Effect of Power distance on entrepreneurial opportunity exploitation among small and medium enterprises owners in Tanzania. Mediation Effect of innovativeness.

Abstract

This study examined the effects of power distance on entrepreneurs' use of business opportunities among Tanzania’s small and medium-sized business owners. Specifically, the study examined the direct effects of power distance on entrepreneurial opportunity exploitation and the mediation effect of innovativeness on the relationship between power distance and entrepreneurial opportunity exploitation. An explanatory research design was used to study 370 small and medium enterprise owners. The survey strategy was used to collect data over a specified period using a questionnaire. Partial least square structural equation modeling (PLS-SEM) was used to examine the reliability, validity, and significance of the results. According to empirical findings, the exploitation of entrepreneurial opportunities is positively and significantly influenced by power distance. Furthermore, mediation effects revealed that the association between power distance and the exploitation of entrepreneurial opportunities occurs through the innovativeness of SMEs owners. Theoretically, the study suggests that innovativeness is a mechanism through which power distance transmits its effects on entrepreneurial opportunity exploitation. As far as managerial implications are concerned, SMEs owners should embrace lower power distance values, which include better interaction with their subordinates, exercising less control, and involving their subordinates in decision-making to promote innovativeness and better exploitation of entrepreneurial opportunities.