Business Startup Motives and Growth Expectations of Micro and Small Small-Scale Entrepreneurs in Southern Province of Sri Lanka: The Mediating Role of Entrepreneurial Orientation

Abstract

New venture creations are vital for the economic growth of any country because of its contribution to employment generation, employment generation, GDP, innovations and value additions. Though a large number of new venture creations occur every year in Sri Lanka, research findings highlighted that a smaller percentage was able to survive. Hence, the number of business establishments cannot be considered as a meaningful indicator of economic growth of the country and the high failure rate is a crucial issue. Past studies revealed that business startup motives effect on the business growth and Entrepreneurial Orientation (EO) plays a crucial role in directing the business towards success. Studies are lacking about the impact of business startup motives on the success and survival of newly established ventures and the mediating role of the EO on the relationship between start-up motives and new venture success. Therefore, the present study focused to reveal whether significant relationship exists between business startup motives and growth expectations; growth expectations between the necessity driven (NDEs) and opportunity driven entrepreneurs (ODEs); and whether EO plays a mediating role on the relationship between business startup motives and growth expectations. Independent Sample T test and Structural Equation Modeling were applied to test the hypotheses. Findings revealed that significant difference exists between the NDEs and ODEs in terms of proactiveness, competitive aggressiveness, and autonomy and no significant difference exists in growth expectations between the NDEs and ODEs. Entrepreneurial Orientation partially mediates the relationship between business startup motives and growth expectations.