Impact of entrepreneurial competencies on the performance of agribusiness SMEs: A case study in Ja-Ela divisional secretariat division, Sri Lanka

Abstract

Small and medium-sized enterprises (SMEs) play a crucial role in the economic and social development in Sri Lanka and a lack of entrepreneurial competencies among SME entrepreneurs is one of the factors hindering SME performance in the Sri Lankan context. Hence, this research aimed to identify the entrepreneurial competencies that impact agribusiness SMEs' performance in the Ja-Ela Divisional Secretariat Division and to provide suggestions to develop these competencies to upgrade agribusiness SMEs in Sri Lanka. A field survey with a pre-tested structured questionnaire was conducted on a randomly selected sample of forty agribusiness SMEs from eight GN divisions in the Ja-Ela DS Division to collect primary data. In this research, strategic competency, organizing competency, opportunity competency, commitment competency, learning competency and relationship competency were measured as entrepreneurial competencies. SME performance was measured using percentage growth in revenue, market share, and adaptation to innovation. Data were analysed using descriptive and inferential statistical methods. The Wilcoxon signed-rank test (one sample) was used to identify significant challenges faced by SMEs, and the Spearman correlation coefficient was used to analyse the relationship between entrepreneurial competencies and demographic characteristics. Results revealed that agribusiness SMEs have a normal level of opportunity competency (µ=3.3), strategic competency (µ=3.2), conceptual competency (µ=3.4), commitment competency (µ=3.3) and organizing competency (µ=3.3) while only their relationship competency (µ=4.0) was high. Correlation analysis revealed that the education level of entrepreneurs impacts on opportunity (ρ=0.382, p<0.05), strategic (ρ=0.338, p<0.05) and organizing (ρ=0.405, p<0.05) competencies. Furthermore, entrepreneurs’ strategic (ρ=0.806, p<0.05), opportunity (ρ=0.733, p<0.05), relationship (ρ=0.863, p<0.05), conceptual (ρ=0.537, p<0.05) organizing (ρ=.850, p<0.05) and commitment (ρ=.635, p<0.05) competencies have a direct positive relationship with performance of agribusiness SMEs. This study concludes that entrepreneurial competencies affect SME performance. However, SME owners’ entrepreneurial competencies are at a low level, and it is necessary to enhance these competencies through programs such as trainings, workshops, exhibitions and associations.