Entrepreneurial Orientation and Performance of Microfinance Cooperatives

Abstract

Microfinance cooperatives (MFCs) play a key role in socio-economic development, predominantly in developing countries. However, studies focusing on the relationship between entrepreneurial orientation (EO) and the performance of MFCs are limited, particularly in Tanzania. This study was informed by the resource-based view to examine the influence of EO dimensions on the performance of MFCs in Tanzania. Specifically, the study focused on four dimensions of EO namely; innovativeness, proactiveness, risk taking, and competitive aggressiveness behaviours. Data were obtained from 299 stratified sampled managers of MFCs through the administration of a structured questionnaire. In testing this relationship, Partial Least Squares Structural Equation Modelling (PLS SEM) was employed and revealed that only proactiveness, innovativeness, and competitive aggressiveness behaviours positively and significantly influenced the performance of MFCs. However, risk taking behaviour was insignificant on the performance of MFCs. The study shows that EO is a crucial managerial resource and capability that helps MFCs to reallocate core competencies to achieve desired goals. Thus, MFCs need to strengthen their ability to implement entrepreneurial strategies effectively. Also, regulators and other key stakeholders need to participate in strengthening these capabilities through different interventions including trainings to address the performance challenges encountered by MFCs.