Shadbolt, NicolaGanegoda Hewage, Ishara Anjalee2023-04-262023-05-292023-04-262023-05-292023http://hdl.handle.net/10179/18264Risk, risk-taking, and risk management have been identified as integral components of entrepreneurship since the inception of the concept of entrepreneurship. However, the relationship between these components still puzzles scholars as different scholars have presented often contrasting theoretical notions and empirical findings regarding how entrepreneurial firms take and manage risk. Despite the importance of risk in entrepreneurship, the attention given to risk management and the adoption of specific risk management strategies is limited in the research literature. The firms operating in the MSME sector play a vital role in economic development in developing countries, particularly in Sri Lanka. The term entrepreneurship is frequently associated and investigated along with the term MSMEs where many researchers have used these two terms synonymously or alternatively. Literature supports the notion that entrepreneurial firms and small businesses are related but they are two different entities with distinctive features. However, the lack of specific criteria to differentiate between the two firm groups is identified as a major hindrance in the sector that negatively affects the development of beneficial policies and scholarly work. With the above questions identified, the overarching research question of this study is; “Do the entrepreneurial micro and small-scale (MSE) firms in the agriculture food processing sector in Sri Lanka manage the risks they face any differently from other MSEs operating in the sector?”. To address this question first it was necessary to assure the existence of such entrepreneurial firms within the sector. For that, the study devised a method to differentiate entrepreneurial firms from their non-entrepreneurial counterparts. Moreover, the study also aimed to investigate the factors that determine the differing risk management behaviour of these MSEs operating in the agriculture food processing sector in Sri Lanka. The research process began with a preliminary study to investigate the context of agriculture food processing MSEs in Sri Lanka. With the support of the findings of the preliminary study and the literature, the five-dimensional Entrepreneurial Orientation approach (i.e. innovativeness, proactiveness, risk-taking, competitive aggressiveness, and autonomy) was identified as the best-fitting method to differentiate between the two firm groups. Upon confirming the existence of entrepreneurial and non-entrepreneurial firms in the sector, the study adopted an exploratory sequential mixed-method approach consisting of two phases; a qualitative phase with selected case firms to explore the nature of their EO followed by a quantitative phase with survey data to investigate the risk management behaviour of a population of these firms. The qualitative phase was conducted with four selected case firms; two entrepreneurial and two non-entrepreneurial to explore the level and nature of EO. The quantitative data were gathered from a sample of 206 MSEs using a structured, researcher-administered questionnaire. The results confirmed that entrepreneurial firms do exist in the agriculture food processing sector in Sri Lanka. Proactiveness, innovativeness, risk-taking, and competitive aggressiveness were identified as the more suitable EO dimensions that can be used to identify and differentiate between entrepreneurial and non-entrepreneurial firms in the Sri Lankan context, with autonomy being identified as not strongly contributing to this differentiation. The study agrees with the existing body of literature on “entrepreneurs are risk takers”, yet goes much beyond of this common notion to prove that they are not only they are risk takers, but also better risk managers compared to their non-entrepreneurial counterparts. The uniqueness of this study is that it has not inly investigated the risk management behaviour of entrepreneurial small firms but also comapred it with a group of non-entreprneurial firms. Quantitative study found significant differences between entrepreneurial and non-entrepreneurial firms in terms of their adoption of risk management strategies. More entrepreneurial firms adopted knowledge-related, strategic, and product price-related market risk management strategies compared to non-entrepreneurial firms. This was also found in the qualitative phase where the entrepreneurial firms were more proactive and showed a notable orientation toward adopting strategic, and knowledge-related, risk management strategies. The two firm groups showed clear differences in their propensities to risk, with two categories of risk propensities identified as entrepreneurial risk (seeking) propensity attributes and non-entrepreneurial risk (averting) propensity attributes. The entrepreneurial risk (seeking) attributes were found to strongly contribute to the differentiation between entrepreneurial and non-entrepreneurial MSEs while the adoption of strategic and knowledge-related risk management strategies was negatively affected by the non-entrepreneurial risk (averting) propensity. Investigating how sources of risk are perceived, both as opportunities and threats, for both entrepreneurial and non-entrepreneurial firms was another important contribution of this study. The results highlighted that the entrepreneurial group perceived more opportunities arising from the sources of risk than the non-entrepreneurial group, with both groups perceiving the threats in a similar manner. Having a proper identification of entrepreneurial and non-entrepreneurial firms is useful for policymakers to devise their policies more strategically. Finally, this study expands the current understanding of entrepreneurial/non-entrepreneurial firms, especially in terms of strategic planning and knowledge-orientation of entrepreneurial firms in managing risks, risk propensity, and perceiving different sources of risks based on the strong foundation of their proactive and opportunity-oriented nature.The AuthorFood industry and tradeRisk managementSri LankaSmall businessEntrepreneurshipThesis300208 Farm management, rural management and agribusiness