Drivers of entrepreneurial orientation and innovation capabilities in African Internet start-ups
Date
2021-12
Authors
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Publisher
Stellenbosch : Stellenbosch University
Abstract
ENGLISH SUMMARY : Tech startups worldwide begin their operations and strategic business initiatives with high expectations of success, but 90% of these startups collapse within their first year of operation. In most developing countries, that number is closer to 95%. This painful reality globally, which is more pronounced in developing markets, is reportedly said to be due to the lack of understanding of what capabilities to foster and the degrees to which each one should be focused on. In many developing countries of Africa, this knowledge gap has led to low levels of sustainable innovation and entrepreneurial activity, which pose a potential threat to employment creation and economic productivity. External capabilities, like infrastructural capabilities or macro-economic capabilities, are constantly changing and peculiar to different business environments making it very difficult for startups to control and develop in reality. However, startups who develop the appropriate internal capabilities, may better understand to what extent investments into certain capabilities may foster their internal business objectives. In addition, startups have often looked at capabilities in isolation as drivers of success. Consequently, such limited focus may not provide a comprehensive overview of the capabilities deemed necessary to drive success in an increasingly digitised business climate.
Consequently, a comprehensive overview of the capabilities deemed necessary to drive success is lacking.
This study therefore investigates which capabilities are necessary to foster innovation and entrepreneurship in tech startups, and how these capabilities directly influence startup performance. Using Teece’s SST (sense, seize, transform) dynamic capabilities-based approach, a framework of all the capabilities needed to drive tech startup performance is presented. This approach was premised on the use of capabilities employees and entrepreneurs of tech startups identified in the literature as relevant, meaningful and thought-provoking for tech startups looking to drive success. Hence, the study's focus was on those identified and include as follows: top-management capabilities, technological competence, organisational learning capabilities, innovation capabilities, entrepreneurial orientation and organisational performance.
We investigate the proposed framework amongst tech startups in four African countries (Nigeria, Ghana, Kenya, and South Africa). A descriptive research design was used, where online surveys were used to target management staff using quota sampling. A sample of 254 individuals employed in tech startups across the four countries was surveyed. Structural equation modelling, in particular PLS-SEM, was used to test the proposed model. The results were confirmed with covariance-based SEM.
This study therefore contributes to existing tech startup literature in four ways. First, it provides a comprehensive view of the dynamic capabilities that tech startups need in order to increase their likelihood of success, something isolated approaches have struggled with in the past. Second, this study directly links these capabilities to organisational performance and illustrate how the key mediators of innovation capabilities and entrepreneurial orientation contributes to organisational performance. Third, the findings also help better understand the combined mediating effects of innovation capabilities and entrepreneurial orientation - previously often studied separately – on fostering firm performance. Finally, we test this model in an emerging market context where there is a paucity of research and insight into the factors that contribute to startup success.
The study's significance is that what initially began as a complex range of isolated drivers that were implicitly linked but in an unspecified way to a firm’s performance has been simplified into a concise, comprehensive capabilities-based SST model. The model's application suggests that it is likely to give startups and their founders better performance indicators that have the potential to influence their culture, mindset, behaviours, and ability to succeed, where so many seem to have failed before.
AFRIKAANSE OPSOMMING : Geen opsomming beskikbaar.
AFRIKAANSE OPSOMMING : Geen opsomming beskikbaar.
Description
Thesis (PhD)--Stellenbosch University, 2021.
Keywords
Entrepreneurship, Internet industry -- Africa, New business enterprises -- Africa, Entrepreneurial orientation, Technological innovations -- Psychological aspects, Organizational learning, UCTD