Does Entrepreneur Innovativeness Moderate The Relationship Between Strategic Orientation And Financial Inclusion?
Purpose- Although previous papers have attempted to explore the determinants of financial inclusion, few studies have interrogated the role of innovativeness in financial addition. This study examines the moderating role of entrepreneur innovativeness on the relationship between strategic orientation and financial inclusion
Design/Methodology - We used two indicators to measure financial inclusion; digital financial inclusion scale and traditional financial inclusion scale. Three proxies were used to measure strategic orientation; learning orientation, market orientation, and technology orientation. Survey data obtained from 634 women entrepreneurs was used, and the hypothesis was tested using moderated regression analysis.
Findings - The empirical results supported the hypothesis that innovative entrepreneur moderates the relationship between strategic orientation and financial inclusion. In particular, the results indicated that at higher levels of entrepreneur innovativeness, learning orientation has a stronger effect on financial inclusion. Similarly, the results also indicated that at high levels of entrepreneur innovativeness, technology orientation affects financial inclusion. In contrast with the other findings showing a positive moderating effect, at higher levels of entrepreneur innovativeness, the impact of market orientation on financial inclusion is low.
Practical Implications - The findings are useful to the government and practitioners for designing policies and training programs geared to increasing the level of financial inclusion among women Small and Medium Enterprises.
Abdu, M., Buba, A., Adamu, I., & Muhammad, T. (2015). Drivers of financial inclusion and gender gap in Nigeria. The Empirical Econometrics and Quantitative Economics Letters (EEQEL), 4(4), 186-199.
Acar, A. Z., & Acar, P. (2012). The effects of organizational culture and innovativeness on business performance in healthcare industry. Procedia-Social and Behavioral Sciences, 58, 683-692. DOI: https://doi.org/10.1016/j.sbspro.2012.09.1046
Adomako, S., Danso, A., & Ofori Damoah, J. (2016). The moderating influence of financial literacy on the relationship between access to finance and firm growth in Ghana. Venture Capital, 18(1), 43-61. DOI: https://doi.org/10.1080/13691066.2015.1079952
Aiken, L. S., West, S. G., & Reno, R. R. (1991). Multiple regression: Testing and interpreting interactions: Sage.
Akman, G., & Yilmaz, C. (2008). Innovative capability, innovation strategy and market orientation: an empirical analysis in Turkish software industry. International Journal of Innovation Management, 12(01), 69-111. DOI: https://doi.org/10.1142/S1363919608001923
Alegre, J., & Chiva, R. (2008). Assessing the impact of organizational learning capability on product innovation performance: An empirical test. Technovation, 28(6), 315-326. DOI: https://doi.org/10.1016/j.technovation.2007.09.003
Amatucci, F. M., & Crawley, D. C. (2011). Financial self-efficacy among women entrepreneurs. International Journal of Gender and Entrepreneurship, 3(1), 23-37. DOI: https://doi.org/10.1108/17566261111114962
Aminu, I. M., & Shariff, M. N. M. (2015). Influence of strategic orientation on SMEs access to finance in Nigeria. Asian Social Science, 11(4), 298. DOI: https://doi.org/10.5539/ass.v11n4p298
Atieno, R. (2009). Linkages, access to finance and the performance of small-scale enterprises in Kenya: Research paper/UNU-WIDER.
Bachas, P., Gertler, P., Higgins, S., & Seira, E. (2018). Digital financial services go a long way: Transaction costs and financial inclusion. Paper presented at the AEA Papers and Proceedings. DOI: https://doi.org/10.1257/pandp.20181013
Baker, W. E., & Sinkula, J. M. (1999). Learning orientation, market orientation, and innovation: Integrating and extending models of organizational performance. Journal of market-focused management, 4(4), 295-308. DOI: https://doi.org/10.1023/A:1009830402395
Barasa, D. A., & Mwirigi, F. M. (2013). The role of agency banking in enhancing financial sector deepening in emerging markets: lessons from the Kenyan experience. European Journal of Business and Management, 5(21), 19-21.
Berisha-Namani, M. (2009). The role of information technology in small and medium sized enterprises in Kosova. Paper presented at the Fulbright academy conference.
Block, J. H., Colombo, M. G., Cumming, D. J., & Vismara, S. (2018). New players in entrepreneurial finance and why they are there. Small Business Economics, 50(2), 239-250. DOI: https://doi.org/10.1007/s11187-016-9826-6
Burns, S. (2015). Mobile money and financial development: The case of M-PESA in Kenya. Available at SSRN 2688585. DOI: https://doi.org/10.2139/ssrn.2688585
Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial marketing management, 31(6), 515-524. DOI: https://doi.org/10.1016/S0019-8501(01)00203-6
Calcagnini, G., Cole, R., Giombini, G., & Grandicelli, G. (2018). Hierarchy of bank loan approval and loan performance. Economia Politica, 35(3), 935-954. DOI: https://doi.org/10.1007/s40888-018-0109-3
Camara, N., & Tuesta, D. (2014). Measuring financial inclusion: A muldimensional index. BBVA Research Paper(14/26). DOI: https://doi.org/10.2139/ssrn.2634616
Casson, P. D., Martin, R., & Nisar, T. M. (2008). The financing decisions of innovative firms. Research in international Business and Finance, 22(2), 208-221. DOI: https://doi.org/10.1016/j.ribaf.2007.05.001
Chang, F. Y., & Webster, C. M. (2018). Influence of innovativeness, environmental competitiveness and government, industry and professional networks on SME export likelihood. Journal of small business management. DOI: https://doi.org/10.1111/jsbm.12446
Charles, N. A., Ojera, P. B., & David, O. (2015). Factors influencing choice of strategic management modes of small enterprises. Journal of Innovation and Entrepreneurship, 4(1), 4. DOI: https://doi.org/10.1186/s13731-014-0016-y
Chikalipah, S. (2017). What determines financial inclusion in Sub-Saharan Africa? African Journal of Economic and Management Studies, 8(1), 8-18. DOI: https://doi.org/10.1108/AJEMS-01-2016-0007
Damanpour, F., & Evan, W. (1990). The adoption of innovations over time: structural characteristics and performance of organizations. Paper presented at the annual meeting of the decision science institute, San Diego.
Demirgüç-Kunt, A., & Klapper, L. (2012). Financial inclusion in Africa: an overview: The World Bank. DOI: https://doi.org/10.1596/1813-9450-6088
Demirguc-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring financial inclusion and the fintech revolution: The World Bank. DOI: https://doi.org/10.1596/978-1-4648-1259-0
Donovan, K. (2012). Mobile money for financial inclusion. Information and Communications for development, 61(1), 61-73. DOI: https://doi.org/10.1596/9780821389911_ch04
Falk, J. H., & Dierking, L. D. (2018). Viewing science learning through an ecosystem lens: A story in two parts. In Navigating the changing landscape of formal and informal science learning opportunities (pp. 9-29): Springer. DOI: https://doi.org/10.1007/978-3-319-89761-5_2
FSD. (2019). FinAccess Household Survey. Retrieved from https://fsdkenya.org/publication/finaccess2019/
Gao, G. Y., Zhou, K. Z., & Yim, C. K. B. (2007). On what should firms focus in transitional economies? A study of the contingent value of strategic orientations in China. International Journal of Research in Marketing, 24(1), 3-15. DOI: https://doi.org/10.1016/j.ijresmar.2006.09.004
Gatignon, H., & Xuereb, J.-M. (1997). Strategic orientation of the firm and new product performance. Journal of marketing research, 34(1), 77-90. DOI: https://doi.org/10.1177/002224379703400107
GoK. (2007). Kenya Vision 2030. The Popular Version. In: National Economic and Social Council of Kenya Nairobi.
Goldsmith, R. E., Freiden, J. B., & Eastman, J. K. (1995). The generality/specificity issue in consumer innovativeness research. Technovation, 15(10), 601-612. DOI: https://doi.org/10.1016/0166-4972(95)99328-D
Gomezelj Omerzel, D., & Antončič, B. (2008). Critical entrepreneur knowledge dimensions for the SME performance. Industrial Management & Data Systems, 108(9), 1182-1199. DOI: https://doi.org/10.1108/02635570810914883
Halaç, D. S. (2015). Multidimensional construct of technology orientation. Procedia-Social and Behavioral Sciences, 195, 1057-1065. DOI: https://doi.org/10.1016/j.sbspro.2015.06.149
Hamilton, L. C., & Asundi, R. (2008). Technology usage and innovation: Its effect on the profitability of SMEs. Management Research News, 31(11), 830-845. DOI: https://doi.org/10.1108/01409170810913033
Han, J. K., Kim, N., & Srivastava, R. K. (1998). Market orientation and organizational performance: is innovation a missing link? Journal of marketing, 62(4), 30-45. DOI: https://doi.org/10.1177/002224299806200403
Hannig, A., & Jansen, S. (2010). Financial inclusion and financial stability: Current policy issues. DOI: https://doi.org/10.2139/ssrn.1729122
Ho, J., Plewa, C., & Lu, V. N. (2016). Examining strategic orientation complementarity using multiple regression analysis and fuzzy set QCA. Journal of business research, 69(6), 2199-2205. DOI: https://doi.org/10.1016/j.jbusres.2015.12.030
Hudson, M., Smart, A., & Bourne, M. (2001). Theory and practice in SME performance measurement systems. International journal of operations & production management, 21(8), 1096-1115. DOI: https://doi.org/10.1108/EUM0000000005587
Hult, G. T. M., Hurley, R. F., & Knight, G. A. (2004). Innovativeness: Its antecedents and impact on business performance. Industrial marketing management, 33(5), 429-438. DOI: https://doi.org/10.1016/j.indmarman.2003.08.015
Hurley, R. F., Hult, G. T. M., & Knight, G. A. (2005). Innovativeness and capacity to innovate in a complexity of firm-level relationships: A response to Woodside (2004). Industrial marketing management, 34(3), 281-283. DOI: https://doi.org/10.1016/j.indmarman.2004.07.006
Jin, J., & Von Zedtwitz, M. (2008). Technological capability development in China's mobile phone industry. Technovation, 28(6), 327-334. DOI: https://doi.org/10.1016/j.technovation.2007.06.003
Kairiza, T., Kiprono, P., & Magadzire, V. (2017). Gender differences in financial inclusion amongst entrepreneurs in Zimbabwe. Small Business Economics, 48(1), 259-272. DOI: https://doi.org/10.1007/s11187-016-9773-2
Kaiser, H. F. (1960). The application of electronic computers to factor analysis. Educational and psychological measurement, 20(1), 141-151. DOI: https://doi.org/10.1177/001316446002000116
Kirzner, I. M. (2009). The alert and creative entrepreneur: A clarification. Small Business Economics, 32(2), 145-152. DOI: https://doi.org/10.1007/s11187-008-9153-7
Klapper, L., El-Zoghbi, M., & Hess, J. (2016). Achieving the sustainable development goals. The role of financial inclusion. Available online: http://www. ccgap. org. Accessed, 23(5), 2016.
Kocak, A., Carsrud, A., & Oflazoglu, S. (2017). Market, entrepreneurial, and technology orientations: impact on innovation and firm performance. Management Decision, 55(2), 248-270. DOI: https://doi.org/10.1108/MD-04-2015-0146
Koh, F., Phoon, K. F., & Ha, C. D. (2018). Digital financial inclusion in South East Asia. In Handbook of Blockchain, Digital Finance, and Inclusion, Volume 2 (pp. 387-403): Elsevier. DOI: https://doi.org/10.1016/B978-0-12-812282-2.00015-2
Kohli, A. K., & Jaworski, B. J. (1990). Market orientation: the construct, research propositions, and managerial implications. Journal of marketing, 54(2), 1-18. DOI: https://doi.org/10.1177/002224299005400201
Kusimba, S. (2018). “It is easy for women to ask!”: Gender and digital finance in Kenya. Economic Anthropology, 5(2), 247-260. DOI: https://doi.org/10.1002/sea2.12121
Laukkanen, T., Nagy, G., Hirvonen, S., Reijonen, H., & Pasanen, M. (2013). The effect of strategic orientations on business performance in SMEs: A multigroup analysis comparing Hungary and Finland. International Marketing Review, 30(6), 510-535. DOI: https://doi.org/10.1108/IMR-09-2011-0230
Lee, D. H., Choi, S. B., & Kwak, W. J. (2014). The effects of four dimensions of strategic orientation on firm innovativeness and performance in emerging market small-and medium-size enterprises. Emerging Markets Finance and Trade, 50(5), 78-96.
Lenka, S. K., & Barik, R. (2018). A discourse analysis of financial inclusion: post-liberalization mapping in rural and urban India. Journal of Financial Economic Policy, 10(3), 406-425. DOI: https://doi.org/10.1108/JFEP-11-2015-0065
Low, D. R., Chapman, R. L., & Sloan, T. R. (2007). Inter-relationships between innovation and market orientation in SMEs. Management Research News, 30(12), 878-891. DOI: https://doi.org/10.1108/01409170710833321
Madrid‐Guijarro, A., Garcia, D., & Van Auken, H. (2009). Barriers to innovation among Spanish manufacturing SMEs. Journal of small business management, 47(4), 465-488. DOI: https://doi.org/10.1111/j.1540-627X.2009.00279.x
Mahmoud, M. A., Blankson, C., Owusu-Frimpong, N., Nwankwo, S., & Trang, T. P. (2016). Market orientation, learning orientation and business performance: The mediating role of innovation. International Journal of Bank Marketing, 34(5), 623-648. DOI: https://doi.org/10.1108/IJBM-04-2015-0057
Mansury, M. A., & Love, J. H. (2008). Innovation, productivity and growth in US business services: A firm-level analysis. Technovation, 28(1-2), 52-62. DOI: https://doi.org/10.1016/j.technovation.2007.06.002
María Ruiz-Jiménez, J., & del Mar Fuentes-Fuentes, M. (2013). Knowledge combination, innovation, organizational performance in technology firms. Industrial Management & Data Systems, 113(4), 523-540. DOI: https://doi.org/10.1108/02635571311322775
Martínez, C. H., Hidalgo, X. P., & Tuesta, D. (2013). Demand factors that influence financial inclusion in Mexico: analysis of the barriers based on the ENIF survey. BBVA Bank, BBVA Research Working Paper, 1-19.
Mindra, R., & Moya, M. (2017). Financial self-efficacy: a mediator in advancing financial inclusion. Equality, Diversity and Inclusion: An International Journal, 36(2), 128-149. DOI: https://doi.org/10.1108/EDI-05-2016-0040
Mindra, R., Moya, M., Zuze, L. T., & Kodongo, O. (2017). Financial self-efficacy: a determinant of financial inclusion. International Journal of Bank Marketing, 35(3), 338-353. DOI: https://doi.org/10.1108/IJBM-05-2016-0065
Murphy, G. B., & Callaway, S. K. (2004). Doing well and happy about it? Explaining variance in entrepreneurs’ stated satisfaction with performance. New England Journal of Entrepreneurship, 7(2), 15-26. DOI: https://doi.org/10.1108/NEJE-07-02-2004-B003
Narver, J. C., & Slater, S. F. (1990). The effect of a market orientation on business profitability. Journal of marketing, 54(4), 20-35. DOI: https://doi.org/10.1177/002224299005400403
Negassi, S., Lhuillery, S., Sattin, J.-F., Hung, T.-Y., & Pratlong, F. (2019). Does the relationship between innovation and competition vary across industries? Comparison of public and private research enterprises. Economics of Innovation and New Technology, 28(5), 465-482. DOI: https://doi.org/10.1080/10438599.2018.1527552
Nienhüser, W. (2008). Resource dependence theory-How well does it explain behavior of organizations? management revue, 9-32. DOI: https://doi.org/10.5771/0935-9915-2008-1-2-9
Noble, C. H., Sinha, R. K., & Kumar, A. (2002). Market orientation and alternative strategic orientations: a longitudinal assessment of performance implications. Journal of marketing, 66(4), 25-39. DOI: https://doi.org/10.1509/jmkg.220.127.116.1113
Okello Candiya Bongomin, G., Ntayi, J. M., Munene, J. C., & Malinga, C. A. (2018). Mobile money and financial inclusion in sub-Saharan Africa: the moderating role of social networks. Journal of African Business, 19(3), 361-384. DOI: https://doi.org/10.1080/15228916.2017.1416214
Okello Candiya Bongomin, G., Ntayi, J. M., Munene, J. C., & Nabeta, I. N. (2016). Financial inclusion in rural Uganda: Testing interaction effect of financial literacy and networks. Journal of African Business, 17(1), 106-128. DOI: https://doi.org/10.1080/15228916.2016.1117382
Ouma, S. A., Odongo, T. M., & Were, M. (2017). Mobile financial services and financial inclusion: Is it a boon for savings mobilization? Review of development finance, 7(1), 29-35. DOI: https://doi.org/10.1016/j.rdf.2017.01.001
Patwardhan, A. (2018). Financial inclusion in the digital age. In Handbook of Blockchain, Digital Finance, and Inclusion, Volume 1 (pp. 57-89): Elsevier. DOI: https://doi.org/10.1016/B978-0-12-810441-5.00004-X
Peachey, S., & Roe, A. (2004). Access to finance. A study for the World Savings Banks Institute.
Pelham, A. M. (1997). Market orientation and performance: the moderating effects of product and customer differentiation. Journal of Business & Industrial Marketing, 12(5), 276-296. DOI: https://doi.org/10.1108/08858629710183257
Rhee, J., Park, T., & Lee, D. H. (2010). Drivers of innovativeness and performance for innovative SMEs in South Korea: Mediation of learning orientation. Technovation, 30(1), 65-75. DOI: https://doi.org/10.1016/j.technovation.2009.04.008
Rubio, A., & Aragón, A. (2009). SMEs competitive behavior: strategic resources and strategies. Management Research: Journal of the Iberoamerican Academy of Management, 7(3), 171-190. DOI: https://doi.org/10.2753/JMR1536-5433070301
Salampasis, D., & Mention, A.-L. (2018). FinTech: Harnessing Innovation for Financial Inclusion. In Handbook of Blockchain, Digital Finance, and Inclusion, Volume 2 (pp. 451-461): Elsevier. DOI: https://doi.org/10.1016/B978-0-12-812282-2.00018-8
Santos-Vijande, M. L., Sanzo-Perez, M. J., Alvarez-Gonzalez, L. I., & Vazquez-Casielles, R. (2005). Organizational learning and market orientation: interface and effects on performance. Industrial marketing management, 34(3), 187-202. DOI: https://doi.org/10.1016/j.indmarman.2004.08.004
Schumpeter, J. A., & Opie, R. (1961). The theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycle: Harvard University Press Cambridge, MA.
Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach: John Wiley & Sons.
Serrao, M., Sequeira, A., & Varambally, K. (2013). Conceptual framework to investigate the accessibility and impact of financial inclusion. Indian Journal of Research, 2(9), 47-49.
Seshamani, V. (2018). Financial Inclusion and Income Inequality: A Case Study of Selected Countries in Sub-Saharan Africa. Archives of Business Research, 6(4). DOI: https://doi.org/10.14738/abr.64.4364
Sethi, D., & Acharya, D. (2018). Financial inclusion and economic growth linkage: Some cross country evidence. Journal of Financial Economic Policy, 10(3), 369-385. DOI: https://doi.org/10.1108/JFEP-11-2016-0073
Sharma, D. (2016). Nexus between financial inclusion and economic growth: Evidence from the emerging Indian economy. Journal of Financial Economic Policy, 8(1), 13-36. DOI: https://doi.org/10.1108/JFEP-01-2015-0004
Slater, S. F., & Narver, J. C. (1994). Does competitive environment moderate the market orientation-performance relationship? Journal of marketing, 58(1), 46-55. DOI: https://doi.org/10.1177/002224299405800104
Spyropoulou, S., Katsikeas, C. S., Skarmeas, D., & Morgan, N. A. (2018). Strategic goal accomplishment in export ventures: the role of capabilities, knowledge, and environment. Journal of the Academy of Marketing Science, 46(1), 109-129. DOI: https://doi.org/10.1007/s11747-017-0519-8
Staniewski, M. W., Nowacki, R., & Awruk, K. (2016). Entrepreneurship and innovativeness of small and medium-sized construction enterprises. International Entrepreneurship and Management Journal, 12(3), 861-877. DOI: https://doi.org/10.1007/s11365-016-0385-8
Tajeddini, K. (2010). Effect of customer orientation and entrepreneurial orientation on innovativeness: Evidence from the hotel industry in Switzerland. Tourism management, 31(2), 221-231. DOI: https://doi.org/10.1016/j.tourman.2009.02.013
Tarus, D. K., & Sitienei, E. K. (2015). Intellectual capital and innovativeness in software development firms: the moderating role of firm size. Journal of African Business, 16(1-2), 48-65. DOI: https://doi.org/10.1080/15228916.2015.1061284
Triki, T., & Faye, I. (2013). Financial inclusion in Africa. African Development Bank.
Tutar, H., Nart, S., & Bingöl, D. (2015). The effects of strategic orientations on innovation capabilities and market performance: The case of ASEM. Procedia-Social and Behavioral Sciences, 207, 709-719. DOI: https://doi.org/10.1016/j.sbspro.2015.10.144
Udell, G. F. (2015). Issues in SME access to finance. European Economy(2), 61.
Van de Vrande, V., De Jong, J. P., Vanhaverbeke, W., & De Rochemont, M. (2009). Open innovation in SMEs: Trends, motives and management challenges. Technovation, 29(6-7), 423-437. DOI: https://doi.org/10.1016/j.technovation.2008.10.001
Venkatraman, N. (1989). Strategic orientation of business enterprises: The construct, dimensionality, and measurement. Management science, 35(8), 942-962. DOI: https://doi.org/10.1287/mnsc.35.8.942
Verhees, F. J., & Meulenberg, M. T. (2004). Market orientation, innovativeness, product innovation, and performance in small firms. Journal of small business management, 42(2), 134-154. DOI: https://doi.org/10.1111/j.1540-627X.2004.00102.x
Weber, P., Geneste, L. A., & Connell, J. (2015). Small business growth: strategic goals and owner preparedness. Journal of Business Strategy, 36(3), 30-36. DOI: https://doi.org/10.1108/JBS-03-2014-0036
Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance: a configurational approach. Journal of business venturing, 20(1), 71-91. DOI: https://doi.org/10.1016/j.jbusvent.2004.01.001
World Bank, W. B. (2014). Global financial development report 2014: Financial inclusion. In (Vol. 2): World Bank Publications. DOI: https://doi.org/10.1596/9780821399859
Yıldız, S., Baştürk, F., & Boz, İ. T. (2014). The effect of leadership and innovativeness on business performance. Procedia-Social and Behavioral Sciences, 150, 785-793. DOI: https://doi.org/10.1016/j.sbspro.2014.09.064
Zhou, K. Z., Yim, C. K., & Tse, D. K. (2005). The effects of strategic orientations on technology-and market-based breakthrough innovations. Journal of marketing, 69(2), 42-60. DOI: https://doi.org/10.1509/jmkg.18.104.22.168756
Zins, A., & Weill, L. (2016). The determinants of financial inclusion in Africa. Review of development finance, 6(1), 46-57. DOI: https://doi.org/10.1016/j.rdf.2016.05.001
Copyright (c) 2019 Judith Ndinda Nguli, Robert Mukoswa Odunga
This work is licensed under a Creative Commons Attribution 4.0 International License.