The role of entrepreneurial orientation in the South African food manufacturing sector

Sole, Mosiuoa M
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This study set out to evaluate and assess the relationship between Entrepreneurial Orientation (EO), manufacturing capabilities and organizational performance in the South African Food Manufacturing industry (SAFM). The SAFM industry is a highly concentrated sector that is key to the growth of the South African economy. This study suggests that EO is the mechanism through which manufacturing capabilities are linked to market needs. Entrepreneurial Orientation (EO) represents the processes and practices that provide a basis for entrepreneurial decisions and actions in an organisation. The related dimensions of EO are: innovativeness, risk taking, proactivity, competitive aggressiveness, and autonomy. Manufacturing capabilities are measured with reference to the cost, flexibility, quality, and delivery of production goals, while organisational performance is measured in reference to market and financial goals. EO and manufacturing capabilities are well established concepts in entrepreneurship and operations management literature. Both constructs along with their impacts on organizational performance, have historically been studied independently, and little research has been performed to bridge the knowledge gap between operations management and entrepreneurship research. Further knowledge gaps exist around understanding how EO is manifested in concentrated markets as well as, insights on research techniques for highly concentrated industries. The majority of current studies that focus on the South African food manufacturing sector are either technical government strategy reports, or reports that focus on food as a commodity and not on the manufacturing of food. Limited empirical research is characteristic of highly concentrated environments as they are usually closed and secretive environments. Furthermore, there are limited empirical studies that focus on the manufacturing in South Africa let alone the African continent. This study has contributed in addressing these gaps. The conceptual framework in this study has been tested using quantitative research methods (survey) based on a positivist approach. 75 senior, middle and executive managers from the top ten revenue generating companies in the SAFM iii industry were surveyed. Secondary data on industry performance collected from Statistic South Africa online repository. The hypotheses were tested by performing Exploratory Factor Analysis (EFA).The reliability and validity of the survey results assessed using Cronbach’s alpha coefficient. Multiple regression analysis - ordinary least square (OLS) and correlation analysis were used to test the hypothesized relationships. This study has three key findings. Firstly, this study found that the manufacturing capabilities of quality and cost are entry conditions for market participation in the South African food manufacturing industry, and that the capabilities of delivery and flexibility have a negative correlation on financial performance. Secondly, the study found that entrepreneurial orientation as a multidimensional construct had a moderate positive relationship with financial performance in the South African food manufacturing industry. Thirdly, it found that a negative co-relationship correlation exists between manufacturing capabilities and the dimensions of entrepreneurial orientation. The findings of this study, suggest that the food manufacturing industry in South Africa lacks competitiveness and that the drivers of performance in the entire industry are subsector specific. When investigating the specific subdivisions of the food manufacturing industry, descriptive analysis offered different insights i.e. firms that perform well in quality and delivery, perform poorly in flexibility and cost. Due to limited data, these relationships were not analysed further. Research on entrepreneurial orientation and manufacturing capabilities in the SAFM, could be improved through studies focusing on particular subdivisions e.g. milk, grain etc., using non-linear regression techniques.
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfillment of the requirements for the degree of Master of Management in Entrepreneurship and New Venture Creation University of the Witwatersrand, Johannesburg, February 2018
Sole, Mosiuoa Micheal, (2018) Entrepreneurial orientation in the South African food manufacturing sector, University of the Witwatersrand, Johannesburg,