Dimensions of Entrepreneurial Self-Efficacy and Firm Performance

Abstract

Creating a highly performing Small and Medium Enterprise (SME) sector is the central focus of many developing countries, but contrary to the expectations, most of SMEs in South Asia face many constraints such as policy inertia, misplaced government priorities, lack of infrastructure facilities, inappropriate technology, and lack of information and lags clearly behind their western counterparts. This situation in volatile environmental conditions has mounted much pressure on the key human agency of the entities and bottlenecked the flow of contribution to the economies. In the face of such constraints, efficacious and resilient entrepreneurs are more likely to ensure their survival amid tremendous rate of failures communal to these countries. It is therefore crucial to understand how more efficacious SME entrepreneurs perform in their operations. This paper investigates the effect of the dimensions of entrepreneurial self-efficacy on the performance of SME entrepreneurs. The study in a sample of 350 small scale hotel and restaurants in Sri Lankan SME sector proved good fit of the proposed structural equation model to the observed data confirming that more efficacious entrepreneurs are highly performing and bouncing back in constrained environments.