INTRODUCTION

Background of Study

This study on entrepreneurial awareness and Small and Medium-sized Enterprises (SME)

performance focuses on understanding the relationship between entrepreneurs' level of awareness

and the performance of their businesses. Specifically, it examines how entrepreneurs' knowledge,

attitudes, and skills influence the sale growth and profitability of SMEs.

The precise definition of SMEs may vary across countries, but they typically have a limited number

of employees and operate within certain revenue or asset thresholds (Wanjiru & George, 2015).

Small and Medium Enterprises (SMEs) refer to businesses that are characterized by their smaller

size in terms of number of employees, annual turnover, or assets in comparison to larger enterprises

(Adamu, & Ibrahim, 2011). In Nigeria, Small and Medium Enterprises Development Agency of

Nigeria (SMEDAN), the governmental body enabled by Acts to Stimulate, monitor and coordinate

the development of the MSMEs sub-sector categorized enterprises (Fig 1) into Micro, small and

medium-sized businesses. According to SMEDAN (2019) categorization, small and medium sized

enterprises are firms having between 0 to 199 employees and own assets between the inclusive

values of N5 million and 500 million naira.

Figure 1: Categories of MSMEs. Adapted from Micro, Small, And Medium Enterprises (Msme)
National Survey 2017 Report.

1
SME accounts for a large portion of employment, particularly in developing economies, and serve

as a breeding ground for entrepreneurship and innovation (Ajayi & Adebisi, 2006; & Aremu &

Adeyemi, 2011). However, SMEs often face a range of internal and external challenges that can

lead to high failure rates. These challenges according to Narada damitha & Jayasekara (2019),

include limited access to finance, lack of managerial skills, inadequate infrastructure, market

competition, regulatory constraints, and vulnerability to economic fluctuations. Recognizing their

significance, governments, policymakers, and scholars continue to focus on creating an enabling

environment and improving performance of SMEs.

The background of this study stems from the recognition that entrepreneurs play a crucial role in

economic development and job creation (Akingunola, 2011) and are considered the backbone of

many economies, contributing significantly to employment and GDP (Babajide, 2011). However,

the performance of SMEs is becoming an important area of concern among business researchers,

practitioners, governments and international organizations due to the high rate of failures resulting

from challenges, including technological disruptions, intense competition, and market volatility

(Akingunola, 2011). The concern is particular to Nigeria where a high rate of failure of SMEs is

reported (Alli, F. & Jimoh, 2013) and the sector is reported to contribute only a small proportion

(10%) of Nigeria ‘s GDP (Gbandi & Amissah, 2014). Entrepreneurial

Entrepreneurial awareness refers to the level of understanding and knowledge that entrepreneurs

possess about various aspects of business management, including marketing, finance, operations,

innovation, and strategic planning (Mitrovic & Bytheway, 2009). It encompasses both the

awareness of opportunities and the ability to capitalize on them effectively (Sriboonlue, 2019).

The study aims to explore how entrepreneurial awareness influences SME performance indicators

2
such as sales growth and profitability. It investigates whether entrepreneurs who possess a higher

level of awareness are more likely to make informed decisions, adapt to changing market

conditions, identify new opportunities, and implement effective strategies.

Statement of The Problem

This section discusses the statement of the problem of this study. Owing to the current competitive

landscape which is overwhelming with radical societal change, economic instability, global

political conflicts and innovative technologies resulting to aggressive competitive business

environment, exploiting risk and opportunities is one of the key essential essences determining

business success and survival (Wambugu, 2015). In fact, the key characteristics of business

entrepreneurship are deeply involved in the combination of taking risk and pitching new

innovation. A lack of superior entrepreneurial knowledge can lead to problems of missed

opportunities, where entrepreneurs fail to recognize and capitalize on potential business

opportunities, limited innovation as individuals may struggle to develop innovative products,

services, or business models, lack of resilience and economic stagnation. The implication is an

adverse social-economic effect on both personal and economic growth of the nation. This current

study will rely on existing research to determining the relationship between entrepreneurial

awareness and performance of small and medium sized enterprises (SME). The paper will reflect

how modern technological utilization, and firm competitiveness can influence sales growth and

profitability. A deeper knowledge of the study area will address a majority of the socio-economic

problems including increasing high failure rate of SME, high level of poverty, high level of

unemployment, low industrial capacity utilization and very low export earnings. The study is based

on secondary data collected from existing literature.

3
Conceptual Framework

ENTERPRENEURIAL PERFORMANCE OF SMALL

FIRMS’
COMPETITIVENESS SALES GROWTH

SUPERIOR PROFITABILITY
ORGANIZATIONAL
INNOVATION

Fig 2: Conceptual Framework

Source: The dimensions of entrepreneurial awareness are adopted from Shamsudeen (2017)’s

proposition of firms’ competitiveness and superior organizational innovation as dimension of

entrepreneurial awareness. The measures of SMEs performance are adopted from the work of

Wanjiru & George, 2015.

Fig 2 above shows the conceptual framework of the study. In the diagram, Enterpreneurial

Awareness is the independent or predictor variable, while Performance of Small and Medium

Enterprises is the dependent or criterion variable. The predictor variable has Firms’

Competitiveness, and Superior Organizational Innovation as dimensions. The dependent variable

is measured in terms of Sales Growth and Profitability.

4
Aims & Objectives of Study

The aim of this research is to investigate the relationship between strategic entrepreneurial

awareness and business performance. Specifically, to investigate how firm strategically

acknowledge, recognize, and concede internal and external organizational resources and to match

the requirements of the changing environment for continued sustenance and profitably.

The objectives include:

1. To determine the effect of firms’ competitiveness on SMEs’ Sale Growth

2. To determine the effect of firms’ competitiveness on profitability of SMEs.

3. To determine the effect of superior organizational innovation on SMEs’ Sale Growth

4. To determine the effect of superior organizational innovation on profitability of SMEs

Research Questions

Based on the above specific objectives of the study the following research questions are drawn

(1) What is the effect of firms’ competitiveness on SMEs’ Sale Growth?

(2) What is the effect of firms’ competitiveness on profitability of SMEs?

(3) What is the effect of superior organizational innovation on SMEs’ Sale Growth?

(4) What is the effect of superior organizational innovation on profitability of SMEs?

Significance of The Study

This study of entrepreneurial awareness and SME performance has significant implications for

promoting entrepreneurship, improving SME success rates, fostering economic growth, and

creating a supportive ecosystem for small and medium-sized enterprises.

5
By understanding the factors that influence entrepreneurial awareness and its impact on SME

performance, stakeholders can take targeted actions to support and empower entrepreneurs,

leading to a more vibrant and prosperous business landscape.

Understanding the relationship between entrepreneurial awareness and SME performance can help

entrepreneurs improve their decision-making processes and business strategies. By increasing their

knowledge and awareness, entrepreneurs can make informed choices, identify growth

opportunities, and effectively address challenges, leading to enhanced performance metrics such

as increased revenue, profitability, and market share.

Policymakers can utilize the research findings to develop policies that support SME growth and

development. By understanding the factors that contribute to SME success, policymakers can

design initiatives that provide resources, access to finance, and a conducive business environment.

This can help create an ecosystem that nurtures entrepreneurship, stimulates innovation, and

enables SMEs to thrive.

Simply put, entrepreneurial awareness means the knowledge and perception towards

entrepreneurship, and it is perceived to be a key factor to starting and running own business. Isreal

Kirzner is credited as the first to employ the expression ‘entrepreneurial alertness’ to describe

entrepreneurial identification of opportunity (Shamsudeen, 2017 & Sriboonlue, 2019). The

entrepreneurship process, as argued by Kirzner (1973) is synonymous to competitive activity;

entrepreneurs herein, are always alert to information and advancing systems by seeking out price

discrepancies as opportunities for profit. Entrepreneurial alertness is defined as an attitude of

receptiveness to available, but as yet overlooked, opportunities (Kirzner, 1997). They exploit

situations of lack of perfect knowledge among the market participants. A ‘Kirznerian entrepreneur’

(Kirzner, 1973) therefore, is a decision-maker whose entire role arises from alertness to unnoticed

opportunities or knowledge about market data.

entrepreneurial alertness by three antecedents: awareness, motivation, and capability. Awareness

refers to ―how an individual recognizes an opportunity in the competitive environment;

motivation accounts for the incentives that drive the entrepreneur to undertake actions in the

context of competitive dynamics; and capability reflects the entrepreneur ‘s resource or knowledge

that underpins his/her ability to execute competitive actions.

Mitrovic and Bytheway (2009) defined entrepreneurial awareness as the level of

SMEs/entrepreneurs' knowledge about the existence and importance of opportunities for

entrepreneurial activities and their successes. While Mayo, et al (2002), viewed entrepreneurial

awareness as the propensity to which firms are able to notice and to be sensitive to information

about entrepreneurial objects, incidents, and patterns of entrepreneurial behaviour in the external

environment, with particular sensitivity to the maker and user problems, unmet needs and interests,

and novel combinations of resources. According to Mayo et al. (2002), entrepreneurial awareness

is necessary to gather information and make linkages between an individual's interests and

expertise and issues within the environment. Within this context of entrepreneurial activity, the

term “awareness” emphasizes the role of strategic management in appropriately acknowledging,

recognizing, and conceding internal and external organizational resources and the ability to match

the requirements of the changing environment (Sriboonlue, 2019).

7
LITERATURE REVIEW.

i. Firms’ Competitive Awareness

A firm's ability to sustainably meet its two-fold objective of satisfying customer demand at a profit

is known as firm competitiveness (Chikán, 2021). This is achieved by providing goods and

services that customers value above those offered by their competitors. To remain competitive, a

firm must be able to adapt to the ever-evolving social and economic conditions (Ambastha, &

Momaya, 2003; & Chikán, 2021). This is referred to as "responsive to environmental impacts" and

"adapting to environmental dynamics" (Philippova, 2004).

Researchers have characterized competitiveness as a multi-faceted and relative concept, with a

variety of competing theories (Ambastha and Momaya, 2003) and associated interdisciplinary

areas of strategy and operations, including a resource-based view (Barney, 2001). To remain

competitive, entrepreneurs must be abreast of their competitive environment. The initial use of the

term ‘awareness of competition’ is credited to Baroutsis and Horton’s 1973 study of ‘The

economic strategy for environmental quality’, where the term is seen as a cognitive ability that

enables businessmen gain competitive advantage (Yeşilkaya, 2015). Kelly and Booth (2004) also

looked at awareness of competition as an intellectual ability for senior managers. according to

them, firms that rapidly engage with competitors and respond to their competitive strategies,

especially competitive threats, are aware of market similarities, and resource similarities.

An overview of key themes and concepts that influencing a firm's ability to compete effectively in

the marketplace includes the firm’s Competitive advantage (Yuleva-Chuchulayna, 2019), it’s

understanding of the external environment (Jaya et al, 2021), the internal characteristics and

resources of the firm as sources of competitive advantage (Madhani, 2010), formulation and

8
implementation of strategies to enhance a firm's competitiveness (Mohamed & Basar, 2023), the

role of research and development (R&D), technological capabilities, adoption of emerging

technologies, effective marketing strategies and strong brand image, International

Competitiveness, Organizational Learning and Knowledge Management, Human Capital and

Talent Management as well as Sustainable Competitiveness (Chikán et at, 2021). This current

study will focus on the firm’s Competitive advantage, it’s understanding of the external

environment, adoption of emerging technologies and the internal characteristics and resources of

the firm as sources of competitive advantage. Whereas, this section will address the firm’s

Competitive advantage, and it’s understanding of the external environment, adoption of emerging

technologies will be reviewed as a dimension of entrepreneurial awareness, while the internal

characteristics and resources of the firm as sources of competitive advantage will be accessed

under theoretical review.

Competitive advantage refers to the unique strengths and capabilities that enable a firm to

outperform its competitors (Yuleva-Chuchulayna, 2019); competitiveness is manifested through

competitive advantages. Competitive advantage in Markova’s view, is the distinguishing features

of a company and its product that are of value for consumers (Markova, 2005); likewise, it is the

firm’s evaluation that forms the basis for the development of marketing strategies (Markova,

2005); in contrast, in Kyurova (2005)’s perspective, competitive advantage can be understood as

a product-specific specific feature that adds value to consumers and carries greater utility than

competitors’ products.

The acquisition of a competitive advantage alone is not sufficient; the acquisition of a lasting

competitive advantage is the key to success (Yuleva-Chuchulayna, 2019). In the long run,

companies acquire competitive advantages through their ability to develop and build upon a set of

key competencies that enable them to serve specific market niches more effectively than their
9
competitors. Key competencies are unique abilities that companies develop in key areas such as

consumer service, providing high quality and dependable services, innovation, collaboration,

flexibility, responsiveness and adaptability to environmental changes and others that enable them

to outpace their competitors. Companies can acquire sustainable advantages only if they possess

valuable resources that are scarce, difficult to replicate and interchangeable.

Understanding the external environment is crucial for assessing a firm's competitiveness as well

as for them to operate effectively and make informed decisions (Banham, 2010). The changing

landscape necessitates that small and medium-sized enterprises (SMEs) access information from

a variety of external sources and continually and systematically analyze the external environment

in order to enable strategic planning (Jaya et al, 2021). The external environment consists of factors

and forces outside the control of the business that can significantly impact its operations,

performance, and success.

Some listed external business environmental change drivers in literatures (Banham, 2010)

includes:

1. Economic Factors: Economic conditions, such as economic growth, inflation, interest rates, and

unemployment, can influence consumer spending power, business investment, and overall market

demand.

2. Political and Legal Factors: Government policies, regulations, and laws can have a profound

impact on businesses. This includes tax policies, trade regulations, labor laws, environmental

regulations, and political stability.

3. Socio-Cultural Factors: Social and cultural factors encompass demographic trends, population

shifts, consumer attitudes, values, beliefs, and lifestyle preferences. These factors can shape

consumer behavior and market demand.

10
4. Technological Factors: Technological advancements and innovations can disrupt industries,

create new opportunities, and impact how businesses operate. Staying aware of technological

trends and adapting to them is crucial for long-term success.

5. Competitive Factors: The competitive environment includes rival businesses, their strategies,

market share, and competitive advantages. Understanding competition helps businesses identify

opportunities, differentiate themselves, and develop effective marketing and growth strategies.

6. Environmental Factors: Environmental concerns and sustainability have gained significant

importance. Factors such as climate change, resource scarcity, and environmental regulations can

impact industries and influence consumer preferences.

However, the focus of this research is on the SMEs’ awareness and adaptation to competitive and

technological factors of the business environment for the increased sales and profitability.

ii. Adoption of superior organizational innovation

The adoption of superior organizational innovations refers to the process by which organizations

implement and integrate innovative practices, strategies, or technologies that are considered

superior or more advanced compared to existing approaches (Frambach, & Schillewaert, 2002).

These innovations can encompass a wide range of areas, including organizational processes,

technologies, management practices, and business models.

The adoption of superior organizational innovations is crucial for organizations to remain

competitive, drive growth, and achieve sustainable success in a rapidly changing business

environment (Frambach, & Schillewaert, 2002; & Karaev, 2023). By embracing and implementing

innovations that offer superior performance, organizations can enhance their efficiency,

effectiveness, productivity, customer satisfaction, and overall performance (Karaev, 2023). The

adoption process typically involves several stages, including awareness and knowledge
11
acquisition, evaluation and decision-making, implementation and assimilation, and evaluation and

outcomes assessment (Yeşilkaya, 2015; & Sriboonlue, 2019). Organizations must take into

account a variety of elements during these stages in order to ensure the successful implementation

of high-quality organizational innovation. These elements may include organizational, individual,

technological, environmental, and social elements (Talukder, 2012).

The organization's culture, structure, leadership, and resources can significantly impact the

adoption process. A supportive and innovative culture, flexible structures, and strong leadership

commitment can facilitate adoption (Talukder, 2012). Individual factors, such as employees'

attitudes, beliefs, and skills, play a vital role in adoption (Ugwu, 2012; & Coffetti et al., 2022).

Factors like individual innovativeness, risk perception, and readiness for change can influence the

willingness of individuals to adopt innovations (Coffetti et al., 2022). Talukder (2012) observed

that the characteristics of the innovation itself, such as its complexity, compatibility with existing

systems, observability of benefits, and relative advantage over existing practices, can affect its

adoption. The external environment, including industry characteristics, market conditions,

regulatory frameworks, and competitive pressures, can shape the adoption of superior

organizational innovations (Coffetti et al., 2022). Fachrunnisa et al., believed social influence,

norms, and networks within and outside the organization can impact the adoption process. Positive

social interactions, support networks, and influential champions of innovation can facilitate

adoption.

Successful adoption of superior organizational innovations requires addressing challenges and

barriers that organizations may encounter, such as resistance to change, lack of resources and

capabilities, risk aversion, organizational inertia, and external constraints. Overcoming these

challenges often requires effective change management strategies, clear communication, training

and skill development, incentives and rewards, and fostering a culture of innovation. To enhance
12
the adoption of superior organizational innovations, organizations can implement various

strategies, including fostering a supportive organizational culture, providing adequate resources

and training, encouraging collaboration and knowledge sharing, establishing innovation

champions, and leveraging external partnerships and networks (Babu & Gopalakrishnan, 2008; &

Agyemang, et al., 2017). Overall, the adoption of superior organizational innovations is a complex

and multifaceted process that requires careful consideration of various factors, effective change

management, and a supportive organizational environment. By embracing and successfully

implementing superior innovations, organizations can position themselves for long-term success

in a dynamic and competitive business landscape.

Measures of Performance of SMES

Organizational performance is the degree to which an organization has achieved its strategic

objectives (Ogboru, 2005). It is the result of the organization's effective formulation and

implementation of a value-creating strategy and techniques, which allows customers to obtain a

service or product of greater value than what they are willing to pay (Sukati, et al,

2013 & Barry, 2007). Komppula (2004) defines performance of small-scale businesses as their

capacity to create employment and wealth through business start-ups, survival and expansion.

Business performances of small and medium-sized enterprises (SMEs) can be any kind of output,

result, advantage, or effect in a business process that's based on a market and financial analysis

(Muis, 2015). It can be categorized into financial, non-financial (marketing) and composite

measures, as well as operational efficiency and effectiveness (Muis, 2015). Businesses that achieve

high levels of performance guarantee that they will be able to maintain and even grow their

business.

13
The measurement and assessment of business performance is based on a variety of dimensions and

indicators, which may vary between organizations (Muis, 2015); for example, the characteristics

and metrics of small and medium-sized enterprises (SMEs) may differ from those of large and

multinational corporations. For the purpose of this study, the appropriate performance indicator

for the competitiveness and the adoption of superior organizational innovation is determined to be

financial and marketing performance. Therefore, the relationship between firms’ competitiveness,

and innovativeness were studies alongside Growth in Sales and profitability measures.

i. Sales Growth

Economists differentiate between organic and inorganic growth (Machek & Machek, (2014).

While Organic growth, also referred to as internal growth, is the process by which firms expands

by increasing sale; inorganic growth is the process of growing a company through mergers and

acquisitions (Jacob, 2006). However, almost all growth for small and medium-sized enterprises

are organic (Machek & Machek, (2014).

Inorganic growth can be achieved in a variety of ways, including generating greater market

demand, providing greater value to customers, and fostering stronger customer relationships, all

of which ultimately lead to a rise in sales. (Jacob, 2006).

Sales growth is a critical metric for businesses to measure their success and sustainability (Muis,

2015) It represents the increase in revenue generated from the sale of goods or services over a

specified period (Jacob, 2006; Wanjiru &George, 2015; & Muis, 2015). Understanding the factors

that drive sales growth is essential for companies to develop effective strategies and achieve long-

term profitability. Various academic and industry sources have provided a variety of key ideas,

concepts, and empirical evidence regarding sales growth. These include Sales Growth Drivers,

14
Sales Force Effectiveness, Customer Relationship Management, and External Factors

management (Wanjiru &George, 2015; Awofadeju et al., 2015; Shrotriya, 2019; & Samson, 2019

Sales growth drivers includes Market Expansion, Product Differentiation, Pricing Strategies and

Marketing and Advertising (Wanjiru &George, 2015). Market expansion refers to increasing sales

by entering new markets or expanding market share in existing markets. Factors such as population

growth, economic development, and technological advancements can contribute to market

expansion (Jacob, 2006; & Wanjiru &George, 2015). Product differentiation on the other hand

involves creating unique features or attributes that distinguish a company's products or services

from competitors (Shrotriya, 2019). This strategy enables businesses to capture market share and

drive sales growth through customer preference and loyalty. Pricing strategies play a significant

role in sales growth. Different pricing approaches, such as penetration pricing, price skimming, or

value-based pricing, can influence consumer demand and affect sales volumes (Sammut-Bonnici

& Channon, 2015). Effective marketing and advertising campaigns are crucial for generating brand

awareness, attracting customers, and driving sales growth (Awofadeju et al., 2015; & Samson,

2019). Utilizing various channels, such as digital marketing, social media, and traditional

advertising, can significantly impact sales performance (Awofadeju et al., 2015).

Sales Force Effectiveness factors include Sales Force Management, Sales Techniques and

Strategies as well as Sales Technology and Automation. Sales Force Management (Zoltners et al.,

2008). Sales force management involves the recruitment, instruction, and motivation of the sales

personnel to meet sales objectives. Factors such as the size of the salesforce, its organizational

structure, remuneration, and evaluation of performance can have an effect on sales growth.

(Zoltners, et al., 2008). Sales Developing efficient sales techniques and strategies can enhance

sales growth. This includes relationship building, consultative selling, cross-selling, upselling, and

effective negotiation skills (Zoltners, et al., 2008). The adoption of sales technologies, such as
15
customer relationship management (CRM) systems, sales analytics, and automation tools, can

streamline sales processes, improve efficiency, and contribute to sales growth (Zoltners, et al.,

2008).

In order to sustain sales growth, it is essential to cultivate and sustain customer relationships. CRM

strategies, such as customer retention, loyalty schemes, targeted marketing, and superior customer

service, can result in repeat sales and positive referrals (Alam, & Rahman, 2012). Likewise, the

overall economic environment, such as GDP growth, inflation rates, and consumer confidence,

can influence sales growth (Zoltners, et al., 2008; & Adamik et al., 2011). Understanding and

adapting to economic trends is important for businesses to navigate through various market

conditions (Yeşilkaya, 2015). Sales growth can be affected by competitive forces within the

industry. Examining competitors' tactics, market position, and consumer preferences can assist

companies in recognizing opportunities and creating effective competitive advantages (Yeşilkaya,

2015; & Karaev, 2023).

Sales growth is a multifaceted and dynamic process influenced by various internal and external

factors. By understanding these concepts and leveraging appropriate strategies, businesses can

optimize their sales performance and achieve sustainable growth in the marketplace.

ii. Profitability of SMEs

Simply put, profitability is the capacity to earn an amount of revenue over expenses from the sale

of goods or services (Geamanu, 2011). It refers to the ability of a business or organization to

generate a financial gain or profit from its operations (Amirthalingam & Balasundaram, 2013). It

is a measure of the extent to which a company's revenues exceed its expenses, resulting in a

positive net income. Profitability is a key indicator of a business's financial health and success, as

it directly impacts its ability to sustain operations, invest in growth, and provide returns to its

16
stakeholders. Profitability measures the overall economic effectiveness of an enterprise and is one

of the primary components of economic efficiency (Geamanu, 2011).

Profitability can be measured and assessed through various financial ratios and metrics, such as

Gross Profit Margin, which represents the percentage of revenue that remains after deducting the

cost of goods sold (Wiwiek & Bianda, 2022). A higher gross profit margin indicates better

profitability; Net Profit Margin, which measures the percentage of revenue that remains as net

income after deducting all expenses, including operating costs, taxes, and interest (Jayathilaka,

2020). A higher net profit margin indicates stronger profitability; and the Return on Investment

(ROI) which is a measure of the profitability of an investment by comparing the net profit

generated to the amount of capital invested. It is expressed as a percentage and provides insight

into the efficiency of capital utilization. Other profitability measure includes a measure of the

profitability of a company relative to its total assets known as the Return on Assets or ROA (

Wiwiek & Bianda, 2022). It indicates how effectively a company utilizes its assets to generate

profits (Wiwiek & Bianda, 2022); Return on Equity (ROE) which measures the profitability of a

company in relation to the equity invested by its shareholders. It shows the return earned for each

dollar of shareholder investment. Earnings Before Interest, Taxes, Depreciation, and Amortization

(EBITDA) margin is also a measures that represents the percentage of revenue that remains after

deducting operating expenses, excluding interest, taxes, depreciation, and amortization

(Jayathilaka, 2020; & Wiwiek & Bianda, 2022). EBITDA provides a measure of profitability

before accounting for non-operating items.

Profitability is essential for the long-term sustainability and growth of a business (Wiwiek &

Bianda, 2022). It allows companies to reinvest in their operations, expand into new markets, attract

investors, and reward shareholders. It is important to note that profitability can vary across

industries (Geamanu, 2011), and it is also influenced by factors such as market conditions,
17
competition, pricing strategies, cost management, and overall business efficiency (Geamanu,

2011; & Wiwiek & Bianda, 2022).

The relationship between Entrepreneurial Awareness and Performance of SMES

The relationship between entrepreneurial awareness and small and medium-sized enterprise

(SME) performance is a topic of interest in the field of entrepreneurship research. Several studies

have explored the relationship between entrepreneurial awareness and SME performance, and the

findings suggest that there is a positive correlation between the two; these relationships include

among others, Opportunity Identification, Innovation and Adaptability, Resource Utilization, Risk

Management as well as Networking and Collaboration

Opportunity Identification: Entrepreneurial awareness helps SME owners and managers to identify

new business opportunities. By being aware of market trends, customer needs, and industry

developments, entrepreneurs can spot opportunities for growth and innovation (Pulka et al., 2020).

This proactive approach to identifying opportunities can positively impact SME performance

(Gaglio, & Winter, 2009).

Innovation and Adaptability: Entrepreneurial awareness is often associated with a mindset that

embraces innovation and adaptability. SMEs that are aware of emerging trends and technologies

are more likely to adapt their products, services, and processes to meet changing customer

demands. This ability to innovate and adapt can enhance SME performance and competitiveness

in the marketplace (Harcourt & Ozo, 2018; Karaev, 2023). In a business landscape characterized

by rivalry and intense competition, Karaev (2023) recommends that businesses that adopt a

realistic, market-oriented perspective in their product development and marketing, as well as a

focus on innovation, are more likely to succeed. Harcourt & Ozo (2018) concluded that brand

awareness has positive, significant and moderate relationship with customer retention and brand
18
extension. They suggest creativity and strategic packaging brand awareness programmes to attain

optimal market performance. Strategic marketing content will increase sales volume, market share,

profitability and growth (Alao et al., 2017)

Resource Utilization: Entrepreneurial awareness also plays a role in optimizing resource utilization

within SMEs. Entrepreneurs who are aware of their own strengths and weaknesses, as well as the

resources available to them, can allocate these resources more effectively to achieve business

objectives. This efficient use of resources can contribute to improved SME performance (Pulka et

al., 2020; & Wach et al., 2018).

Risk Management: Entrepreneurial awareness includes an understanding of the risks and

uncertainties associated with business ventures (Adiandariet al., 2020). SMEs that are aware of

potential risks and have the ability to assess and manage them effectively are more likely to make

informed decisions and minimize negative impacts (Fallah et al., 2022). This risk management

capability can positively influence SME performance (Adiandari et al., 2020 & Fallah et al., 2022).

Networking and Collaboration: Entrepreneurial awareness often involves building networks and

collaborating with other entrepreneurs, industry experts, suppliers, and customers. Such

networking and collaboration can lead to knowledge sharing, access to resources, and

opportunities for strategic partnerships. These connections can provide SMEs with a competitive

advantage and contribute to improved performance (Fachrunnisa et al., 2013; Petrescu et al., 2014

& Al-Omoush et al., 2022)

19
Theoretical Review

Knowledge-Based View

The Knowledge-Based View (KBV) is a theoretical perspective that focuses on the role of

knowledge as a key resource for firms in gaining and sustaining a competitive advantage (Lei et

al., 1996). It suggests that a firm's knowledge assets, including both explicit and tacit knowledge,

are critical for achieving superior performance and long-term success (Cook & Yanow, 1995).

The KBV emerged as a response to the Resource-Based View (RBV) of the firm (Hitt et al., 2001;

Rouse & Daellenbach, 2002) which emphasizes the importance of firm-specific resources and

capabilities for competitive advantage. While the RBV recognizes the significance of knowledge,

the KBV places knowledge at the core of the firm's strategic resources (Rouse & Daellenbach,

2002).

According to the KBV, knowledge can be classified into three main categories which are explicit

Knowledge, Tacit Knowledge, and Embedded Knowledge (Nonaka & Takeuchi, 1995, Balogun

& Jenkins, 2003). Explicit Knowledge refers to codified and easily transferable knowledge, such

as patents, trademarks, databases, and documented procedures (Chandler & Lyon, 2009). Explicit

knowledge can be readily communicated and shared within the organization. Tacit knowledge

represents the personal, context-specific, and often unarticulated knowledge possessed by

individuals within the organization (Nonaka & Takeuchi, 1995). It includes skills, experiences,

insights, and know-how that are difficult to formalize and transfer. Tacit knowledge is often

embedded in the minds of employees and developed through learning and experience (Levitt &

March, 1988). While Embedded knowledge refers to knowledge that is embedded within

organizational routines, processes, systems, and structures (Zack, 2003). It includes the collective

knowledge, values, and norms that shape the organization's culture and guide decision-making.

20
The KBV asserts that knowledge assets differ among firms, and the ability to effectively acquire,

create, store, transfer, and apply knowledge is a source of competitive advantage (Nonaka, 1991;

Zack, 2003). In this view, firms that possess unique and valuable knowledge are better equipped

to innovate, adapt to changing market conditions, and outperform their competitors (Zack, 2003).

Organizational capabilities emerge over time through a process of organizational learning (Levitt

& March, 1988; Szulanski, 2003). Therefore, to leverage knowledge for competitive advantage,

the KBV suggests that firms should focus on knowledge management practices, including

knowledge creation, acquisition, transfer, and protection (Levitt & March, 1988). This involves

developing a learning culture (Nonaka, 1991), encouraging knowledge sharing and collaboration

(DeNisi, et al., 2003), investing in training and development programs, and creating mechanisms

for capturing and disseminating knowledge throughout the organization (Zack, 2003).

Through the use of dynamic capabilities, organizations get to integrate, to build and to reconfigure

their internal and external capacities to face fast changing environments (Chandler & Lyon, 2009).

Knowledge-based capabilities are considered to be the most strategically important ones to create

and sustain competitive advantage (DeNisi et al., 2003). The capacity to learn faster than

competitors could turn out to be the only sustained competitive advantage (Chandler & Lyon,

2009). This dynamic capability builds up over time a historical or path dependency (Cook &

Yanow, 1995), creating causal ambiguity (creating barriers to imitability and making it very

difficult for other firms to recreate the unique historical evolution each organization develops),

and it establishes a basis for competitive advantage (Cook & Yanow, 1995). To this study the

theory explains the need for leadership style to be addressed at a contingent situation, or a need by

way of introducing a flexible model to sustain business growth when necessary

21
Empirical Review

Sriboonlue (2019) in the study, ‘Strategic Entrepreneurial Awareness and Business Performance:

Empirical Evidence from Small and Medium-sized Enterprises in Thailand’, carried out a

quantitative research study on how entrepreneurial awareness can help firms promote

entrepreneurial capability and innovation. He investigated the relationship between firms’

competitiveness, superior organizational innovation and outstanding business creativity and their

relationships with the business performance on a population of 3 million Thai’s SMEs. Having

received responses from 387 managing director or managing partner, an analysis using the

statistical techniques of VIFs, correlation analysis, and regression analysis concluded that SMEs

are able to enhance their entrepreneurial orientation, perspectives and characteristics in order to

achieve the higher-level performance, greater financial return and newer business innovation.

In a related study, Pulka et al (2020) undertook a research on ‘Entrepreneurial Awareness, Access

to Finance, Market Orientation, Viable Business Plan and Performance of Telecommunication

SMEs’ to examined the moderating role of entrepreneurial awareness on the link between access

to finance, market orientation, viable business plan and SMEs performance in the

telecommunication SMEs in Nigeria. Data were collected from telecommunication SMEs

operating in Maiduguri and Yola using a structured questionnaire. Using convenient sampling

technique, 418 telecommunication SMEs were identified. Collected data were analyzed using

SPSS 24 and Smart-PLS 3.0. Findings revealed that entrepreneurial awareness, market orientation

and access to finance are significantly related to SMEs performance, while there is an insignificant

relationship between viable business plan and SMEs performance. Similarly, there is a significant

moderating effect of entrepreneurial awareness on the relationship between viable business plan

and SMEs performance.

22
In another study, Shamsudeen (2017) explored the relationship between entrepreneurial

Awareness, entrepreneurial self-efficacy, viable business plan, and performance of

SMEs in north-western Nigeria. Using the cluster sampling technique and the cross-sectional

research design, data collected randomly from 354 respondents out of the 559 questionnaires

distributed were analyzed using SmartPLS 2.0 tool. findings of this study revealed that

entrepreneurial awareness and viable business plan had direct significant relationships with SMEs

‘performance in Nigeria while entrepreneurial self-efficacy was found not to be a predictor of

performance.

Yeşilkaya (2015) examined Awareness of Competition at Senior Management and its Effect on

Firm Performance. He conducted a survey with 380 managers in participation and obtained

findings on analysis that indicated a positive correlation between the firm performance and the

instinct for benefiting from the opportunities, strategic vigilance, motivation for competition,

competitive market information that are dimensions of awareness of competition

Knowledge Gap

the concept of entrepreneurial awareness in most studies has commonly measured organizational

performance in terms of access to finance, Market Orientation, Viable Business Plan, product,

customer or brand awareness; these approaches has neglected its measurements against the aspect

of performance relating to sales growth and profitability. The present study therefore measures

entrepreneurial awareness by considering its impact on the growth of sales and profitability of the

enterprise.

23
Findings

Entrepreneurial awareness enhances entrepreneurial orientation, perspectives and characteristics

leading to higher-level performance, greater financial return in terms of sales growth and

profitability, and newer business innovation.

This study also found that entrepreneurial awareness has significant influence on the relationship

between viable business plan and SMEs performance.

The findings of this study have significant implications for policymakers, business support

organizations, and entrepreneurs themselves. They can help policymakers design targeted

programs and policies to promote entrepreneurial education and training, provide resources for

SME development, and foster an entrepreneurial ecosystem. Business support organizations can

develop tailored training programs and mentorship initiatives to enhance entrepreneurs' awareness

and skills. Entrepreneurs can benefit from understanding the importance of continuous learning,

self-improvement, and staying abreast of industry trends to achieve sustainable growth and

success.

Overall, the study on entrepreneurial awareness and SME performance contributes to the

understanding of how entrepreneurs' knowledge and awareness impact the success of their

businesses and provides insights for fostering entrepreneurship and SME development.

24
Conclusion

The research work concludes that SMEs play a critical role in the economy, driving innovation,

employment, and economic growth. Owing to the multiple challenges enterprises face in the

business environment, entrepreneurial awareness and SME performance has significant

implications for promoting entrepreneurship, improving SME success rates, fostering economic

growth, and creating a supportive ecosystem for small and medium-sized enterprises. A higher

level of entrepreneurial awareness is lead to better performance outcomes for SMEs.

By understanding the concept of firm’s competitiveness and adopting superior organizational

innovation, and leveraging appropriate strategies, businesses can optimize their sales performance

and achieve sustainable growth in the marketplace.

Recommendation

Based on the review of literatures of entrepreneurial awareness and performance of SMEs, this

study makes the following recommendations to enhance SMEs’ entrepreneurial awareness and

improve their overall performance:

That policy makers should facilitate access to relevant and up-to-date information, market

intelligence, and resources for SMEs. This can be achieved through the establishment of business

development centers, online platforms, and networking events where SMEs can learn from

successful entrepreneurs, share experiences, and access valuable resources.

The government can promote the adoption of technology and digital tools among SMEs. This can

involve providing training programs on digital literacy, e-commerce, online marketing, and

utilizing business productivity tools. Embracing digital technologies can improve efficiency,

expand market reach, and enhance competitiveness for SMEs.

25