Customer Orientation as a Mediating Mechanism in the Relationship Between Entrepreneurial Orientation and Firm Growth: Evidence from Small and Medium Enterprises

Small and Medium Enterprises (SMEs) are important growth and job creators in the economy, but most of them fail to attain sustainable growth because of the lack of adequate resources, competition and market dynamics. Although entrepreneurial orientation (EO) with innovativeness, proactiveness, and risk-taking has been reported to be a key factor that determines firm growth, there is a lack of research into the mechanisms through which EO is converted into the actual result. Customer orientation (CO), with its focus on the knowledge and reaction to the needs of customers, has become one of the prospective mediating mechanisms that match the entrepreneurial efforts with the reality of the market. This paper is a study based on the Resource-Based View and the Market Orientation Theory, where customer orientation is mediated in the connection between EO and firm growth among SMEs in Ilorin Metropolis, Nigeria. A cross-sectional survey was carried out in a quantitative way, where 200 structured questionnaires were done to SME owners and managers in three fields, namely retail and trading, service based and manufacturing/production. Multiple regression and mediation analysis (Baron and Kenny approach with bootstrapping) were used to analyze 176 valid answers. The hypotheses that are set to be tested imply that EO has a positive impact on the growth of firms, and that customer orientation mediates this aspect to some extent. With the incorporation of both entrepreneurial and customer-driven approaches, SMEs have a greater chance of realizing greater sales, market share, and improvements in employment. The research paper concludes that entrepreneurial initiatives combined with customer-oriented practices contribute to the performance of SMEs in dynamic markets. The recommendations are the development of EO capabilities, the emphasis on customer engagement, and the development of strategic initiatives that would harmonize innovation with market demands. The support agencies and policymakers are urged to offer resources and training programs that will enhance the entrepreneurial as well as customer oriented skills.