A Structural Equation Model on Business Performance of Micro-Enterprises

The primary aim of this research endeavor was to come up with a model for business performance as influenced by market orientation, organizational learning, and entrepreneurial orientation. A descriptive-causal design utilizing Structural Equation Modelling (SEM) was employed. Through a stratified random sampling method, there were 420 business owners and employees in Region XI who were surveyed using an adapted questionnaire. Findings revealed that market orientation and entrepreneurial orientation obtained a very high level of mean scores while organizational learning gained a high level of mean score. Further, a relationship exists between market orientation, organizational learning, entrepreneurial orientation, and endogenous business performance. The generated model exhibited a causal relationship between business performance, market orientation, organizational orientation, and organizational learning orientation. The model also expressed a new concept showing that the endogenous business performance of micro-businesses was determined by the two remaining measures: measure and analysis and innovation and learning which is further influenced by the exogenous market orientation defined by its retained indicators: customer orientation and inter-functional coordination which is substantiated by entrepreneurial orientation as evidenced by the remaining constructs: proactiveness and competitive-aggressiveness and finally reinforced by organizational learning orientation supported by the internal acquisition of knowledge and external acquisition of knowledge.