entrepreneurship business plan in ethiopia

Entrepreneurship Development Institute

The Entrepreneurship Development Institute (EDI) - Ethiopia is an autonomous institution reporting to the newly established Ministry of Labor and Skills, came into being following the latest government reorganization bringing together two entities, namely: The UNDP-supported Entrepreneurship Development Centre (EDC), established in February 2013, and the World Bank-financed Women Entrepreneurship Development Project (WEDP), inaugurated in December 2012. Both projects used to operate under the auspices of the former Ministry of Urban Development and Construction before the reorganization. EDI aims to midwife the emergence of a vibrant, competitive, and innovative private sector driven by a dynamic, vibrant, and growth-oriented SME sector. This is accomplished through a comprehensive package of entrepreneurship support programs ranging from ecosystem and capacity building to business development services (BDS), access to finance ...

What we offer at EDI

Training Workshops

EDI provides various entrepreneurship training packages in order to increase the capacity (skill and competency) of entrepreneurs. The types of training packages that EDI provides to entrepreneurs include:

• Entrepreneurship Training Workshop
• Customized Entrepreneurship Training
• Women Entrepreneurship Training
• Youth Entrepreneurship Training
• Rural Entrepreneurship Training

EDI’s training programmes are offered in Amharic, Afaan Oromoo, and Tigrigna.

Business Training Workshop

The Business Development Service (BDS) department’s goal is to support the establishment of new SMEs and enhance growth of existing ones which will result in improved productivity and job creation for the country. This will be achieved through the provision of continuous business advisory service.

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Innovation for Development is defined as the process of designing, developing, and growing new ideas that help fix pressing unmet economic or technological development or social needs. Development challenges require innovative solutions, linking different actors and a collective tapping into bodies of knowledge and development solutions. Innovation can be a powerful mechanism for enabling youth and women, the private sector, government entities and civil society to come up with sustainable solutions for development challenges.

Providing training and credit to micro and small enterprises owned or partly owned by the participating female entrepreneurs in Addis Ababa, Dire Dawa, Mekele, Bahir Dar, Adama, Hawassa, Assela, Axum, Dilla and Gondar Cities to increase the earnings and employment of the enterprises

New Jobs Created

Businesses Expanded

New Businesses

The 2022/2023 Ethiospur Business Plan Competition unveils the Top 20 finalists

The 2022/2023 EthioSpur Business Plan Competition has received applications from December 4, 2022 to April 30, 2023. The competition attracted around 1000 applicants across Ethiopia. Once applications closed, all applications went through a rigorous review and selection process...

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Call for application, bruh ict/digital enabled innovation competition 2023.

Apply for Bruh ICT II 2023 if you fulfill the following eligibility criteria:

• If you are an Ethiopian citizen between the age of 18-35;
• If you have an innovative ICT/Digital Enabled business Idea that has a potential for operationalization, expansion and sustainability;
• If you want to access tailored training, incubation and acceleration support services to advanceyour entrepreneurial skills to turn your ideas into practice;
• If you want to access a seed grant money and follow up coaching/mentoring services;
• If you have not accessed a similar training/seed money/incubation/acceleration support services at least with in the past 2 years;
• Women, disabled youths, internally displaced people are highly encouraged
• Application date is until July-5-2023

How Can Ethiopian Entrepreneurs Build Successful Businesses?

Entrepreneurship is becoming more popular in Ethiopia as the country tries to create more jobs and expand its economy. That is a good thing considering the prevalence of unemployment and some domestic crimes along with it. However, starting a successful business in Ethiopia is a challenging due to various factors, such as limited access to capital, infrastructure, and skilled labor. Even with these challenges, there is a lot of potential for entrepreneurs to succeed and make a positive impact.

Understanding the Business Landscape in Ethiopia

Developing a Business Idea in Ethiopia

• Identify a problem to solve
• Research the market
• Analyze the competition
• Test the idea
• Develop a business plan

Starting a Business in Ethiopia

• Register the business
• Obtain necessary licenses and permits
• Open a business bank account
• Obtain funding
• Hire employees

Growing a Business in Ethiopia

• Expand to new markets
• Introduce new products or services
• Build a strong team
• Leverage technology
• Seek funding

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Entrepreneurship and small business development in Ethiopia  

Programs and partnerships, lead institution(s), ethiopian development research institute.

This project aims to improve the Ethiopian government's policies and practices, and those of other actors, to support small- and medium-sized enterprise (SME) development in the country. Read more

This project aims to improve the Ethiopian government's policies and practices, and those of other actors, to support small- and medium-sized enterprise (SME) development in the country. Since the early 2000s, the Ethiopian government has implemented successive development plans and sectoral strategies to transform the economy and create better jobs. The government's development strategies emphasize the role of SMEs in job creation, particularly in urban areas. They have placed a priority on women and youth in employment-generating schemes. The SME promotion and support packages provide improved market access, technical and entrepreneurial training, and access to financing and work opportunities. Despite the attention given to SMEs in Ethiopia's development efforts, there are large knowledge gaps regarding their performance and the circumstances in which small business entrepreneurs operate. Little is known about the extent to which large entrepreneurial schemes have generated employment or created dynamic entrepreneurs who are able to grow and willing to take risks. The Ethiopian Development Research Institute is initiating a five-year program to support job creation, particularly for youth and women, and to inform and guide policy on small business development in Ethiopia. The United Nations Development Programme is providing additional funding. The Ethiopian Chamber of Commerce and Sectorial Associations, Association of Ethiopian Microfinance Institutions, Ministry of Industry, other government bodies, and development partners will be directly involved in this project. The research team will generate evidence through field surveys and focus group discussions in 10 Ethiopian towns. This project is expected to: -expand and strengthen Ethiopia's SME sector -improve the business environment and infrastructure for doing business in Ethiopia -provide policymakers with the tools and knowledge to design strategies that support young entrepreneurs -build capacity among young researchers and leaders -publish journal articles and policy briefs -develop a database that will track the SME sector's growth over time

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Prime Minister Launches Ethiopia's New Entrepreneurship Development Programme

May 14, 2018.

The Government of the Federal Democratic Republic Ethiopia, in collaboration with the United Nations Development Programme (UNDP)  jointly launched an Entrepreneurship Development Programme for Ethiopia  at a special ceremony presided by H.E. Prime Minister Hailemariam Desalegn.

Making his keynote address, Prime Minister Hailemariam Desalegn said, "This project is very important for a host of reasons that have significant bearing on the national development endeavors that we are undertaking in this country." He added, "As you may well know, one of the challenges we have in this country that stands in the way of ensuring rapid industrial growth is the acute lack of social capital and particularly that of entrepreneurship skills." 

The Program was developed by Ministry of Urban Development and Construction (MUDCo) and UNDP to unleash a transformational change through tapping into the creativity and drive of existing and aspiring Ethiopian entrepreneurs to accelerate country’s economic growth, create jobs, wealth and alleviate poverty.

The launch was attended by a wide sector of stakeholders including ministers, other members of the public sector, the private sector as well as Ambassadors and development partners.

Addressing the participants, UNDP Resident Representative reflected, "Today we are here to launch Ethiopia’s Entrepreneurship Development Programme.  But, in my view, we are here to do more than unveil a specific programme. As I look around this room I believe it is apt to conclude that we are all gathered here to pay tribute to the spirit and power of entrepreneurship." Ethiopia’s Entrepreneurship Development Programme will provide training and comprehensive business advisory services to micro- and small-scale enterprises. The programme will develop enterprises of over 200,000.00 (two hundred thousand) entrepreneurs through provision of entrepreneurial skills training and business advisory services. In order to ensure the sustainability of the programme, twenty five thousand additional people will be trained as Trainers and a further 20,000 trained as Business Advisors to support the implementation of the program. The three year Programme, running from 2012-2015, will require USD 26.3 million, of which 6million USD has already been allocated by UNDP.  

Ethiopia Entrepreneurship Development Programme

Entrepreneurship programme highlights

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Financing for Startups in Ethiopia: How New Initiatives Are Addressing the Gap

Starting a new business is thrilling but securing financing can be a major obstacle for many entrepreneurs. While venture capital and angel investing receive a lot of attention, banks and financial institutions also play a key role in funding startups – especially in developing economies. However, limited collateral and lack of credit history can make accessing traditional business loans difficult for young entrepreneurs and startups.

In Ethiopia, securing financing from banks without collateral is especially challenging. But new initiatives are emerging to address this gap. Recently, the Ethiopian Youth Entrepreneurs Association (EYEA) partnered with the Commercial Bank of Ethiopia (CBE) to launch two new financial products aimed at supporting startups. CBE’s new “idea finance” product provides loans to early-stage entrepreneurs and startups without requiring collateral. To qualify, applicants need a patent from the Ethiopian Intellectual Property Agency and a detailed business plan. By removing collateral requirements, this innovative loan product helps get innovative business ideas off the ground. CBE has offered similar financing for over a decade, but uptake has been low. This highlights an opportunity for expanded marketing and education to raise awareness.

EYEA and CBE also initiated an advisory service called KENA to provide capacity building and mentorship to young startup founders. Programs like KENA are crucial to setting entrepreneurs up for success by building their skills. EYEA’s networking platform Zelela connects young founders with stakeholders like government officials and investors. These connections are invaluable for securing financing and other support. Zelela conferences have focused on topics from information access to policy advocacy.

More institutions should follow CBE’s model and develop creative financing solutions for startups. Alleviating collateral requirements can unlock funding for young entrepreneurs to turn ideas into reality. In Ethiopia, financial technology and digital lending are expanding access to financing for small businesses and startups. Traditional collateral requirements have been a major obstacle, but new digital platforms are using alternative data for credit scoring to provide loans without collateral.

Promising Progress Through Fintech

Alongside these efforts, financial technology and digital lending are also expanding access to capital for small businesses and startups nationwide. New platforms are applying alternative data and algorithms to provide collateral-free loans.

For example, Michu (ሚቹ) from the Cooperative Bank of Oromia leverages artificial intelligence (AI) to assess creditworthiness and offer micro, small, and medium-sized enterprise (MSME) loans without collateral. By removing this barrier, Michu helps address the unmet financing needs of underserved micro and small enterprises.

Dube Ale (ዱቤ አለ) from Dashen Bank is another digital credit product reinventing lending by making it more convenient, accessible, and affordable. Customers can get approved for lines of credit up to 700,000 birr based on income and credit history, without collateral. Easy access to working capital can help MSMEs better manage cash flow.

Other new platforms like Alegnta (አለኝታ) from Lion Bank also provide collateral-free loans tailored for diverse needs, from rideshare drivers to SMEs. Alegnta’s 500 million birr revolving fund demonstrates growing investment in digital finance.

These innovative services showcase how fin-tech is driving financial inclusion in Ethiopia. By using alternative data and digital delivery, lenders can serve MSME segments once considered too risky. Financial regulators should continue updating frameworks to enable responsible digital credit while protecting consumers.

Expanding access to finance helps MSMEs and startups invest, create jobs, and build resilience. Digital lending still has room for growth in Ethiopia, but early movers like Michu, Dube Ale, and Alegnta provide promising models for how technology can democratize financing for unserved entrepreneurs.

Other countries are also pioneering collateral-free small business financing. In Kenya, microfinance institutions like Kiva leverage crowdfunding and technology to provide low-interest loans. Creative models like these help African startups access seed capital.

The R&D Group, in collaboration with UNDP and the National Bank of Ethiopia (NBE), is actively engaged in capacity building for Ethiopian SMEs. As part of their efforts, they are implementing the Technical Assistance Facility (TAF) program, which aims to provide support to innovative small and medium-sized enterprises in Ethiopia. The primary objective of the TAF program is to assist SMEs in growing and developing their businesses while also contributing to job creation and the overall Ethiopian economy.

To enhance their support for SMEs in Ethiopia, the Innovative Finance Lab (IFL) from UNDP and NBE have partnered with the R&D Group. This partnership aims to strengthen the implementation of the TAF program, which is a joint initiative between NBE and the UNDP. Through this collaboration, technical assistance will be provided to small and medium-sized enterprises (SMEs) across Ethiopia.

The challenges of securing financing for startups in Ethiopia are significant, but there are a number of innovative solutions emerging to address these challenges. By leveraging fintech and digital lending, entrepreneurs can gain access to capital that would otherwise be unavailable to them. This is good news for the Ethiopian economy, as it will help to spur innovation and job creation.

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Ethiopian Entrepreneurs Make the Most of Business Opportunities

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Women in Ethiopia have a good nose for business opportunities, leading some to start their own ventures. Too often, however, these budding entrepreneurs lack access to business networks, financial services and training in business skills in a country where men dominate agribusiness. These limitations make it harder for women to develop and fully realize their entrepreneurial goals.

Business owner Tsehay Fantu is a prime example. In 2005, she decided to start a business out of her home in Adama, a town southwest of Addis Abba. With the help of two sisters, she began selling processed “ready-to-cook” chickens to neighbors and local businesses. She proudly named her business “Tsehay’s Chickens.” Yet her start-up business was slow to grow—she sold about 100 chickens a month, yielding about $300 in monthly revenue.

Then, in 2014, Fantu became one of 94 Ethiopian women entrepreneurs to participate in the Women in Agribusiness Leadership Network (WALN), a Feed the Future cooperative that gives women the resources to plan, manage and grow their businesses. After enrolling in a 10-month program in finance, planning and marketing, Fantu gained the additional skills to grow her business.

She added cooked chicken to her line of “ready-to-cook” processed chicken, increasing the value of her product. Compared to a processed chicken at $6.50, a roasted chicken is valued at $20. Cooked in a ready-to-eat stew, the chicken brings a healthy $25. She expanded her customer base, more than doubling her clients in hotels and other institutions. She now sells 900 chickens a month, a threefold increase, and reports more than $800 in revenue in recent months. With the improved cash flow, Fantu is now able to rent a storefront in downtown Adama and buy a new freezer.

Borrowing to invest in business is a common practice, but one that many women fear and forgo due to lack of access to financial services for women-led start-up businesses. After gaining better information on financing, Fantu, along with her sisters, took out a $900 loan from a microfinance lender to launch a new product line of Ethiopian spices and dry goods. They have already paid off half of the loan.

“WALN gave me the confidence to get a loan. Ethiopian women are usually too frightened to take loans from official sources, too afraid they won’t be able to pay it back,” she said.

Inspiring as Fantu’s story is, it’s not hers alone. The cooperative is designed to multiply the number of women who own successful businesses and to build a self-sustaining leadership group among Ethiopian women entrepreneurs. Each member is tasked to mentor up to four women in the technical and leadership skills they have gained in the program.

The mentoring networks also help women entrepreneurs think beyond the local markets for their products. Mehbuba Seid, a coffee farm owner in southern Ethiopia, gained information and business contacts that prompted her to debut a sample of her coffee at the annual conference of the Specialty Coffee Association of America.

Dehab Mesfin, a mentor and owner of Diamond Coffee Enterprise, joined other cooperative members to establish the Ethiopian Women in Coffee organization.

“A lot of women think there is a finite market out there, but Ethiopia and Africa are enormous. There is enough room for everybody to find their place. I always tell the women I mentor that anybody can copy your product but nobody can copy you,” she said.

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Encouraging entrepreneurs

ILO launches business plan competition to boost entrepreneurship in Ethiopia’s Somali region

The competition offers financial support and specialized training to promising business ideas, aiming to stimulate entrepreneurship and sustainable economic growth among refugees and their hosts in the Somali region.

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E4Impact MBA in Addis Ababa

Mba in impact entrepreneurship: an mba to develop your business.

V MBA edition

Starting date: November 2023

Duration: 18 months – part-time

Master Title: by Università Cattolica del Sacro Cuore (Italy)

Location: St.Mary’s university, Ras Abebe aragay St, Addis Ababa

E4Impact in collaboration with  ALTIS – Graduate School of Business and Society  and  St. Mary’s University  of Addis Ababa offers a  unique MBA in Impact Entrepreneurship  to provide  active and aspiring   Ethiopian entrepreneurs  with results-oriented education, coaching, and interaction with the local business community and potential investors.

The MBA program gives simultaneously an  academic and business acceleration experience.  It supports both active and aspiring entrepreneurs to:

• Develop the  business skills  necessary to guide a new venture or scale an existing business;
• Utilize  tools and solutions  for the start-up or scaling of a high growth business;
• Develop a  personal network of mentors and investors ;
• Establish  links with entrepreneurs across Africa .

Participants will be awarded a  degree from Università Cattolica del Sacro Cuore of Milan , Italy.

The Blended formula

The   Global MBA in Impact Entrepreneurship  helps MBA participants to apply what they learn to their business while  carrying on with their work  thanks to a unique and flexible blend of intensive weeks of in-class lessons, distance learning, long weekends in class and competitions.

Over 18 months, MBA participants spend  40 days in the classroom . Courses are integrated with  online video lessons  and  exercises.

Coaching & Mentoring

A key part of the E4Impact MBA is the work each participant does with the  Business Coach , a dedicated business consultant, who provides individual support in refining your enterprise. The Coach supports each participant in implementing the Business Plan and developing relationships with the eco-system.

MBA participants also receive experienced mentorship through regular contact with successful local and international business people.

MBA Curriculum

The E4Impact MBA is structured as a “training camp,” where each course directly responds to a particular need that arises while implementing a start-up or scale-up strategy. The MBA classes are divided into business courses and labs.

Business Courses

• Business Model Design
• Responsible Management & Impact Measurement
• Business Strategy
• Go to Market: Market Analysis
• Go to Market: Entrepreneurial Marketing
• Accounting for Entrepreneurs
• Financial Planning
• Entrepreneurial Finance
• Human Resource Management & Leadership
• Process & Project Management

Business labs

• Business Planning Lab
• Business Scaling Lab
• Sales and Negotiations
• Networking for Growth

Candidates must be strongly oriented to being an  entrepreneur . Specifically, prospective applicants must have:

• A  summary of a feasible business idea
• Payment of the application fee
• A  Curriculum vitae  (Resume)
• A  Reference letter
• A Copy of  certified Bachelor Degree Certificate
• A Copy of  certified Transcripts

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Entrepreneurial orientation and venture performance in Ethiopia: the moderating role of business sector and enterprise location

• Open access
• Published: 04 September 2018
• Volume 8 , article number  25 , ( 2018 )

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• Abdella Kosa 1 ,
• Idris Mohammad 2 &
• Dereje Ajibie 3  

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Entrepreneurial orientation in different perspective contributes to the success of ventures differently. Therefore, this study aimed to investigate the contribution of entrepreneurial orientation towards the performance of small ventures in the context of different business sectors and the location of the businesses. To achieve this objective, the primary data was obtained from a sample of 210 small firms which were selected from the central part of Ethiopia using two level multi-stage sampling. The finding of the study indicates that entrepreneurial orientation positively influences ventures performance, but it will determine more when enterprises are established in city areas and involved in the industry sector. Therefore, the owner/managers of enterprises should improve their practices of entrepreneurial orientation by introducing new lines, technologies, and market; improve workers’ participation in developing new ideas and design; and compete aggressively by taking a calculated risk. Finally, our implication for further study is that future research has to compare the transited and failed enterprises in longitudinal studies to capture the progress of entrepreneurial orientation among transited and failed firms.

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Given the current economic challenges facing many countries across the globe, the notion of engendering greater entrepreneurial activity has become a prominent goal for many national governments (Cooney 2012 ) because entrepreneurial activity increases employment (Kirchhoff and Phillips 1988 ) and influences the economy at the regional and national levels (Jinpei Wu 2009). Small firms have a potential to provide the ideal environment for enabling entrepreneurs to optimally exercise their talents, and to attain their personal and professional goals (Federal Democratic Republic of Ethiopia (FDRE) Ministry of Trade and Industry (MoTI) 1997 ). However, many small firms operate in a very competitive environment with increased risk and inability to forecast in the current unstable economy (Ndirangu and Mukulu 2014 ). Competitors with access to much larger pools of strategic resource have a greater flexibility in managing their external activities – timing of promotional campaigns, new product launches, and so on (Bianchi et al. 2012 ). In Ethiopia, small firms contribute less in job creation and development of economy when compared with counterparts in other countries due to financial problem, lack of qualified employees, lack of proper financial records, marketing problems, and lack of working premises and raw materials. Lack of information about market opportunities and standards and regulations is one of the underlying factors that hinder their performance (Gebreeyesus 2009 ).

According to Wiklund and Shepherd ( 2005 ), entrepreneurial orientation (EO) provides small businesses with the ability to discover new business opportunities and the discovery of new opportunities enhances their differentiation from other firms (Omisakin et al. 2016 ). The adoption of an entrepreneurial orientation as an indispensable variable to the growth oriented small firms seems pertinent (Ferreira and Azevedo 2008 ) because it is a significant contributor to a firm’s success (Mahmood and Hanafi 2013 ). In fact, high EO among small business owners enhances the formation and activation of personal strategies affecting business growth and performance (Omisakin et al. 2016 ).

It is not surprising that firms benefit from adopting and practicing entrepreneurial orientation in an effective way. This is because firms need to look for opportunities continuously by searching new market and identifying new product, taking a calculated risk that brings an attractive result, competing aggressively to win competitors, and following participative management system to encourage workers’ participation in innovation and a new way of doing things. All these activities need to undertake to improve their performance. The firms are uncertain about their existence without employing entrepreneurial orientations since firms are highly competitive, and technology and other environments are rapidly changing.

Even though firm performance is a focus area in the strategy of many owners/ managers of small firms, many researchers have targeted investigating the factors that affect firm performance, while the moderators used are different among different authors. Among the moderators, a firm’s resources, firm size, firm age, and educational level are widely used. However, we did not find the test of moderating impact of firm’s business sector and enterprises location in the relationship. The contribution of EO towards the performance of small ventures is different for the firms operating in different sectors and different locations. More specifically, ventures operating in cities perform better than ventures in small towns and rural areas and firms involved in industrial sectors perform better than firms involved in the service sectors.

To fill the gap, the following questions were answered; what is the current level of entrepreneurial orientation practice among small firms? What is the current level of performance among small firms? Do the Entrepreneurial orientation affect small business performance? Do a firm’s business sector and operating location moderate the relationship between EO and firm performance? Therefore, the findings of this study enable small firm owner/manager to better understand how to enhance their business performance. This study has also implications for policy makers and other parties involved in the promotion of small firms to see the need to support small firms, which would reduce unemployment for the youth, fulfill infrastructure and create meaningful results on the economic development. In addition, this study makes several contributions to the fields of entrepreneurial orientation and venture performance through a comprehensive review of the literature and empirically testing the connections.

Theory and hypotheses

• Entrepreneurial orientation

Entrepreneurial orientation (EO) is a firm’s ability to innovate, take risks, and proactively pursue market opportunities (Rauch et al. 2009 ; Wiklund and Shepherd 2005 ). Jinpei ( 2009 ) stated that Entrepreneurial orientation is defined as an individual’s attitude towards engaging in entrepreneurial activities, be it within an existing firm or creating a new venture. On the other hand, the term “entrepreneurial orientation” has been used to refer to the strategy making processes and styles of firms engaged in entrepreneurial activities (Lumpkin and Dess 2001 ). It captures the entrepreneurial aspects of a firm’s decision-making styles, methods, and practices of (Lumpkin and Dess 1996 ; Wiklund and Shepherd 2005 ). Rauch et al. ( 2009 ) conclude that EO represents the policies and practices that provide a basis for entrepreneurial decisions and actions. Therefore, EO influences entrepreneurs and small business owners in their engagement in business and product innovation, and market development (Carland et al. 1984 ). Generally, entrepreneurial orientation allows a firm to develop ideas and realize them in the form of new products and services, participate in risky projects, predict future requirements, and find new market opportunities (Covin and Slevin 1989 ).

Entrepreneurial orientation and venture performance

According to Venkatraman and Ramanujam ( 1986 ), performance can be measured with financial and operational (non-financial) indicators. Objective financial data for many businesses are not publicly available, and respondents are often unable or unwilling to provide the desired organization-level objective information (Fiorito and LaForge 1986 ,). Yet, subjective measures depend on judgmental assessments of respondents and these indicators cover both financial and non-financial indicators (Gonzalez-Benito and Gonzalez-Benito 2005 ). As a result, subjective performance measures may yield more complete information (Covin and Slevin 1989 ). Generally, many researchers recommend subjective measures of performance over objective measures.

Today’s dynamic business environment requires a firm to regularly innovate, take risk into account, give room for autonomy, be proactive, and aggressively compete to maintain or find a new position in the market place (Omisakin et al. 2016 ). The characteristics and motivations of small firm owner-managers have considerable influences on the performance of their firms (Davidsson 1989 ). Wang ( 2008 ) posits that EO is important for business performance. This suggests that firms adopting more EO perform better than those that lack such orientation (Omisakin et al. 2016 ). Other research suggests that entrepreneurial firms may benefit more from imitation than from high levels of innovativeness (Lumpkin and Dess 1996 ). In summary, the results of many studies indicate the positive relationship between EO and performance.

Innovativeness and firms performance

Covin and Slevin ( 1989 ) define innovativeness as the firm’s propensity to engage in new idea generation, experimentation, and research and development activities. Innovativeness is also defined as a firm’s ability and attempt to engage in new ideas or to innovate and create processes that may result in new products (Rauch et al. 2009 ). Covin and Miles ( 1999 ) agree that without innovativeness, entrepreneurship cannot exist and that innovativeness is a crucial part of firm survival strategies (Omisakin et al. 2016 ). A number of research has found a positive relationship between innovation and firm performance (Rauch et al. 2009 ; Justine et al. 2005 ). As a result, the importance of innovation as a contributing variable to the measurement of EO and performance is incontrovertible (Omisakin et al. 2016 ). Therefore, the following hypothesis were developed.

H1a: Innovativeness dimension of EO positively influences ventures performance

Proactiveness and firms performance

Proactiveness relates to forward-looking, first mover advantage-seeking efforts to shape the environment by introducing new products or processes ahead of the competition (Rauch et al. 2009 ; Lyon et al. 2000 ). Proactive companies perform better than rivals because they respond market changes instantly (Hughes and Morgan 2007 ), they become leaders of the industry with opportunities they find before their rivals (Lumpkin and Dess 1996 ). Many studies on the relationship between EO and performance/growth have found positive relationship between proactiveness and performance (Lumpkin and Dess 2001 ; Hughes and Morgan 2007 ; Rauch et al. 2009 ; Sascha et al. 2012 ). Therefore, our hypothesis also proposes a positive influence of proactiveness on performance.

H1b: Proactiveness dimension of EO positively influences venture performance

Risk taking and firms’ performance

Lumpkin and Dess ( 2001 ) argue that risk-taking refers to taking calculated business opportunities when the outcome of the risk cannot be determined immediately. Similarly, Wiklund and Shepherd ( 2003 ) suggest that risk-taking orientation is the willingness of an entrepreneurial firm to invest resources in a venture where the outcome may be highly uncertain or unknown (Omisakin et al. 2016 ). Risk taking consists of activities such as borrowing heavily, committing a high percentage of resources to projects with uncertain outcomes, and entering unknown markets (Lyon et al. 2000 ). Therefore, risk taking will contribute for the performance of ventures.

H1c: Risk taking dimension of EO positively influences ventures performance

Competitive aggressiveness and firms performance

Competitive aggressiveness refers to a firm’s propensity to directly and intensely challenge its competitors to enter the market or improve its position, that is, to outperform rivals in the market place (Lumpkin and Dess 1996 ). Competitively aggressive firms often respond to such challenges with head-to-head confrontation (Shan et al. 2016 ). Mahmood and Hanafi ( 2013 ) examine the mediating effect of competitive advantage on the relationship between entrepreneurial orientation and performance of women-owned small and medium enterprises (SMEs) in Malaysia. Competitive aggressiveness has been found to enhance firm performance (Lyon et al. 2000 ). Justine et al. ( 2005 ) found a positive relationship between competitive aggressiveness and firm performance.

H1d: Competitive aggressiveness positively influences venture performance

Autonomous and firms performance

Autonomy refers to the independent action of an individual or team in bringing forth an idea or vision and bringing it to fruition (Lumpkin and Dess 1996 ). It reflects the strong desire of a person to have freedom in the development and implementation of an idea within an organization (Lumpkin et al. 2009 ). Evidence of autonomy in firms may vary as a function of size, management style, or ownership (Lumpkin and Dess 1996 ), for example Justine et al. ( 2005 ) find that autonomy have a positive impact on the performance. The opinions and empirical evidence from research have concluded that autonomy enhances the firm’s positive performance (Omisakin et al. 2016 ). Generally, all the components of entrepreneurial orientation are positively related with performance of small firms.

H1e: Autonomous dimension of EO positively influences venture performance

Entrepreneurial orientation is widely acknowledged as a strong predictor of firm performance. There is little consensus on what constitutes suitable moderators, however, there are both external and internal variables (Wiklund and Shepherd 2003 ) and various environmental variables (Tan and Tan 2005 ) that moderate the relationship. Investigations on the direct effect of EO on firm performance have not provided a comprehensive description of the relationship (Wang 2008 ; Wiklund and Shepherd 2005 ), whereas some of the research in this area ignores factors that may moderate the strength of EO on firm performance (Omisakin et al. 2016 ). Wiklund and Shepherd ( 2003 , 2005) indicate that EO has a positive influence on firm performance by taking into consideration certain environmental factors that may have a moderating effect on the EO-performance relationship.

The intervening variables in the study of Davidsson ( 1989 ) refer to the characteristics of the industry and the firm as well as those of the individual differences attributable to characteristics of the industry. In this study, we hypothesize that firm’s established location and enterprise sector moderate the relationship because the firms operating in different sectors may practice EO differently. The relationship between entrepreneurial orientation and a business’ performance varies depending on the industry (Zahra 2008 ). Industry type (Hitt and Tyler 1991 ) may affect the complexity and styles of strategy making (Dess et al. 1997 ). We also observed that firms located in different location practice EO differently and also grow differently. As such, we proposed that,

H2: The involvement of firms in manufacturing sector intensifies the positive influence of entrepreneurial orientation on the ventures performance.

H3: The establishment of firms in larger cities intensifies the positive influence of entrepreneurial orientation on the ventures performance.

Control variables

Given that a firm’s performance and the level of entrepreneurial orientation can vary within firms depending on their age and size (Lumpkin and Dess 1996 ; Van Doom et al. 2013 ; Wales et al. 2013 ; Shirokova et al. 2015 ). Businesses of different size and age may exhibit different organizational and environmental characteristics, which in turn may influence performance (Wiklund and Shepherd 2005 ). Therefore, these variables were included as controls.

The firm age is measured as the number of years (Shirokova et al. 2015 ). The older a firm is, the more hierarchy and inertia it has and thus the less it is motivated to shift organizational directions by innovating new products or services (Huergo and Jaumandreu 2004 ). Similarly, Luo et al. ( 2005 ) argue that younger firms are more likely to exhibit entrepreneurial strategic behaviors. Conversely, managers of younger firms lacking established business processes, experiential market knowledge, and well-developed organizational norms often engage in excessive trial and error behavior, resulting in diminished capacity to link strategic moves to performance outcomes (Slevin and Covin 1997 ). The EO-performance relationship would be strongest among younger firms (Anderson and Eshima 2013 ).

Several research found that firm size has a positive relationship with EO in SMEs (eg. Stam and Elfring 2008 ). Wiklund ( 1999 ) asserts that EO strengthens the performances of small firms because smallness fosters the flexibility needed to make EO initiatives successful. On the other hand, smaller firms may face more severe challenges in exploiting opportunities because of their small resource bases (Stam and Elfring 2008 ). Majority of studies have found that men have a greater probability of becoming entrepreneurs compared to female (Allen et al. 2008 ; Wagner 2007 ; Bernat et al. 2016 ). Lorunka et al. ( 2011 ) found that the founder’s gender is important factors in predicting growth in a small enterprise. The impact of the independent variables on entrepreneurship is the same for both men and women (Bernat et al. 2016 ).

Research design and sample size

This study has a descriptive and explanatory research design. In selecting respondents to obtain primary data, we applied two levels of multi-stage sampling. In the first stage, central part of Ethiopia has been selected judgmentally since many of the small firms operating in the central part of the country. In the second stage, a sample of five cities with a large number of MSEs were selected. The researchers focused only on the grown small enterprises that are registered, licensed formally and currently operating under federal micro and small enterprise development agency (FeMESDA). These firms are categorized under three different sectors including manufacturing, construction, service, trade, and urban farming, in which all are considered for the sample.

A sample of 226 owners/managers were selected using convenience sampling technique from the Small firms in central Ethiopia, which involved in five different sectors. Out of these firms, the responses of 210 firms were validated and used for the analysis. For sample size selection, the sample size determination range developed by Malhorta Naresh was adopted. For instance, there are 1139 small firms grown to medium enterprise in the last 5 years in Addis Ababa (capital city), which fall in the fifth range in Malhorta Naresh’s sample size determination table. In this range, a large sample size of 125 respondents was selected from Addis Ababa. The number of firms grown to medium enterprise in Debre Berhan, Fiche, and Ambo is 17, 18, and 16 respectively. Therefore, the highest sample of 125 from Addis Ababa, 50 from Adama, 16 from Ambo, 18 from Fiche and 17 from Debre Berhan were selected.

Data collection instruments

The questionnaires that consisting of three parts which were developed partly by using a seven-point Likert scale were distributed to the selected owner/managers. Researchers use different instruments to measure performance that is classified under financial and non-financial performance. The operational performance captures indicators such as the introduction of new products, market-share, product quality, and the like (Weezel 2009 ). According to Wiklund and Shepherd ( 2005 ), performance is multidimensional in nature, and it is therefore advantageous to integrate different dimensions of performance in empirical studies. Gonzalez-Benito and Gonzalez-Benito ( 2005 ) suggest the use of subjective measures because subjective measure facilitates the measurement of complex dimensions of performance. Therefore, in this study, venture’s performance was measured non-financially by the responses to three performance indices using a 7-point Likert scale ranging from 1 ‘Much Worse’ to 7 ‘much better’, for all four items: improvement in profitability, sales, resource, and employee.

The EO scale consists of nine items under three dimensions of innovativeness, pro-activeness and risk-taking (Covin and Slevin 1989 ). Okhomina ( 2010 ) used four dimensions of entrepreneurial orientation that were measured using a thirteen–item, 7-point Likert-type scale designed to measure respondents’ entrepreneurial orientation. Later, Hughes and Morgan ( 2007 ) used the 14 item questionnaire for Entrepreneurial orientation that is measured on seven point Likert scale. Hughes and Morgan ( 2007 ) modified and developed to capture the entrepreneurial orientation dimensions of innovativeness, proactiveness, risk-taking, competitive aggressiveness and autonomy and gauged on a seven-point Likert scale. We adopted this measure for our study as a measure of EO by making minor modification on some items of competitive aggressiveness and autonomy. The items used for competitive aggressiveness includes, “In general, our business takes a bold or aggressive approach when competing” and “We try to undo and out-maneuver the competition as best as we can.” The modified items used for autonomous includes “Employees are permitted to communicate and act without interference”, “Employees independently perform jobs that allow them to make and instigate changes in the way they perform their work task.”, and “Employees are given authority and responsibility to act alone if they think it to be in the best interests of the business.” The higher score reflects higher levels of entrepreneurial orientation.

The sector in which firms operate includes manufacturing, construction, service, trade, and urban farming. The sector type is dummy coded as 0 for the manufacturing industry and 1 for another sector. The firms were categorized to city firms and regional town firms. Regarding the control variables, firm age was measured by the number of years since the firm’s establishment (Shirokova et al. 2015 ). The dummy variable for firm age is coded as 0 = firms established before 10 years, and firms with 10 or fewer years in the establishment are coded as 1. Finally, to determine the size of firms, we used the number of permanent and temporary employment under an enterprise for this research, and we coded 0 for firms with less than 30 employees and 1 for firms with 30 or more workers.

The measurement instruments were tested for validity and reliability before analysis was made for completeness and compatibility with the purpose of the study. Pre-tests of the questionnaire was conducted with ten firms of varying sizes and belonging to different sectors for getting feedback about the clarity of the survey items and to test new questionnaire items developed for the research. Cronbach’ alpha test of reliability was used to measure the reliability. The data gathered through questionnaires were analyzed and presented by quantitative methods of data analysis such as descriptive statistics analysis, correlation analysis, and multiple linear regression analysis. The results were interpreted using mean, standard deviation, and coefficients and presented quantitatively through tables and figures to give a condensed picture of the data.

Results and analysis

Results of descriptive statistics.

The mean value 4.12 reveals that the average performance of firms is moderate. Regarding the control variables, the mean value for owner/manager gender is .20 that means females were about 2 out of 10 owners/managers. From this, we understand that most of the firms grown to medium enterprise are the firms led by males compared to females. The number of older firms that are grown to emerging medium enterprises is less than the younger firms. The firm size that is measured by a number of permanent and temporary workers is one of the items that is used to measure the growth of the firms and majority of our respondents have more than 30 workers, this is because the majority of our respondents are involved with the manufacturing and construction sectors which have numerous enterprises grown to emerging medium enterprises (Table 1 ).

Most of the dimensions of EO are moderately practiced in Ethiopia. We see that the firms in Ethiopia are moderately innovative, while they are moderately better in proactiveness. Regarding risk taking propensity, it is moderately low. Competitive aggressiveness and autonomous are also moderate. In addition, among the five sectors in which firms are involved, the manufacturing sector covers a large part of firms grown to an emerging medium enterprise. This reveals firms involved with this sector are more successful and grown to the medium level. The location in which firms established is also an important factor that contributes to the success of the firm. That is, there are more opportunities to grow in large cities than regional cities. Among the main effects, innovativeness, proactiveness, risk taking and autonomous are positively correlated with the performance of ventures, while competitive aggressiveness is not significantly correlated with venture performance (Table 2 ).

Results of regression analysis

The adjusted R square .683 in the above table indicates that when entrepreneurial orientation dimensions are alone, approximately 68.3% of the variance of the performance of ventures is explained by them. But with the addition of moderator and interactions, the R square value increased to .711. That means when EO is combined with moderators and interactions, they explain of variance in the venture performance.

Firm size significantly influences the venture growth at the 0.1 significant level. Regarding the components of EO, proactiveness, risk-taking and autonomous variables significantly influence the venture growth in model 3. The coefficient of a constant which is 1.739 at .000 indicates that control variables and main effect in common positively influence the venture’s performance. The result of controls indicates, the more the number of employees, the better the growth of the enterprises and the younger the firms, the better the growth of ventures. A 1-standard deviation increase in proactiveness gives rise to a 7.0% increase in performance relative to the average performance level. This means as firms are more proactive, the performance of ventures improves. Similarly, a 1-standard deviation increases in risk taking gives rise to an 8.1% increase in performance relative to the average performance level. That is, risk taker firms tend to perform better than risk-averse firms. Finally, the influence of autonomy (β = .157, .000) on ventures performance is positively significant. That means as the ventures autonomous level increases the performance of the venture will increase. That is, a 1-standard deviation increase in autonomous gives rise to a 6.28% increase in performance relative to the average performance level.

Generally, the more a firm’s proactiveness, risk taking, and autonomous, the better the performance of the firm. The moderating variables, business sector, and ventures location are added to the main effect and control variables. The constant increases from 1.539 to 1.739 in this model after moderators are added. This means the influence of the independent variables is improved with the moderators. Among the moderators, business sector has a significant influence on the performance. The overall influence of entrepreneurial orientation on performance enhances when the interaction of innovativeness and business sector, innovativeness and enterprise location, proactiveness and business sector, and autonomous and business sectors are added to the model (model 4). When all entrepreneurial orientation dimensions are combined with the business sector and enterprise location, the coefficient is 1.226.

Ventures performance and transition

Even though the firms selected for the study are the grown firms, they show a moderate performance. The performance of these ventures is better among young firms led by men, and ventures involved with the industrial sectors. The gender of owners/managers is dominated by males that mean women participated less as owner and manager of a firm. Regarding the firm size, the majority of firms have more than 30 workers and those are mostly the firms involved in manufacturing and construction sector. This is because the firms with less than 30 employees are service-oriented ventures including firms involved in a trade.

When we see the mean value of firm age, more than half of firms grown to start-up medium enterprises in the last 5 years are younger firms. This is because younger firms come up with new thinking, fresh ideas, and interest that make them give full consideration to their career. Among the sectors, the manufacturing sector is the highest grown sector comparatively.

The number of firms grown to start-up medium enterprise is higher in Addis Ababa than the summation of four regional towns selected for the study. This is why there are higher market and customers in larger cities than regional towns. Firms in capital cities have a higher potential for growth than firms established in regional towns because there are a large number of people in the city compared with the regional states, which contributes to higher customers and markets.

Regarding the sectors, the manufacturing sector is the highest in the number of existed firms. Specifically, in Addis Ababa, the manufacturing sector is approximately equal to the summation of all other sectors. That is, the manufacturing sector is more successful in larger cities. In the last 5 years, only a few of small firms have grown to a medium enterprise, in which most of them are involved with manufacturing and construction.

The total capital recorded and the level of employment is the higher among these two sectors. As a result, these two sectors have special consideration since they are contributing to the economy by reducing unemployment level and generating revenue for the members. The government also encourages firms which have grown to emerging medium enterprises to engage in these sectors.

Entrepreneurial orientation practices

Innovativeness.

The elements in innovation such as technology utilization, marketing, and management style are moderately utilized, but when we are comparing with other firms that are not transited and failed, the firms have grown to medium enterprise overweighs them. There is a high control on employees who are trying to apply their own work because the owner/managers believe that employees are not capable of improving the existing system. Most researchers in leadership recommend a close relationship between the manager and employees, but such kinds of relationship do not exist between owner/manager and workers in most of the Ethiopian firms. This leads to the poor innovativeness of firms, which depends only on the leader even if small firms are a spring of new innovation. In most cases, these firms are unable to employ different marketing strategies such as promotion as it is applied by large firms.

Proactiveness

Most firms generated new actions which other competitors are following. They are the first in introducing new products/services, administrative techniques, and operating technologies comparatively, but in introducing new products/services or ideas they rely on a leader. This means being the first in providing goods/services with a new model, design, and different product is the key to attracting new customers and retaining the existing customers. However, the leaders were not providing sufficient incentives for individuals who are proactive in identifying and applying new ways before others. Comparatively, they are also finding a new market and customers before their competitors. The survival and growth of any firm depend on the market share and customer loyalty. Therefore, firms that identify and find a new market before the competitors are advantageous for getting a new customer that helps them to have larger market shares. Developing new administrative techniques and operating technologies prior to competitors are also helpful in getting things better done by workers and producing easily with low resource and effort. Saving resource and generating better outcome with minimum effort occurred because of new appropriate technology that varies the difference between revenue and cost. Generally, the secret for the growth of these enterprises is being the first in introducing a new product, technologies, and searching for new markets.

Risk taking

The owner/managers are reluctant to encourage the employees who are ready to take calculated risks and to try new products and ideas, while they emphasized on exploration and experimentation of employees. Most managers in small firms are not willing to distribute power and give freedom to their workers that hinder these employees to take a calculated risk that may help them to bring new ideas on the product, process, and technology. These make the firms not to try frequently the new products and ideas. On the other hand, firms attempt to explore opportunities that are found in their area, but it is not successful since only owner managers strive to search for opportunities. In most cases, the explored opportunities are not successful after experimentation. As risk aversion prohibits firms from exploiting new opportunities regarding production system, marketing, and technology. Extreme risk-taking can also hurt a firm due to facing undesirable risks, such as loss of money, equipment, key personnel, and customer leading a firm to failure.

Competitive aggressiveness

Even though they follow poor marketing strategy, they compete intensely and powerfully against their local small firm competitors rather than remaining status quo to avoid clashes. However, their competition against large firms is poor and they are not aggressive and compete harshly. Most of these firms are competing on product differentiation in manufacturing and service sector, while construction and trade sectors are competing on prices. The aggressive competitive measures that firms are taking to avoid failure help them to win and grow their enterprises. As we observed, most manufacturing industries, specifically metal and woodwork, and textile sectors are producing attractive design and a new model to attract customers and win the competition. Enterprises involved in the construction sector are mostly competing with a price to win a bid since most of their work is dependent on the bid. Even though they are primarily competing on a price, they also compete by developing new model and design.

The finding of the study shows that the firms are moderately autonomous because they strictly follow procedures and will not give complete freedom to workers in making decisions. The absence of independence and freedom prevents the enterprise from getting new ideas that contribute to the success of the firm. Therefore, the success of the firm depends on the skill of the manager, rather than being the outcome and effort of the enterprise’s members. These cause the enterprises not to survive and transit to the next level. Theoretically, there is a closer control in small firms than large firms. Previously, our study subject is firms transited to start-up medium by winning the competition in small firms, but now they are supposed to compete against larger firms that give more freedom and independence, which contribute to the innovation of new processes, products, and technology.

The role of entrepreneurial orientation on ventures performance

The research on the relationship between EO and firms performance provides different findings. The direction of this relationship is also different between different studies. For example, some studies (Covin and Slevin 1986 ; Hult et al. 2003 ; Lee et al. 2001 ; Wiklund and Shepherd 2003 , Kroeger 2007 ; Davis 2007 ; Giudici and Reinmoeller 2013 ; Zahra and Covin 1995 ; Ozgen and Baron 2007 ; Wiklund and Shepherd 2003 ; Lumpkin and Dess 1996 ; Covin and Slevin 1991 ; Wang 2008 ; Omisakin et al. 2016 ) find a positive relationship, while others (George et al. 2001 ; Covin et al. 1994 ) find no significant relationship between EO and performance. In our case, among the EO dimensions proactiveness, risk taking, and autonomous are significantly positively related to firms growth, while innovativeness and competitive aggressiveness are not significantly related to ventures performance. The moderators also positively moderate this relationship.

The firms involved in the manufacturing sector are proactive, risk takers, compete aggressively and autonomous than firms involved in other sectors. The specific jobs in this sector mainly include wood and metal work, textile and garment, leather and leather products, and construction input production. As a result, it is easy to introduce new product and design, a new way of doing things, and new technology. These firms compete not only by price, but also compete on design, quality, and appearance of their products. Most ventures involved with the industrial sectors are generating new actions, including finding new market and customers before the others because they have to design differently and bring a new model before others.

The owners/managers of industry sector ventures emphasized more on the exploration and experimentation by employees. Therefore, EO influences venture performance in this sector more than their counterparts. The industry sector is larger in size than service and trade sectors in which high control of employees who are trying to apply for their own work because the owners/managers believe that employees are not capable of improving the existing system. The emphasis on the marketing of tried and true product/services is also better for these firms. That is, the less the control and the more emphasis on tried and true products in an industry sector, the better the performance of ventures.

The location also positively moderates the relation between EO and venture performance. Firms located in the larger city are more innovative, proactive, competitive and autonomous than firms established in regional towns. These are because of high competition in the large city, which encourage firms to innovate a new way of doing things and technology that helps to produce new products, and to search for new markets. A risk is associated with activities that have good promise to return. As a result, firms in larger cities are more autonomous and risk takers. In general, firms involved with the manufacturing sector and adopting strong EO tend to perform more than their relatives. Besides, firms located in larger cities that adopt EO grow much better than enterprises established in regional towns. More specifically, the performance of ventures in larger cities is better than the ventures in regional towns because of the better practice of EO in larger cities.

The introduction of new products/services, administrative techniques, and operating technologies are better among firms established in larger cities because they are the first in getting new technologies imported. In addition, the number of products/services users and competitors are higher in larger cities that make them provide goods/services differently with a new model, design, and different product to win the competition. Most managers of small ventures in regional towns are not willing to distribute power and give freedom to their workers that hinder these employees to take a calculated risk than venture managers in larger cities. These make the ventures to try frequently the new products and ideas generated from all workers. This is why the growth of ventures in larger cities is better than the ventures in regional towns. The level of innovation in products, technologies, and markets is higher among firms operating in the capital city than firms in regional towns because there are larger ventures in city areas from which small firms learn. The absence of independence and freedom prevents the enterprise from getting new ideas that contribute to the success of the firm in regional towns. Regarding the control variables, we find that younger firms perform well to grow towards the next level better than the older one and firms with a large number of workers tend to grow more.

Even though innovativeness does not affect the performance alone, the interaction of innovation with the business sector and enterprise location influences the performance positively. That is, the firms who are innovative and involved with the manufacturing sector will perform more than their counterparts. Similarly, innovative firms located in larger cities perform better than their counterparts.

Conclusions and implications

The performance and entrepreneurial orientation practice among Ethiopian small enterprises are moderate. In general, entrepreneurial orientation positively influences ventures performance, and specifically, proactiveness, risk-taking, and autonomous dimensions positively determine venture performance. The level of influence is increasing as firms are involved with the manufacturing sector since the entrepreneurial orientation is better and contributed more to the venture’s performance in this sector. Similarly, the level of influence is increasing as firms are being established in larger cities because the firms in cities have more customers and competitors causing them to generate unique strategies that lead them to outstanding performance. Moreover, younger ventures with new ideas and effort and ventures with a large number of workers have a better performance than older and ventures with a small number of workers.

Practical implications

It is widely recommended for small and medium enterprises to employ entrepreneurial orientation for their venture performance. In addition, there are also other variables that facilitate the effective utilization of entrepreneurial orientation for a better venture performance. The extent of influence is also different for different firms operating in different situations. Therefore, by taking into account the findings of our study, we recommend the following suggestions for government bodies and venture owner/managers. The entrepreneurial orientation activities are moderately practiced during their growth to medium-sized enterprises, but this is not adequate for competing with the existing medium and larger enterprises. Therefore, the enterprise’s owner/manager should improve developing new products, entering new markets, introducing new technology, taking new ideas from working members, competing aggressively, and working autonomously by taking calculated risks. The impact of entrepreneurial orientation on the performance of ventures is higher when firms are involved with the industrial sector and operating in a city with a large number of populations. As a result, the owner/managers should assess and recognize the sector in which they involve and the location in which they are operating.

Limitations and future implications

This study is not without limitation. First, the study was conducted on only firms transited from small scale to medium-sized enterprises which didn’t include failed firms. However, it would have a paramount importance if firms not transited to the next stage were also included. Secondly, the study area from which primary data obtained is limited to central Ethiopia, while it could be more representative if more study areas were included in the study. Third, data was collected in one shot. Thus, considering these limitations, we suggest the following ideas for further research. First, it has more importance if the strategies of both transited and failed enterprises are studied comparatively to differentiate the working and poor strategies. Second, we suggest future research to include more study areas under consideration. Finally, we recommend researchers to undertake a longitudinal study to identify the progress of these firms in order to test their impacts on performance adding more variables including the bank finance, venture capital, and angel investors.

Abbreviations

Federal micro and small enterprise development agency

Small and medium enterprises

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Acknowledgements

The authors wish to thank the editor-in-chief and the external language editor for their helpful contribution. Many thanks to the anonymous reviewers for insightful comments and suggestions. We also thank the respondents for responding to the questionnaire, we distributed to them.

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Abdella Kosa

Department of Management, Debre Berhan University, Debre Birhan, Ethiopia

Idris Mohammad

College of Business and Economics, Debre Berhan University, Debre Birhan, Ethiopia

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Kosa, A., Mohammad, I. & Ajibie, D. Entrepreneurial orientation and venture performance in Ethiopia: the moderating role of business sector and enterprise location. J Glob Entrepr Res 8 , 25 (2018). https://doi.org/10.1186/s40497-018-0110-x

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Haramaya University

University Industry Linkage and Entrepreneurship Development Directorate

University-Industry Linkage and Entrepreneurship Development Directorate (UILEDD) was was launched in 2018 with the aim to achieve expected impact and satisfaction in university-industry linkages, business/technology incubation, and students’ practical skill development. This directorate has two Associate Directorates; Associate Directorates for Entrepreneurship Development and Business Incubation, and Associate Directorates for Internship. It has the mandate to link the university with different industries in eastern Ethiopia and beyond for mutual benefits through students’ practical attachments, training, students and staff internship and externship, educational visits, research, joint research with industries, staff exchange, and other related activities. One of the objectives of this directorate is to upgrade our graduates’ skills and attitudes in their respective field of studies through acquiring practical skills from industries. Industries will have the opportunity to be benefited from the human resources of the University through tailor-made trainings, short and long term trainings, research and technology generation and adoptions. We believe that industries play indispensible role for production of competent and skillful graduates, and hence we give considerable attention for vibrant university-industry linkage. The directorate shall also work hard to link the university with different industries in order to ensure and maintain sustainable and resilient mutual relationships. This will offer the opportunity to improve competency of our graduates, and to produce marketable graduates that will bridge the gap in skilled human resources of different industries of the country and beyond.

UILEDD also formulates  different programs (capacity building for community schools, coordinating and facilitating student placements /interns/, Informal Adult Education, Seeking opportunities for entrepreneurship trainings etc.) which help to address the needs of community in a way that helps students to learn or acquire knowledge, attitude and skills from the community. Designing starts with defining the nature of community needs, then based on the nature or scope of the needs, there shall be setting of objectives, planning and setting strategies to achieve the objectives.

Entrepreneurship and business/technology incubation

Entrepreneurship training is considered as the most effective ways to reorient  our graduates from job-seeking to becoming self-employed and entrepreneurial.  Series of entrepreneurial training workshops shall be developed and given to prospective graduates. Moreover, the same trainings shall be given to junior class so that they can develop entrepreneurship mindset and be prepared to develop innovative business ideas that enable them to compete in business idea competition. The role of the directorate in this regard is to facilitate, coordinate and promote entrepreneurial training for students so as to foster and promote entrepreneurial thinking among University community (students, staff members) through designing and implementing wide range of programs and activities in collaboration with concerned bodies and institutions. The directorate also invites students and staff to develop business ideas and innovation for competition and facilitate linking winners of the competition with funding agencies. There shall be opportunities for funding business ideas and/or projects that will particularly benefit Haramaya University based on fund availability. To this effect awareness creation will be given to first year undergraduate students after which successive trainings shall be given to develop the skill of the students to develop business plan and/or projects for competition. Business incubation center shall be used to facilitate these activities. There is technology business incubation center in the College of Business and Economics with a mini-branch at Haramaya Institute of Technology (HiT) that is used by students as well as the academic staff.

Linkages and Internships

This is the channels through which knowledge and technology is transferred and shared between the university and the industries and different business organizations so that it would be integrated into products and services. University staff and students shall be linked with industry for collaborative research and consultancy works, and obtain opportunities in industry for practical experience. The UILEDD and concerned academic colleges jointly shall implement planned activities which include establishing and strengthening linkage along with entering Memorandum of Understanding amongst academic and research institutions and industries. The Directorate facilitates conditions for placing university students to industries for practical attachment and work based learning. It also arranges educational visits for students and industries and experience sharing for industry workers in the university. Moreover, it facilitates joint research works and technology innovation by staff members of the university and industry workers. The Directorate has the following approaches which can be executed through described modalities. Approaches listed below are not exhaustive and there are conceptual overlappings. There can also be differences in their application across colleges and institutes which may need further conceptualization.

• University-Industry Linkage
• University-School Linkage
• Community Based Practical Training (CBTP)
• Team Training Program (TTP)
• Community Attachment
• Practical Attachment
• Service Learning
• Work Based Learning
• Collaborative Research Works
• Functional Adult Education
• Educational Visit/Trips
• Fieldwork/Clinical Placement

An institutional academic networking and partnership is an agreement to do UILED activities together that will benefit Haramaya University and all involved partners (institutions and organizations) and bringing results that could not be achieved by operating alone. A successful partnership and networking enhances the impact and effectiveness of action through combined and more efficient use of resources; promotes innovation; and is distinguished by a strong commitment from each partner. Networking and partnership start from need assessment and designing appropriate UILED approaches.

Networking and Collaboration

There shall be networking and partnership between or among departments/colleges within the University and among different institutions and organizations in the country as well as outside the country with the aim of creating and expanding opportunities for institutions and organizations to collaborate and exchange, experiences, knowledge, resources and information relevant to success of UILEDD activities.

The vision of UILED is to make Haramaya University center of excellence in University-Industry Linkage and Entrepreneurship Development at the national level by 2030.

The mission of UILED is to create sustainable University-Industry Linkage, and to promote entrepreneurship culture and eco-system in the community to support the socio-economic development of the Nation.

The (UILED) of Haramaya University aimed to establish and enhance mutual and effective university-industry linkage, technology business incubation centers, and entrepreneurship development thereby promote knowledge and skills to students, staff and business communities.

In line with this the goals of UILED are to:

• Establish strong and sustainable University-Industry Linkage in Ethiopia.
• Equip graduates with practical knowledge and skill of working in industries.
• Promote and support community and industry-based problem solving research.
• Build entrepreneurship-oriented communities.
• Facilitate generation and enrichment of innovative business ideas.
• Support the emergence and the survival of high potential start-up, and existing firms.
• Facilitate and promote the commercialization of university research outcomes and startups.
• Facilitate university wide institutional IP rights services.

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Entrepreneurship Development Center – EDC

In accordance with the Growth and Transformation plan (GTP), the overarching objective of government is to reduce poverty by 2015. This includes an emphasis on the unleashing of the potential of micro and small enterprise sector to create employment opportunities, wealth and alleviate poverty through entrepreneurial skills training and provision of business development services. Many initiatives have been put in place to meet these objectives; among these is the Entrepreneurship Development Center (EDC- Ethiopia), the lead implementing agency of the Entrepreneurship Development Program (EDP).

The EDP is an innovative development initiative launched by the Government of the Federal Democratic Republic of Ethiopia represented by the Ministry of Urban Development, Housing and Construction (MoUDHCo) and the Federal Micro and Small Enterprises Agency (FeMSEDA),   in partnership with the United Nations Development Programme (UNDP), along with support from the Government of Canada. The program aims to foster the emergence and growth of an indigenous cadre of competitive and sustainably profitable SMEs in Ethiopia.

The Entrepreneurship Development Center- Ethiopia was officially launched in May 2013 with the aim of identifying growth oriented enterprises as well as potential entrepreneurs. This is done in order to equip the target beneficiaries with much needed entrepreneurial skills and competencies that enable them to establish, run and operate sustainable, profitable and competitive businesses. Indigenous entrepreneurs with enhanced capacity to unleash their full potential for job creation, income generation and improving livelihoods are thereby able to contribute to poverty reduction in Ethiopia. The target beneficiaries of the services provided by the EDC- Ethiopia are growth-oriented enterprises as well as potential entrepreneurs, unemployed youth, women entrepreneurs and university students.

The Center currently provides a comprehensive package of support services to aspiring and existing entrepreneurs. Potential entrepreneurs as well as existing micro and small enterprises (MSEs) are offered a flagship 6-day Entrepreneurship Training Workshop (ETW), intensive entrepreneurship training as well as and other customized entrepreneurship trainings. The trainings are complemented with a comprehensive and integrated range of business development support and advisory services for targeted beneficiaries. These include entrepreneurial and management skills training, technical assistance in the preparation and review of business plans, business counseling, assistance in sourcing credit, and assistance in identifying local subcontracting opportunities between micro and small enterprises with larger local companies.

In order to have competent local entrepreneurship trainers and Business Development Service (BDS) Advisors, the center provides additional training for selected potential trainers and BDS Advisors. Business development support and advisory services (BDS) are also provided to business owners to improve their business management and operational skills and thereby enhance their capacity to become competitive, more profitable and expand or diversify existing businesses in order to establish new sustainable businesses.

Recent additions to the services provided by EDC-Ethiopia include Innovation for Development Service that provides support for innovators and entrepreneurs with innovative ideas as well as other innovation services. The EDC-Ethiopia has direct responsibility for delivering the service mix mentioned above in addition to developing best practices and piloting promising initiatives for entrepreneurship development. The Center also in the process of inaugurating five Centers of Excellence for Entrepreneurship established in five selected public Universities in the country.

The head offices of the Entrepreneurship Development Center (EDC)- Ethiopia are located on the third floor of Nega City  Mall, Kazanchis, Addis Ababa. In order to expand and increase the geographic coverage of the activities and services, EDC-Ethiopia also has four regional offices that have been established in four regions including SNNPR with a regional office located in Hawassa, in Tigray with a regional office located in Mekelle, in the Amhara region with a regional office located in Bahir Dar as well as in the Oromiya region with a regional office located in Bishoftu.

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