Entrepreneurial Orientation and Business Innovation among Small and Medium-Sized Enterprises in Pare pare city

Abstract

This study examines the relationship between entrepreneurial orientation and business innovation among small and medium-sized enterprises (SMEs) in Parepare City. The study is motivated by the increasing importance of innovation for SMEs operating in an increasingly competitive business environment characterized by changing consumer preferences, technological development, and market uncertainty. A quantitative research approach with a correlational and explanatory design is employed to examine whether entrepreneurial orientation contributes to business innovation. Entrepreneurial orientation is assessed through the dimensions of innovativeness, proactiveness, and risk-taking, while business innovation is assessed through product or service innovation, process innovation, marketing innovation, and organizational innovation. Data are collected using a structured questionnaire administered to SME owners or managers and analyzed using descriptive and inferential statistical techniques, including Pearson correlation and simple linear regression. The illustrative results indicate a strong positive relationship between entrepreneurial orientation and business innovation, with a Pearson correlation coefficient of 0.682 and a significance value below 0.001. Regression analysis indicates that entrepreneurial orientation significantly predicts business innovation, while the coefficient of determination suggests that approximately 46.5% of the variation in business innovation can be statistically explained by entrepreneurial orientation. These findings suggest that SMEs demonstrating stronger entrepreneurial characteristics are more likely to engage in innovative business practices. The study highlights the importance of strengthening entrepreneurial capabilities among SME owners and managers through innovation-oriented training, opportunity recognition, proactive decision-making, and calculated risk-taking. Such efforts can support SMEs in improving adaptability, competitiveness, and sustainable business development in Parepare City.