Sig. (2-tailed) .054
N 331 331
The result of Pearson correlation analysis in Table 5.28 indicates that the significance
is equal to .054 which is greater than .01 (.054>.01). It means that the null hypothesis (H2o)
was failed to reject. Therefore, there is no correlation between relationship competencies and
SMEs’ (micro and small firms) performance at the .01 significant levels.
89
Hypothesis 3
H3o: There is no relationship between entrepreneurial competencies in terms of conceptual
competencies and SMEs’ (micro and small firms) performance.
H3a: There is a relationship between entrepreneurial competencies in terms of conceptual
competencies and SMEs’ (micro and small firms) performance.
Table 5.29: The analysis of the relationship between entrepreneurial competencies in
terms of conceptual competencies and SMEs’ (micro and small firms) performance by using
Pearson product moment correlation coefficient.
Correlations
meanconp meanfm
Meanconp
Pearson Correlation 1 .012
Sig. (2-tailed) .825
N 331 331
Meanfm
Pearson Correlation .012 1
Sig. (2-tailed) .825
N 331 331
The result of Pearson correlation analysis in Table 5.29 indicates that the
significannce is equal to .825 which is greater than .01 (.825>.01). It means that the null
hypothesis (H3o) was failed to reject. Therefore, there is no correlation between conceptual
competencies and SMEs’ (micro and small firms) performance at the .01 significant levels.
90
Hypothesis 4
H4o: There is no relationship between entrepreneurial competencies in terms of organizing
competencies and SMEs’ (micro and small firms) performance.
H4a: There is a relationship between entrepreneurial competencies in terms of organizing
competencies and SMEs’ (micro and small firms) performance.
Table 5.30: The analysis of the relationship between entrepreneurial competencies in
terms of organizing competencies and SMEs’ (micro and small firms) performance by using
Pearson product moment correlation coefficient.
Correlations
meanorg meanfp
Meanorg
Pearson Correlation 1 .466**
Sig. (2-tailed) .000
N 331 331
Meanfp
Pearson Correlation .466** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.30 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H4o) was
rejected. Therefore, there is a correlation between organizing competencies and SMEs’
(micro and small firms) performance at the .01 significant levels.
Pearson’s Correlation .466 means that there is a moderate positive relationship
between organizing competencies and SMEs’ (micro and small firms) performance or it can
be concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
91
Hypothesis 5
H5o: There is no relationship between entrepreneurial competencies in terms of strategic
competencies and SMEs’ (micro and small firms) performance.
H5a: There is a relationship between entrepreneurial competencies in terms of strategic
competencies and SMEs’ (micro and small firms) performance.
Table 5.31: The analysis of the relationship between entrepreneurial competencies in
terms of strategic competencies and SMEs’ (micro and small firms) performance by using
Pearson product moment correlation coefficient.
Correlations
meanstg meanfp
Meanstg
Pearson Correlation 1 .397**
Sig. (2-tailed) .000
N 331 331
Meanfp
Pearson Correlation .397** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.31 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H5o) was
rejected. Therefore, there is a correlation between strategic competencies and SMEs’ (micro
and small firms) performance at the .01 significant levels.
Pearson’s Correlation .397 means that there is a weak positive relationship between
strategic competencies and SMEs’ (micro and small firms) performance or it can be
concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
92
Hypothesis 6
H6o: There is no relationship between entrepreneurial competencies in terms of commitment
competencies and SMEs’ (micro and small firms) performance.
H6a: There is a relationship between entrepreneurial competencies in terms of commitment
competencies and SMEs’ (micro and small firms) performance.
Table 5.32: The analysis of the relationship between entrepreneurial competencies in
terms of commitment competencies and SMEs’ (micro and small firms) performance by
using Pearson product moment correlation coefficient.
Correlations
meancom meanfm
Meancom
Pearson Correlation 1 .148**
Sig. (2-tailed) .007
N 331 331
Meanfm
Pearson Correlation .148** 1
Sig. (2-tailed) .007
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.32 indicates that the significance
is equal to .007 which is less than .01 (.007<.01). It means that the null hypothesis (H6o) was
rejected. Therefore, there is a correlation between commitment competencies and SMEs’
(micro and small firms) performance at the .01 significant levels.
Pearson’s Correlation .148 means that there is a very weak positive relationship
between commitment competencies and SMEs’ (micro and small firms) performance or it can
be concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
93
Hypothesis 7
H7o: External factor does not affect SMEs’ (micro and small firms) performance.
H7a: External factor affects SMEs’ (micro and small firms) performance.
Table 5.33: The analysis of the relationship between external factor and SMEs’ (micro and
small firms) performance by using Pearson product moment correlation coefficient.
Correlations
meanext meanfp
Meanext
Pearson Correlation 1 .424**
Sig. (2-tailed) .000
N 331 331
Meanfp
Pearson Correlation .424** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.33 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H7o) was
rejected. Therefore, there is a correlation between external factor and SMEs’ (micro and
small firms) performance at the .01 significant levels.
Pearson’s Correlation .424 means that there is a moderate positive relationship
between external factor and SMEs’ (micro and small firms) performance or it can be
concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
94
Hypothesis 8
H8o: Firm characteristics in terms of firm’s nature is not associated with SMEs’ (micro and
small firms) performance.
H8a: Firm characteristics in terms of firm’s nature is associated with SMEs’ (micro and small
firms) performance.
Table 5.34: The analysis of the relationship between firm characteristics in terms of firm’s
nature and SMEs’ (micro and small firms) performance by using Pearson product moment
correlation coefficient.
Correlations
meanfcnat meanfp
Meanfcnat
Pearson Correlation 1 .482**
Sig. (2-tailed) .000
N 331 331
Meanfp
Pearson Correlation .482** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.34 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H8o) was
rejected. Therefore, there is a correlation between firm’s nature and SMEs’ (micro and small
firms) performance at the .01 significant levels.
Pearson’s Correlation .482 means that there is a moderate positive relationship
between firm’s nature and SMEs’ (micro and small firms) performance or it can be concluded
that the two variables move to the same direction while the increase in one variable will lead
to increase in another variable.
95
Hypothesis 9
H9o: Firm characteristic in terms of firm’s size is not associated with SMEs’ (micro and small
firms) performance.
H9a: Firm characteristic in terms of firm’s size is associated with SMEs’ (micro and small
firms) performance.
Table 5.35: The analysis of the relationship between firm characteristics in terms of firm’s
size and SMEs’ (micro and small firms) performance by using Pearson product moment
correlation coefficient.
Correlations
meansiz meanfm
Meansiz
Pearson Correlation 1 .015
Sig. (2-tailed) .790
N 331 331
Meanfm
Pearson Correlation .015 1
Sig. (2-tailed) .790
N 331 331
The result of Pearson correlation analysis in Table 5.35 indicates that the significance
is equal to .790 which is greater than .01 (.790>.01). It means that the null hypothesis (H9o)
was failed to reject. Therefore, there is no correlation between firm’s nature and SMEs’
(micro and small firms) performance at the .01 significant levels.
96
Hypothesis 10
H10o: Firm characteristic in terms of firm knowledge is not associated with SMEs’ (micro
and small firms) performance.
H10a: Firm characteristic in terms of firm knowledge is associated with SMEs’ (micro and
small firms) performance.
Table 5.36: The analysis of the relationship between firm characteristics in terms of firm
knowledge and SMEs’ (micro and small firms) performance by using Pearson product
moment correlation coefficient.
Correlations
meanknw meanfm
Meanknw
Pearson Correlation 1 .492**
Sig. (2-tailed) .000
N 331 331
Meanfm
Pearson Correlation .492** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.36 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H10o)
was rejected. Therefore, there is a correlation between firm knowledge and SMEs’ (micro
and small firms) performance at the .01 significant levels.
Pearson’s Correlation .492 means that there is a moderate positive relationship
between firm knowledge and SMEs’ (micro and small firms) performance or it can be
concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
97
Hypothesis 11
H11o: Location does not influence SMEs’ (micro and small firms) performance.
H11a: Location influences SMEs’ (micro and small firms) performance.
Table 5.37: The analysis of the relationship between entrepreneurial location, firm’s nature
and SMEs’ (micro and small firms) performance by using Pearson product moment
correlation coefficient.
Correlations
meanloc meanfm
meanloc
Pearson Correlation 1 .504**
Sig. (2-tailed) .000
N 331 331
meanfm
Pearson Correlation .504** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.37 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H11o)
was rejected. Therefore, there is a correlation between location, firm’s nature and SMEs’
(micro and small firms) performance at the .01 significant levels.
Pearson’s Correlation .504 means that there is a moderate positive relationship
between location and SMEs’ (micro and small firms) performance or it can be concluded that
the two variables move to the same direction while the increase in one variable will lead to
increase in another variable.
98
Hypothesis 12
H12o: There is no relationship between market orientation relative to customer orientation
and SMEs’ (micro and small firms) performance.
H12a: There is a relationship between market orientation relative to customer orientation and
SMEs’ (micro and small firms) performance.
Table 5.38: The analysis of the relationship between market orientation relative to
customer orientation and SMEs’ (micro and small firms) performance by using Pearson
product moment correlation coefficient.
Correlations
meancust meanfm
Meancust
Pearson Correlation 1 .421**
Sig. (2-tailed) .000
N 331 331
Meanfm
Pearson Correlation .421** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.38 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H12o)
was rejected. Therefore, there a correlation between customer orientation and SMEs’ (micro
and small firms) performance at the .01 significant levels.
Pearson’s Correlation .421 means that there is a moderate positive relationship
between customer orientation and SMEs’ (micro and small firms) performance or it can be
concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
99
Hypothesis 13
H13o: There is no association between market orientation in terms of competitor orientation
and SMEs’ (micro and small firms) performance.
H13a: There is an association between market orientation in terms of competitor orientation
and SMEs’ (micro and small firms) performance.
Table 5.39: The analysis of the relationship between market orientation in terms of
competitor orientation and SMEs’ (micro and small firms) performance by using Pearson
product moment correlation coefficient.
Correlations
meancomp meanfm
Meancomp
Pearson Correlation 1 .449**
Sig. (2-tailed) .000
N 331 331
Meanfm
Pearson Correlation .449** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.39 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H13o)
was rejected. Therefore, there a correlation between competitor orientation and SMEs’ (micro
and small firms) performance at the .01 significant levels.
Pearson’s Correlation .449 means that there is a moderate positive relationship
between competitor orientation and SMEs’ (micro and small firms) performance or it can be
concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
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Hypothesis 14
H14o: There is no correlation between market orientation in terms of inter-functional
orientation and SMEs’ (micro and small firms) performance.
H14a: There is a correlation between market orientation in terms of inter-functional
orientation and SMEs’ (micro and small firms) performance.
Table 5.40: The analysis of the relationship between market orientation in terms of inter-
functional orientation and SMEs’ (micro and small firms) performance by using Pearson
product moment correlation coefficient.
Correlations
meanintf meanfm
Meanintf
Pearson Correlation 1 .413**
Sig. (2-tailed) .000
N 331 331
Meanfm
Pearson Correlation .413** 1
Sig. (2-tailed) .000
N 331 331
**. Correlation is significant at the 0.01 level (2-tailed).
The result of Pearson correlation analysis in Table 5.40 indicates that the significance
is equal to .000 which is less than .01 (.000<.01). It means that the null hypothesis (H14o)
was rejected. Therefore, there a correlation between inter-functional orientation and SMEs’
(micro and small firms) performance at the .01 significant levels.
Pearson’s Correlation .413 means that there is a moderate positive relationship
between inter-functional orientation and SMEs’ (micro and small firms) performance or it
can be concluded that the two variables move to the same direction while the increase in one
variable will lead to increase in another variable.
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Table 5.41: Summary of hypotheses testing
Hypo
thesis
Statement Statistics
Used
Level of
Significant
Correlation
coefficient Relationship
1 Opportunity competencies and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.827 -0.012 No
Relationship
2 Relationship competencies and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.054 0.106 No
Association
3 Conceptual competencies and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.825 0.012 No Correlation
4 Organizing competencies and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.466** Moderate
5 Strategic competencies and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.397** Weak
6 Commitment competencies and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.007 0.148** Very Weak
7 H7a: External factor affects
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.424** Moderate
8 Firm’s nature is associated with
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.482** Moderate
9 Firm’s size is not associated with
SMEs’ (micro and small firms)
performance
Pearson’s
Correlation
0.790 0.015 No
Relationship
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10 Firm knowledge is associated
with SMEs’ (micro and small
firms) performance.
Pearson’s
Correlation
0.000 0.492** Moderate
11 Location influences SMEs’ (micro
and small firms) performance.
Pearson’s
Correlation 0.000 0.504** Moderate
12 Customer orientation and SMEs’
(micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.421** Moderate
13 Competitor orientation and SMEs’
(micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.449** Moderate
14 Inter-functional orientation and
SMEs’ (micro and small firms)
performance.
Pearson’s
Correlation
0.000 0.413** Moderate
103
CHAPTER 6
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
The chapter comprises four sections including summary of findings, conclusion,
recommendation and future studies. There will be three sub-sections under the summary of
findings which are the summary of demographic factors, summary of hypotheses, discussion
and implication of the research. The summary of demographic factors section discusses the
characteristics of the respondents in this study. Besides, the hypotheses summary section
describes the results of hypotheses testing whereas discussion and implication section
explains the results of the current research in order to identify the differences between present
and previous study. Conclusion and recommendation of this study are given in section three
and four. Finally, future studies (the suggestions to future researchers who are keen on doing
further research of the same topic) will be presented in the last section of the study.
6.1 Summary of Findings
The aim of the study was to investigate the determinants of SMEs’ (micro and small
firms) performance from Kyaing Tong, Myanmar. In order to achieve the objective of the
research, the researcher conducted the survey by distributing 400 questionnaires from May
27th, 2013 to June 20th, 2013. Nevertheless, only 331 completed and usable questionnaires
were returned by the respondents. The participants of the research were SME (small or micro
business) owners who run their firms with less than 50 subordinates from Kyaing Tong area,
Eastern Shan State, Myanmar.
6.1.1 Summary of Demographic Factors
Demographic factors consist of four factors which are age, gender, ethnicity and
educational background of the respondents. From the data collection, the study shows that
51% (169) of the respondents were aged between 31 and 40 which represent the largest group
of the respondents. Another result in relation to gender reveals that most of the respondents
were male which account for 63.4% (210) of total respondents. Moreover, Shan ethnic group
represents the majority of the respondents amounting to 47.7% (158) while the largest group
of the respondents hold bachelor’s degree with the percentage of 48.9% (162).
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Table: 6.1: Summary of demographic factors
Demographic factors The majority group of
respondents
The percentage of total
respondents
Age 31 – 40 years old 51%
Gender Male 63.4%
Ethnicity Shan 47.7%
Education Level Bachelor’s Degree 48.9%
6.1.2: Summary of Hypotheses Testing
Table 6.2: Summary of hypotheses testing
No Null Hypothesis Failed to
Reject Ho
Rejected
Ho
1 H1o: There is no relationship between entrepreneurial
competencies in terms of opportunity competencies and
SMEs’ (micro and small firms) performance.
X
2 H2o: There is no relationship between entrepreneurial
competencies in terms of relationship competencies and
SMEs’ (micro and small firms) performance.
X
3 H3o: There is no relationship between entrepreneurial
competencies in terms of conceptual competencies and
SMEs’ (micro and small firms) performance.
X
4 H4o: There is no relationship between entrepreneurial
competencies in term of organizing competencies and
SMEs’ (micro and small firms) performance.
X
5 H5o: There is no relationship between entrepreneurial
competencies in term of strategic competencies and
SMEs’ (micro and small firms) performance.
X
6 H6o: There is no relationship between entrepreneurial
competencies in term of commitment competencies and
SMEs’ (micro and small firms) performance.
X
105
7 H7o: External factor does not affect SMEs’ (micro and
small firms) performance. X
8 H8o: Firm characteristic in term of firm’s nature is not
associated with SMEs’ (micro and small firms)
performance.
X
9 H9o: Firm characteristic in term of firm’s size is not
associated with SMEs’ (micro and small firms)
performance.
X
10 H10o: Firm characteristic in term of firm knowledge is
not associated with SMEs’ (micro and small firms)
performance.
X
11 H11o: Location does not influence SMEs’ (micro and
small firms) performance. X
12 H12o: There is no relationship between market
orientation relative to customer orientation and SMEs’
(micro and small firms) performance.
X
13 H13o: There is no relationship between market
orientation in term of competitor orientation and SMEs’
(micro and small firms) performance.
X
14 H14o: There is no relationship between market
orientation in term of inter-functional orientation and
SMEs’ (micro and small firms) performance.
X
The results of the research are generated through 331 completed and usable
questionnaires which were returned by the respondents. Questionnaire method with the five
points Likert scale was utilized as a research instrument in this study. A total of six variables
were studied in this research. Besides, fourteen hypotheses were set to test the correlation
between each variable. In order to test the research hypotheses, Pearson’s Correlation
analysis technique was applied in this study. Ten out of fourteen null hypotheses have been
rejected after analyzing the research hypotheses.
The null hypotheses of hypothesis four, five, six, seven, eight, ten, eleven, twelve,
thirteen and fourteen have been rejected in this study. This means that there exists the
106
positive relationship between organizing competencies, strategic competencies, commitment
competencies, external factor, nature of firm, firm knowledge, location, customer orientation,
competitor orientation, inter-functional orientation and SMEs’ (micro and small firms)
performance.
On the other hand, the null hypotheses of hypothesis one, two, three and nine have
failed to reject in this research. Hence, these results indicate that opportunity competencies,
relationship competencies, conceptual competencies, size of firm have no relationship with
SMEs (micro and small firms) performance.
6.1.3: Discussion and Implications
This study has been carried out to investigate the correlation between entrepreneurial
competencies, external factor, firm characteristics, location, market orientation and SMEs’
(micro and small firms) performance. According to the results of the research, there are ten
hypotheses which have significant association. Discussions regarding these variables are as
follows;
From hypothesis one, the findings reveal that opportunity competencies have no
significant relationship with SMEs’ (micro and small firms) performance. This means that the
null hypothesis has failed to reject hypothesis one. The finding is not consistent with the work
of Sarwoko et al., (2013) who affirmed that entrepreneurial competencies significantly
influence firm performance, meaning the higher entrepreneurial competencies of SME
owners will have an effect on business performance. The owners of SMEs should have the
ability to read the opportunities occurring in the environment. This is quite an unexpected
result. This may be due to the reason of town’s location. As the researcher aforementioned,
Kyaing Tong (town) is located in the lower portion and very remote from the commercial city
of Myanmar. The current economic condition of the town is not so good and consequently
fewer opportunities are discovered in this area.
For hypothesis two, the result of the study shows that there is no statistically
significant relationship between relationship competencies and SMEs’ (micro and small
firms) performance, which means the null hypothesis failed to reject. The result of this
hypothesis does not coincide with the previous study. This is also one of the unpredicted
results. According to Sarwoko et al., (2013), entrepreneurial competencies regarding
relationship competencies influence significantly on firm performance. The owners of SMEs
107
should have the ability to establish rapport and develop a long-term relationship of mutual
trust with others. This result may come from the absence of substitute products in the market.
Besides, as the researcher previously mentioned, literacy rate in that area is low with the
percentage of 52.2% in Eastern Shan State in accordance with 2010 statistics (Myanmar
Peace Monitor) (http://www.mmpeacemonitor.org/background/ethnic-grievances, assessed
on 23th July, 2013). This means that there might be differences when dealing with the
educated and uneducated customers.
According to the hypothesis three’s result, it indicates that there is no statistically
significant relationship between conceptual competencies and SMEs’ (micro and small firms)
performance. In other words, the null hypothesis of hypothesis three failed to reject. The
finding is not in line with the results of Sarwoko et al., (2013), Man et al. (2002) and Ahmad
et al. (2010). The findings of their works suggested that entrepreneurial competencies in
terms of conceptual competencies have a significant impact on business performance which
indicated that if the owners of SMEs have higher competencies relating to conceptual skills,
it will have an effect on performance of their businesses performance. Additionally, they
recommended that SMEs’ owners should have the ability to explore new ideas and
understand the business implications of a wider range of ideas. This may be the reason of
selected industry. Most of the previous studies concentrated on manufacturing industry
whereas the present researcher focused only on service industry. Conceptual competencies of
owners from manufacturing firms may vary from those who from service firms.
Based on hypothesis four, the researcher found that organizing competencies have a
significant positive relationship with SMEs’ (micro and small firms) performance. The result
of Pearson Correlation coefficient of 0.466 at the significant level of 0.01 indicates that there
exists a moderate positive relationship between these two variables. From the works of
Sarwoko et al., (2013), Man et al. (2002) and Ahmad et al. (2010), they stated that organizing
competencies play a vital role in enhancing firm performance. Hence, the result of hypothesis
four harmonized with the result of the aforementioned studies.
For the result of hypothesis five, the researcher found that there is a statistically
significant relationship between strategic competencies and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that strategic competencies have a weak
positive relationship (0.397) with SMEs’ (micro and small firms) performance at the
108
significant level of 0.01. This is in line with (Kotey and Meredith, 1997) that the strategies
owners adopt in operating their firms and the performance outcomes of their businesses are
empirically related. This is also supported by Man et al., (2002) that the strategic
competencies of the owner are positively related to the performance of SMEs.
From the result of hypothesis six, it shows that there is a statistically significant
relationship between commitment competencies and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that commitment competencies have a very
weak positive relationship (0.148) with SMEs’ (micro and small firms) performance at the
significant level of 0.01. The finding matches with the previous research. According to Man
et al., (2002), the commitment competencies of the owner are positively related to the
performance of SMEs.
Based on the hypothesis seven, the researcher found that there is a statistically
significant relationship between external factor and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that external factor have a moderate positive
relationship (0.424) with SMEs’ (micro and small firms) performance at the significant level
of 0.01. The finding is in line with Pelham & Wilson (1996), Covin & Slevin (1990) and
Kolvereid (1992) that external environments have an impact on firm performance and
growth.
According to hypothesis eight, the result indicates that there is a statistically
significant relationship between nature of firm and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that the nature of a firm has a moderate
positive relationship (0.482) with SMEs’ (micro and small firms) performance at the
significant level of 0.01. This verdict is supported by (Lucky and Minai, 2011) who reported
in their study that firm characteristics in terms of the nature of firm significantly affect firm
performance.
For hypothesis nine, the finding reveals that there is no statistically significant
relationship between size of firm and SMEs’ (micro and small firms) performance. This
means that the null hypothesis has failed to reject hypothesis nine. However, the result does
not harmonize with the research done by (Lucky and Minai, 2011). They found that size of
firm significantly affect firm performance. The results of their study suggest that firm size is
109
important elements in achieving firm performance. The entrepreneurs/business owners should
therefore always give considerations to firm size in the course of small business and
entrepreneurship development, as doing this would help them to achieve a positive result
during normal and turbulent periods, and this in turn would bring about a positive firm
performance. In this study, the researcher selected SMEs which have less than 50 employees.
All of those previous studies have been carried out for the whole SMEs industry, thus, it
might not apply to the specific firm size.
From the result of hypothesis ten, the researcher found that there is a statistically
significant relationship between firm knowledge and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that firm knowledge has a medium positive
relationship (0.492) with SMEs’ (micro and small firms) performance at a significant level of
0.01. This finding is also in line with the result of previous studies. According to Lucky and
Minai (2011), firm characteristics in terms of firm knowledge significantly affect firm
performance.
For hypothesis eleven, it implies that there is a statistically significant relationship
between location and SMEs’ (micro and small firms) performance. Pearson Correlation’s
result shows that location has a moderate positive relationship (0.504) with SMEs’ (micro
and small firms) performance at a significant level of 0.01. The result is consistent with
(Orloff, 2002) and he mentioned that location is a factor that should not be neglected because
it shapes the performance of the firm. Greening, Barringer and Macy (1996) asserted that
considering the important role of location is imperative to attain a positive performance of the
firm.
According to hypothesis twelve, the result indicates that there is a statistically
significant relationship between customer orientation and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that customer orientation has a moderate
positive relationship (0.421) with SMEs’ (micro and small firms) performance at a significant
level of 0.01. The finding is consistent with Pulendran et al. (2000) who have proved in their
study that market oriented firms are likely to have a better performance than the firms that
neglected market orientation concept. It is pretty obvious that market orientation relative to
customer orientation factor contributes to the business success of the firms.
110
Based on the result of hypothesis thirteen, the researcher found that there is a
statistically significant relationship between competitor orientation and SMEs’ (micro and
small firms) performance. Pearson Correlation’s result shows that competitor orientation has
a moderate positive relationship (0.449) with SMEs’ (micro and small firms) performance at
the significant level of 0.01. The finding of this hypothesis is supported by Idar & Mahmood
(2011) and Verhees & Meulenberg (2004) who stated that competitor orientation and firm
performance have a positive relationship.
For hypothesis fourteen, the result indicates that there is a statistically significant
relationship between inter-functional orientation and SMEs’ (micro and small firms)
performance. Pearson Correlation’s result shows that inter-functional orientation has a
medium positive relationship (0.413) with SMEs’ (micro and small firms) performance at the
significant level of 0.01. The finding is in line with Bigne & Blesa (2003) who asserted that
inter-functional orientation positively affects firm performance.
6.2: Conclusion
The study has explored the association between one main dependent variable which is
firm performance and its independent variables such as entrepreneurial competencies
(opportunity competencies, relationship competencies, conceptual competencies, organizing
competencies, strategic competencies, commitment competencies), external factor, firm
characteristics (nature of firm, size of firm, firm knowledge), location and market orientation
(customer orientation, competitor orientation, inter-functional orientation).
The study used primary data to generate the results for this research. Secondary data
of this study was applied as the background of the research. The research model was
developed and analyzed by applying questionnaire survey method. Besides, the hypotheses
have been set and tested by using Pearson Correlation Coefficient (Bivariate). Generally,
most of the findings are in line with the previous studies for instance; Mamat and Ismail
(2011), Sanchez (2012), Minai and Lucky (2011). According to the statistical testing, the
researcher of the present study referred to the Pearson’s Correlation Coefficient analysis
which reveals that most of the significant level are 0.000, which is less than 0.05 (0.000 <
0.05). The results identify that most of the null hypotheses (H4o, H5o, H6o, H7o, H8o, H10o,
H11o, H12o, H13o, and H14o) are rejected, except four of the null hypotheses (H1o, H2o, H3o,
111
H9o) are failed to reject in hypotheses testing procedure. Moreover, both primary and
secondary data indicate that there exists an association between organizing competencies,
strategic competencies, commitment competencies, external factor, nature of firm, firm
knowledge, location, customer orientation, competitor orientation, inter-functional orientation
and firm performance. Nonetheless, the results imply that relationship does not exist between
opportunity competencies, relationship competencies, conceptual competencies, size of firm
and firm performance. Furthermore, it can be concluded that location is the most important
factor which has the highest relationship with firm performance whilst the second highest
correlation exists between firm knowledge and firm performance.
6.3: Recommendation
The study revealed that there are significant positive relationship between organizing
competencies, strategic competencies, commitment competencies, external factor, nature of
firm, firm knowledge, customer orientation, competitor orientation, inter-functional
orientation and SMEs’ (micro and small firms) performance. Yet, three of the components of
entrepreneurial competencies which are opportunity competencies, relationship
competencies, conceptual competencies and firm’s size stood out to be having no significant
positive relationship with firm performance of SMEs in the area of Kyaing Tong, Eastern
Shan State, Myanmar.
According to the result of first hypothesis in this research, the researchers found that
there is no relationship between opportunity competencies and firm performance. This means
that opportunity competencies of the owners do not have an impact on firm performance.
Moreover, the researcher discovered that “Seize high-quality business opportunities” has the
highest average mean and “Perceive unmet consumer needs” has a slightly lower average
mean. Hence, the researcher would like to suggest SMEs’ owners from Kyaing Tong that
they should evaluate more frequently their customers’ needs as to create a better customer
satisfaction program. On the other hand, if the organization does not seek the ways to satisfy
its customers, they will look for the others or alternative suppliers. Dissatisfied customers
may lead to lots of drawbacks such as customers only buy when offering a compelling sale,
complain more, have greater service demand and speak ill of the organization to others.
Moreover, customer dissatisfaction can reduce the performance of the firm.
112
Based on the result of hypothesis two, the researcher found that there is no correlation
between relationship competencies and firm performance. Thus, the researcher can conclude
that relationship competencies do not have any relationship or link with the firm
performance. Besides, the researcher found that “Develop long-term trusting relationships
with others” has the highest average mean, while the statement of “Communicate with others
effectively” shows the lowest average mean. In relation to this finding, the researcher would
like to suggest that the owners of SMEs from Kyaing Tong should take effective
communication training program in order to strengthen their relationship skills.
Communication creates an image about individual as well as the organization. Effective
communication can built positive and long lasting relationship with customers.
As for the result of hypothesis three, the researcher found that there is no correlation
between conceptual competencies and firm performance. Hence, it can be concluded that
conceptual competencies do not have an effect on the firm performance. Besides, the
researcher found that “Look at old problems in new ways” has the highest average mean,
whereas the statement of “Explore new ideas” shows the lowest average mean. In respect to
this finding, the researcher would like to suggest that the owners of SMEs from Kyaing Tong
should take effective management training program as to brace their creative thinking skills.
By improving creative thinking skill, their firms will become more innovative and always be
ahead of the others enterprises.
For the result of hypothesis four, the researcher found that there is a significant
positive association between organizing competencies and firm performance. Thus, it can be
concluded that organizing competencies affect firm performance. Moreover, the researcher
found that “Motivate people” has the highest average mean, whilst the statement of
“Coordinate tasks” shows the lowest average mean. With regard to this finding, the
researcher would like to suggest that the owners of SMEs from Kyaing Tong should take
management training program as to use their resources in an effective and efficient way. As a
result of coordinating tasks, firms can avoid overlapping efforts. Moreover, it can also
mitigate from the unnecessary use of firm’s resources.
For the result of hypothesis five, the researcher found that there is a significant
positive association between strategic competencies and firm performance. It can be
concluded that strategic competencies are the factors that affect firm performance. Moreover,
113
the researcher found that “Determine strategic actions by weighing costs and benefits” has
the highest average mean, while the statement of “Evaluate results against strategic goals”
shows the lowest average mean. In relation to this finding, the researcher would like to
suggest that the owners of SMEs from Kyaing Tong should monitor and their day to day
operations in order not to drift away from the objectives and strategic goals of the
organization. In addition, they should evaluate their firms at least per annum.
For hypothesis six’s result, the researcher found that there is a significant positive
association between commitment competencies and firm performance. It can be concluded
that commitment competencies are the factors that affect on the firm performance.
Furthermore, the researcher found that “Commit to long-term business goals” has the highest
average mean, yet the statement of “Possess an extremely strong internal drive” shows the
lowest average mean. According to this finding, the researcher would like to suggest that the
owners of SMEs from Kyaing Tong should take some intensive management trainings to
promote their self-esteem and willpower. Since they are the brain of their respective firms,
every single thing they do will affect the performance of their firms.
As for the hypothesis seven, the researcher found that there is a significant positive
association between external factor and firm performance. It can be concluded that external
factor affects significantly on the firm performance. Furthermore, the researcher found that
“Supply contributes to my business performance” has the highest average mean, but the
statement of “The availability of raw materials” shows the lowest average mean. According
to this finding, the researcher would like to suggest that the policy makers or local authorities
form Kyaing Tong should arrange multi modes of transport for local people and businesses as
to promote the availability of raw materials and they should attract more domestic and
foreign investors to lessen the shortage of raw materials.
As for the result of hypothesis eight, the researcher found that there is a significant
positive association between nature of firm and firm performance. It can be concluded that
nature of firm affects significantly on the firm performance. Furthermore, the researcher
found that “I consider my product/service is big well accepted by the customers due to the
quality” has the highest average mean, but the statement of “I found my product/service
strength is due to the pricing” shows the lowest average mean. According to this finding, the
researcher would like to suggest that the owners of SMEs from Kyaing Tong should take
114
under consideration of alternative strategies for instance; pricing strategy, low cost leadership
strategy and cost reduction strategy in an attempt to enhance a better firm performance.
Based on the result of hypothesis nine, the researcher found that there is no significant
relationship between size of firm and firm performance. It can be concluded that firm’s size
does not affect on the firm performance. Furthermore, the researcher found that “I have full
control of my finance” has the highest average mean, whereas the statement of “I have full
control of my employees” shows the lowest average mean. According to this finding, the
researcher would like to suggest that the owners of SMEs from Kyaing Tong should take
human resource management training so as to improve their skills relating to walking assets
management. Since human resource is the heart of all organizations, promoting this
department will contribute efficiency, effectiveness and productivity improvements for the
organization.
According to the result of hypothesis ten, the researcher found that there is a
significant positive correlation between firm knowledge and firm performance. It can be
concluded that firm knowledge has an effect on the firm performance. Furthermore, the
researcher found that “I have adequate knowledge about my creditors/debtors” has the
highest average mean, whereas the statement of “I have adequate knowledge to market my
product” shows the lowest average mean. According to this finding, the researcher would like
to suggest that the owners of SMEs from Kyaing Tong should take training in relation to
market development or they can apply Ansoff’s growth strategy into practice.
According to the result of hypothesis eleven, the researcher found that there is a
significant positive correlation between location and firm performance. It can be concluded
that firm knowledge has an effect on the firm performance. Furthermore, the researcher found
that “The good road network is considered adequate” has the highest average mean, whereas
the statement of “The electricity supply is constant to aid my business performance” shows
the lowest average mean. According to this finding, the researcher would like to suggest that
the policy makers or local authorities form Kyaing Tong should strive to get 24 hours
electricity in order to promote the economic status of Kyaing Tong.
For hypothesis twelve, the researcher found that there is a significant positive
correlation between customer orientation and firm performance. It can be concluded that
115
customer orientation has an effect on the firm performance. Furthermore, the researcher
found that “We give close attention to after-sales service” has the highest average mean,
whereas the statement of “We measure customer satisfaction systematically and frequently”
shows the lowest average mean. According to this finding, the researcher would like to
suggest that the owners of SMEs from Kyaing Tong should measure their customer
satisfaction regularly and effectively to be able to identify the needs of their customers.
As for hypothesis thirteen’s result, the researcher found that there is a significant
positive correlation between competitor orientation and firm performance. It can be
concluded that competitor orientation has an effect on the firm performance. Furthermore, the
researcher found that “We rapidly respond to competitive actions that threaten us” has the
highest average mean, whereas the statement of “Top management regularly discusses
competitors’ strengths and strategies” shows the lowest average mean. According to this
finding, the researcher would like to suggest that the owners of SMEs from Kyaing Tong
should conduct meetings regularly with all of their employees so as to discuss about their
competitors’ strengths and strategies.
For the result of hypothesis fourteen, the researcher found that there is a significant
positive correlation between inter-functional orientation and firm performance. It can be
concluded that inter-functional orientation has an effect on the firm performance.
Furthermore, the researcher found that “Our managers understand how everyone in our
business can contribute to creating customer value.” has the highest average mean, whereas
the statement of “Our top managers from across the company regularly visit our current and
prospective customers” shows the lowest average mean. According to this finding, the
researcher would like to suggest that the owners of SMEs from Kyaing Tong should ask their
managers to visit current and prospective customers of the organizations to build the mutual
trust and long term relationship with their customers. SMEs owners should also set the fixed
system in relation to this program.
116
6.4: Further Study
As this research emphasized only on the relationship between entrepreneurial
competencies, external factor, firm characteristics, location, market orientation and firm
performance, the study still misses some or view to be covered. In particular, the sample of
the present research gave attention to the firms from service sector. Most of the firms that
participated in this research are running with a few numbers of employees. On the other hand,
there are so many factors or elements that contribute in boosting SMEs’ (micro and small
firms) performance. Therefore, here are some of the suggestions for future researchers to
undertake. These are as follows;
In order to address the correlation between each variable, future study should be
carried out for testing the model of Mamat and Ismail (2011), Minai and Lucky (2011), Man,
Lau and Chan (2002) by using the samples from different industries and cultures.
In this study, the researcher studied only owners of SMEs’ (micro and small firms).
Besides, the study only represents the owners from Kyaing Tong, Myanmar. Thus, the results
may not be generalized to owners from other areas even in Myanmar. Escalating the
respondent group to other areas than Kyaing Tong is a need for future researchers.
In addition, the study focused only on the owners of SMEs’ (micro and small firms)
who operate their firms with less than 50 workers. Hence, it would be truly attractive to see if
the same results are attained with the other target populations.
In every single work of research, the generability and applicability of the results are
very imperative. According to Sekaran et al., (2001), the more research findings are
generalizable then the greater their usefulness and as well as their value. To be able to
generalize the findings of one research, certain conditions are paramount needs. First of all, a
huge sample size is requisite. Besides, if a similar study is conducted within a different
setting, it should generate the same results. Moreover, different research methods and
research designs should be used to see whether it produces the same result or not.
117
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130
Appendix A
Questionnaire for research
Determinants of SMEs’ (micro and small Firms) Performance in the Context of Kyaing Tong,
Eastern Shan State, Myanmar
Dear Sir/Madam,
I am an MBA student of the Assumption University from Thailand. I am currently
working on a thesis for my master degree. I would like to request your assistance with a
research I am conducting on the factors that influence micro and small business performance.
I hope that you will agree to assist me by completing this questionnaire.
You will notice that the survey includes questions about the activities you normally
engage in. It will only take you about 20 minutes to complete this survey. Your perceptions
are highly valuable and your responses will be kept confidential. They will only be used for
the purpose of academic research. Your kind cooperation in responding to all questions in
this questionnaire would be greatly appreciated. Please kindly check ( ) the Likert item
which most closely represent your opinion since there is no right or wrong answer.
Thank you in advance for your time and cooperation. If you need any clarification
regarding to the questions or this research, please contact me.
Email: [email protected] Tel: 095252815
Sincerely Yours,
Han Min Oo
MBA (Day)
ID (5439035)
Assumption University, Thailand.
131
PART 1: General Information
For the following questions, please tick ( √) one that matches with the option of respondent.
1. Does/did your father/mother own a business?
A. Yes B. No
2. please tick ( √) one that matches with the option of respondent.
A. Management training before starting this business
B. Technical training before starting this business
C. Management training after starting this business
D. Technical training after starting this business
E. None
3. Before starting up this business, did you have any relevant work experience?
A. Yes B. No
4. Do you have business start-up experience prior to this business?
A. Yes B. No
5. On average, hours per week spent on this business:
1) 20 Hours or less 2) 21-40 Hours 3) 41-60 Hours 4) more than 60 hours
6. Number of years of this business:
1) Less than 5 years 2) 5-10 years 3) 11-15 years 4) More than 16 years
7. Number of full-time employee:
1) 5 persons or less 2) 5-9 persons 3) 10-50 persons 4) more than 50 persons
8. Apart from this business, do you also own other businesses?
A. Yes B. No
132
There are 40 questions in this part with 5 points Likert scale where strongly disagree = 1,
disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree = 5. Please select the
number from each statement that best represents your opinion.
PART 2: Entrepreneur Competencies
Variables
As the owner of this business I am able to……….
Opportunity Competencies
9. Identify goods or services customers want. 1 2 3 4 5
10. Perceive unmet consumer needs. 1 2 3 4 5
11. Actively look for products or services that provide real
benefit to customers.
1 2 3 4 5
12. Seize high-quality business opportunities. 1 2 3 4 5
Relationship Competencies
13. Develop long-term trusting relationships with others. 1 2 3 4 5
14. Negotiate with others. 1 2 3 4 5
15. Interact with others. 1 2 3 4 5
16. Maintain a personal network of work contacts. 1 2 3 4 5
17. Understand what others mean by their words and actions. 1 2 3 4 5
18. Communicate with others effectively. 1 2 3 4 5
Conceptual Competencies
19. Apply ideas, issues, and observations to alternative
contexts.
1 2 3 4 5
20. Take reasonable job-related risks. 1 2 3 4 5
21. Look at old problems in new ways. 1 2 3 4 5
22. Explore new ideas. 1 2 3 4 5
23. Treat new problems as opportunities. 1 2 3 4 5
133
Organizing Competencies
24. Plan the operations of the business. 1 2 3 4 5
25. Keeps organization running smoothly. 1 2 3 4 5
26. Organize resources. 1 2 3 4 5
27. Coordinate tasks. 1 2 3 4 5
28. Supervise subordinates. 1 2 3 4 5
29. Lead subordinates. 1 2 3 4 5
30. Organize people. 1 2 3 4 5
31. Motivate people. 1 2 3 4 5
32. Delegate effectively. 1 2 3 4 5
Strategy Competencies
33. Determine long-term issues, problems, or opportunities. 1 2 3 4 5
34. Aware of the projected directions of the industry and how
changes might impact the firm.
1 2 3 4 5
35. Prioritize work in alignment with business goals. 1 2 3 4 5
36. Redesign the department and/or organization to better meet
long-term objectives and changes.
1 2 3 4 5
37. Monitor progress toward strategic goals. 1 2 3 4 5
38. Evaluate results against strategic goals. 1 2 3 4 5
39. Determine strategic actions by weighing costs and benefits. 1 2 3 4 5
134
There are 8 questions in this part with 5 points likert scale where strongly disagree = 1,
disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree = 5. Please select the
number from each statement that best represents your opinion.
PART 3: External Factors
Variables
43. Infrastructure and facilities contribute to my business
performance.
1 2 3 4 5
44. The domestic economic conditions contribute to my
business performance.
1 2 3 4 5
45. Government policy contributes to my business
performance.
1 2 3 4 5
46. The availability of raw materials. 1 2 3 4 5
47. Supply contributes to my business performance. 1 2 3 4 5
48. Power supply contributes to my performance. 1 2 3 4 5
Commitment Competencies
40. Dedicate to make the venture work whenever possible. 1 2 3 4 5
41. Possess an extremely strong internal drive. 1 2 3 4 5
42. Commit to long-term business goals. 1 2 3 4 5
135
There are 14 questions in this part with 5 points likert scale where strongly disagree = 1,
disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree = 5. Please select the
number from each statement that best represents your opinion.
PART 4: Firm Characteristics
Variables
Nature of firm
49. I consider my product/service is very unique in the
market.
1 2 3 4 5
50. I consider my product/service is big well accepted by the
customers due to the quality.
1 2 3 4 5
51. I found my product/service strength is due to the pricing. 1 2 3 4 5
Firm size
52. I have full control of my employees. 1 2 3 4 5
53. I have full control of my finance. 1 2 3 4 5
54. I have full control of my day-to-day operation process. 1 2 3 4 5
Firm knowledge
55. I have adequate knowledge to explain my customers. 1 2 3 4 5
56. I have adequate knowledge to lead my employees. 1 2 3 4 5
57. I have adequate knowledge about my suppliers. 1 2 3 4 5
58. I have adequate knowledge about my creditors/debtors. 1 2 3 4 5
59. I have adequate knowledge to distribute my products or
services.
1 2 3 4 5
60. I have adequate knowledge to operate my firm. 1 2 3 4 5
61. I have adequate knowledge to market my product. 1 2 3 4 5
136
There are 8 questions in this part with 5 points likert scale where strongly disagree = 1,
disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree = 5. Please select the
number from each statement that best represents your opinion.
PART 5: Location
Variables
62. My firm is located in the busy area. 1 2 3 4 5
63. My business location is suitable in such a way that it
assists my firm to perform at the level I wanted.
1 2 3 4 5
64. The electricity supply is constant to aid my business
performance.
1 2 3 4 5
65. The good road network is considered adequate. 1 2 3 4 5
66. The location is near to technological reach. 1 2 3 4 5
67. My firm is located near to the source of raw materials/
suppliers.
1 2 3 4 5
There are 11 questions in this part with 5 points likert scale where strongly disagree = 1,
disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree = 5. Please select the
number from each statement that best represents your opinion.
PART 6: Market Orientation
Variables
Customer Orientation
68. We give close attention to after-sales service. 1 2 3 4 5
69. We constantly monitor our level of commitment and
orientation to serving customers’ needs.
1 2 3 4 5
70. Our business objectives are driven primarily by customer
satisfaction.
1 2 3 4 5
71. We measure customer satisfaction systematically and
frequently.
1 2 3 4 5
137
Competitor orientation
72. Our salespeople regularly share information within our
organization concerning competitors’ strategies.
1 2 3 4 5
73. We rapidly respond to competitive actions that threaten
us.
1 2 3 4 5
74. Top management regularly discusses competitors’
strengths and strategies.
1 2 3 4 5
Interfunctional Coordination
75. Our managers understand how everyone in our business
can contribute to creating customer value.
1 2 3 4 5
76. All of our business functions (e.g., marketing/sales, etc.)
are integrated in serving the needs of our target markets.
1 2 3 4 5
77. All the departments in our company are responsive to one
another’s needs and requests.
1 2 3 4 5
78. Our top managers from across the company regularly visit
our current and prospective customers.
1 2 3 4 5
138
There are 10 questions in this part with 5 points likert scale where strongly disagree = 1,
disagree = 2, neither agree nor disagree = 3, agree = 4, strongly agree = 5. Please select the
number from each statement that best represents your opinion.
PART 7: Firm Performance
Variables
79. I recorded a commendable nature of growth in sales since
in the last 2 years.
1 2 3 4 5
80. I recorded increment in market share. 1 2 3 4 5
81. Growth in profit in last 3 years. 1 2 3 4 5
82. Commendable profit after tax on sales. 1 2 3 4 5
83. My over all business performance and success is
commendable.
1 2 3 4 5
84. I am quite satisfied with the sufficient level of income
from my business and my business size.
1 2 3 4 5
85. I ensure that my business income is sufficient for me and
my family.
1 2 3 4 5
86. I am concern with the quality of life for myself and for my
family.
1 2 3 4 5
87. Profit is my top priority. 1 2 3 4 5
88. I am more concern about the sustainability of my business
and its growth.
1 2 3 4 5
139
PART 8: Demography
For the following questions, please tick (√ ) one that matches with the option of respondent.
89. Your current age:
1) 30 or less 2) 31-40 3) 41-50 4) 51 or above
90. Sex:
A. Male B. Female
91. Your ethnic group:
A. Burmese B. Shan C. Chinese D. Others
92. Highest educational qualification:
A. Primary B. Secondary C. Post-secondary or Diploma
D. Bachelor's degree E. Master’s degree F. Ph.D.
140
Appendix B
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141
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146
aMumif;aumif;pGmodonf/ 58/ rdrd jrD&Sif?jrDpm;
taMumif;aumif;pGmodonf/
59/ rdrd\ukefpnf^0efaqmifrIudkaumif;rGefpmjzefUjzL;edkif&efod&Sdygonf/
60/ rdrdvkyfief; aumif;rGefpGmvnfywfekdkif&efod&Sdygonf/
61/ rdrdvkyfief;\ ukefpnf^0efaqmifrI twGuf aps;uGuf aumif;rGefpGm&SmazGedkifygonf/
þtydkif;wGifar;cGef;aygif;(6)ckyg0ifygonf/
rdrdoabmxm;ESifhtudkufnDqHk;wpfckudk trSefjcpf (Â) ay;yg/
vHk;0oabmrwl=1? oabmrwl=2? Mum;aeoabmxm;=3? oabmwl=4?
vHk;0oabmwl=5/
tydkif; (5) ae&m
pOf
taMumif;t&m 1 2 3 4 5
62/ uGsefawmfhvkyfief;onfvlpnfum;aomae&mwGifwnf&Sdygonf/
63/ uGsefawmf\ae&monfoifhawmfíuGsefawmftvdk&SdaompGrf;aqmif&nfrsdK;&&SdatmifulnDay;onf/
64/ vSsyfppf"mwftm;&&SdrIuvkyfief;pGrf;aqmif&nfudktaxmuftul jyKonf/
65/ vrf;yef;qufoG,fa&;onfaumif;rGefonf/ 66/ uGsefawmf\vkyfief;wnfae&monfvkyfief;vnfy
wf&efvdktyf\aomenf;ynmrsm; vufwpfurf;wGif&Sdonf/
67/ uGsefawmf\vkyfief;onfrdrdvkyfief;odkUukefpnf^0efaqmifrI a&mif;csay;aeaomolrsm;ESifhukefMurf;t&if;tjrpfteD;wGif wnf&Sdonf/
147
þtydkif;wGifar;cGef;aygif;(6)ckyg0ifygonf/
rdrdoabmxm;ESifhtudkufnDqHk;wpfckudk trSefjcpf (Â) ay;yg/
vHk;0oabmrwl=1? oabmrwl=2? Mum;aeoabmxm;=3? oabmwl=4?
vHk;0oabmwl=5/
tydkif; (6) aps;uGufpD;yGg;a&;a&SU&Ijcif;
0,fola&SU&Ijcif; pOf
taMumif;t&m 1 2 3 4 5
68/ uGsefawmfwdkUonfta&mif;tjyD;0efaqmifrIrsm;udktxl;tav; xm;onf/
69/ uGsefawmfwdkUonf0,fola&SU&Ijcif;tpDtpOfrsm;tm;jzifh0,folvdktyfcsufrsm;udktjrJr jywfapmifhMunfhxdef;odrf;onf/
70/ uGsefawmfwdkUvkyfief;yef;wdkifonf0,folpdwfwdkif;usapqdkonfhtay:wGiftajccHcsrSwfxm;onf/
71/ uGsefawmfwdkUonf0,folpdwfauseyfrI&Sd?r&SdrMumcP?pepfw usqef;ppfonf/
jydKifbufa&SU&Ijcif; 72/ uGsefawmfwdkUta&mif;0efxrf;onf
jydKifbuf\ r[mjAL[m ESifhywfowf aomowif; tcsuftvufrsm;udk yHkrSefvkyfief; xJwGifa0rSsonf/
73/ uGsefawmfwdkUvkyfief;udkjcdrf;acsmufvmaomjydKifqdkifrIrsm;udkcsuf csif;wHkjyefonf/
74/ jydKifbuf\tm;omcsufrsm;ESifhr[mjAL[mrsm;udkpDrHcefUcGJolrsm;rSyHkrSefaqG;aEG;onf/
Xmetcsif;csif;aygif;pyfndIEdIif;jcif; 75/ 0,folpdwfwdkif;uszefwD;a&;wGif0efxrf;rsm;
tm;vHk;rnfodkUyg0ifyl;aygif;aqmif&Guf&rnfudkpDrHcefUcGJolrSem;vnfonf/
148
76/ &nfrSef;aps;uGuf\vdktyfcsufrsm;udk0efaqmifrIay;&efuGsefawmfwdkUXmersm;tm;vHk;yl;aygif;aqmif&Gufonf/
77/ Xmeaygif;pHkrS0efxrf;wpfOD;csif;pD\vdktyfcsufawmif;qdkcsufrsm;udkXmewdkif;rScsufcsif;ulnDaqmif&Gufay;onf/
78/ vuf&Sd0,folESifh0,foljzpfvmedkifaomolrsm;tm;pDrHcefUcGJolrSyHkrSefoGm;a&mufvnfywfonf/
þtydkif;wGifar;cGef;aygif;(10)ckyg0ifygonf/
rdrdoabmxm;ESifhtudkufnDqHk;wpfckudk trSefjcpf (Â) ay;yg/
vHk;0oabmrwl=1? oabmrwl=2? Mum;aeoabmxm;=3? oabmwl=4?
vHk;0oabmwl=5/
tydkif; (7) vkyfief;pGrf;aqmif&nf
pOf
taMumif;t&m 1 2 3 4 5
79/ vGefcJhonfh2ESpfrSpítvGefaumif;aoma&mif;tm;wdk;wufrIrsm;tm;rSwfwrf;wifxm;onf/
80/ aps;uGufcsJUxGifvmrIrsm;tm;rSwfwrf;wifxm;onf/
81/ vGefcJhonfh3ESpfwGiftjrwfwdk;vmonf/ 82/ t&if;ESifhtcGefEIwfjyD;tvGefaumif;rGefao
mtjrwf&Sdonf/
83/ vkyfief;pGrf;aqmif&nfESifhatmifjrifrIonfa,bk,tm;jzifhtvGefaumif;rGefonf/
84/ uGsefawmf\vkyfief;rS&&dSonfhvkHavmufaom0ifaiGtm;pdwf auseyfrI&Sdonf/
85/ vkyfief;0ifaiGonfuGsefawmfESifhrdom;pktwGufvHkavmufrI&Sdonf
86/ uGsefawmfESifhrdom;pk\b0t&nftaoG;jrifhrm;a&;udktxl;t av;xm;onf/
87/ tjrwfonfuGsefawmf\yxrOD;pm;ay;jzpfonf/
149
88/ vkyfief;&nf&SnfwnfwHha&;ESifhwdk;wufrItay:uGsefawmfydkt av;xm;onf/
tydkif; (8)
rdrdESifhtudkufnDqHk;wpfckudk trSefjcpf (Â) ay;yg/
89/ vuf&Sdtouf
(u) 30 ESpf (odkU) atmuf (c) 31 rS 40 ESpf (*) 41 rS 50ESpf
(C) 51ESpfESifhtxuf
90/ vdif
(u) usm; (c) r
91/ vlrsdK;
(u) Arm (c) &Srf; (*) tjcm; (C) w&kwf
92/ ynmt&nftcsif;
(u) rlvwef; (c) tv,fwef;(*) txufwef;(odkU)'Dyvdkrm (C) bGJU
(p) r[mbGJU (q) yg&*lbGJU
