International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471

THE DETERMINANTS OF SMEs PERFORMANCE OPERATING IN FOOD AND BEVERAGE INDUSTRY IN

Larabi Chouayb Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia. Malaysia. Tamma Elhachemi School of International Studies, Universiti Utara Malaysia, Malaysia. Abderrahmane Elkheloufi School of Business Management, Universiti Utara Malaysia. Malaysia.

ABSTRACT Purpose – The purpose of this study is to examine the moderation influence of organizational trust (OT) between entrepreneurial orientation (EO) dimensions (innovativeness, proactiveness and risk-taking) and small and medium enterprises (SMEs) in the emerging economy and developing country. This paper is conducted in Algeria, choosing the food industry as a sector of this study. Design/methodology/approach – Data were collected from 210 of small and medium enterprises operating in the food industry located in Algeria, using questionnaire survey to collect data and to test six hypotheses exist in this research. The questionnaire were hand delivered to owner/manager of small and medium enterprises.

Findings – The Results suggest that innovativeness, proactiveness and risk-taking have a positive and significant influence on small and medium enterprises. The results indicate also that organizational trust moderates the relationship between innovativeness, proactiveness, risk-taking and small and medium enterprises. Research limitations/implications – The findings of this study can be beneficial for owner and manager of small and medium enterprises as they give them insights on how entrepreneurial orientation dimensions affect positively the performance in the Algerian enterprises operating in the food industry. Such a relation suggests that entrepreneurial orientation adoption is crucial factor that can enhance the firm performance by applying innovativeness, proactiveness, and risk-taking notions. Originality/value – This paper among the pioneer studies in the review and the first study in Algeria- contributes to the knowledge by providing empirical evidence on the role of entrepreneurial orientation dimensions and organizational trust on the small and medium enterprises. Keyterms – entrepreneurial orientation (EO), organizational trust (OT), small and medium enterprises (SMEs), performance.

1- INTRODUCTION Literature showed abundance of papers in SMEs performance. The literature review of this study shows a review of performance and related concepts and the factors that influence the SMEs performance. This latter still confronts some problems in terms of satisfying the social and economic obligations. In other words, SMEs show a fragility to grow in size and unable to survive and succeed on a long-term scale, due to some problems pertaining to innovation and entrepreneurship (Dahbia 2016; Makri, 2016; Bouazza, Ardjouman, & Abada, 2015), weak proactiveness to new markets (Ferhati, 2018) and lack of entrepreneurial orientation (EO) spirit (Bouazza, Ardjouman, & Abada, 2015). Makhlouf (2018) indicates that most enterprises are afraid to take-risk and widen their markets and export their products abroad. Therefore, SMEs still suffer due to the absence of innovativeness, proactiveness and risk-taking factors that were not being widely examined in Algerian firms, and because of most Algerian SMEs lacking to make proactive and innovative activities to new markets (Ferhati, 2018).

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International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471

The following discusses the relationship between EO dimensions (innovativeness, proactiveness and risk-taking). Furthermore, the study shows the limitation studies concerning to organizational trust (OT) and its moderating influence between innovativeness, proactiveness, risk-taking and SMEs performance especially in the food and beverage industry in Algeria. 2- LITERATURE REVIEWS 2.1 Definition of performance and related terms Performance is a fundamental concept as it helps any organization to evaluate its growth and progress. However, past literatures assumed wrongly that performance, efficiency and effectiveness have the same meaning (Abbas, Azid & Besar, 2016), and the same thing can be observed with productivity. Researchers sometimes are confused between the term performance and productivity (Ricardo & Wade, 2001). According to Sundqvist, Backlund and Chronéer (2014), the terms efficiency and effectiveness are being used without clear definitions. Therefore, there is unclear definitions between all these concepts performance, efficiency, effectiveness, and productivity. Compared to performance; productivity, efficiency and effectiveness have different meanings even though some prior studies demonstrated that they are similar. According to Sillanpää, (2011), although performance is difficult to define, but it is for a certain does not mean effectiveness, efficiency or productivity. Performance as a concept is used to assess the efforts of individual or group of people (Corvellec, 1997). As a point of view, this definition mentioned “effort”, and this word should relate with objective, because assessing “the efforts” must be in regards to or compare to something. Therefore, the author should include the word “objective” in the definition for more clarification. Accordingly, performance usually relates to objectives and to what extend the results meet the objectives. All in all, Hornby (2000), has given a stronger definition of performance as an action or achievement considered in relation to how successful it is. “Action” or “achievement” as stated in the definition refers to the efforts, and this action “how successful” means how the results are achieved to the stated objectives. On the other hand, other terms are still ambiguous, especially with efficiency and effectiveness (Sundqvist, et al, 2014). Many practitioners and some authors consider them as synonyms (Zidane & Olsson, 2017). As a matter of fact, there is a confusion in considering these terms (efficiency and effectiveness) as synonyms (Hickey & Brosnan, 2012). Effectiveness and efficiency definitions are totally different from each other, because each of these terms has their own distinct and unique meaning, and they are used for different purposes (Mouzas, 2006). As a similarity, effectiveness and efficiency are both used to assess and measure the performance of organization (measurement tools). In fact, they are commonly being used to measure a firm’s performance (Robbins, 2000). According to Drucker (1977), Griffin (1987) and Anthony (1989), efficiency is often associated with performing activities or doing things right, whereas effectiveness is often related to proper selection of the activities or doing the right things, and the following table clarifies more the difference between these two concepts:

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International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471

Table 1: The difference between effectiveness and efficiency.

Effectiveness Efficiency Effectiveness is “the extent to which the Efficiency is “doing things in the most objective has been achieved” (Samset, 2003) economical way for particular result” (Zidane & Olsson, 2017)

Effectiveness asks if we are actually achieving Efficiency asks if the minimum resources are what we want to achieve (Zidane & Olsson, used in goal seeking (Zidane, Olsson & 2017) 2017)

Effectiveness refers to an absolute level of Efficiency relates to “the optimal use of the outcome attainment (Pennings & Goodman, resources to achieve the desired output” 1977) (Chavan, 2009)

Effectiveness is setting the “right targets to Efficiency means “the construction process uses achieve an overall goal” (Zidane & Olsson, a minimum of resources, time and cost to 2017) produce the specified result” (Zidane & Olsson,2017)

From the above Table1, effectiveness and efficiency are two different concepts. In summary, effectiveness is related to what extent the desired objective has been achieved and efficiency is the ability to accomplish the result with minimum resources. As mentioned before, confusions among researchers are not only on the term performance with effectiveness and efficiency, but also on the usage of the term performance with productivity (Ricardo & Wade, 2001). Productivity is a different term in comparison to performance, effectiveness and efficiency. Productivity refers to the volume of work done in a specified amount of time (Abu-Jarad, Yusof & Nikbin, 2010). In this definition, “volume of work” refers to quantity or specific result (effectiveness), and “specific amount of time” refers to using particular resources wisely (efficiency). Parida and Kumar (2009) claimed that productivity is the combination of effectiveness and efficiency, or as Drucker‘s definition of effectiveness and efficiency is, doing things right and doing the right things. As a summary, productivity contains the composition of both effectiveness and efficiency (Rantanen, 1995). 2.2 Entrepreneurial orientation EO is widely established in the literature, thus, the researcher will only focus on the contextual and theoretical gap exists without touching the importance and definitions of this concept. Regardless to the context gap, EO has been mostly studied in countries with a mature economic condition such as United States (Gupta & Batra, 2015). However, limited studies can be noticed in emerging economies of developing countries (Belgacem, 2015) like Algeria, compared to mature western countries. Studies in Western countries comprises of IT firms, software companies, manufacturing, industry sector, electronics manufacturing industries, metal/wood enterprises, chemical industry, and hardware/IT consulting (Campos, 2017; Hakala, 2013; Jalali, Jaafar & Ramayah, 2014; White & Vila, 2017; Frank, Kessler & Fink, 2010; Tang, Z. Tang & Cowden, 2016; Van Doorn, Heyden, Tröster & Volberda, 2015). However, researchers did not show interest to investigate EO in the food and beverage sector. Not only the food and beverage sector being omitted in the western countries, the same being neglected in Algeria as well. Therefore, as one of the largest food importers, SMEs stakeholders in the food sector will benefit from the findings of this study. Concerning to theoretical gap, prior studies indicated the direct relationship between EO and performance without including the intervening variables (Buli, 2017; Kowalik, Danik & Sikora, 2017; Kallmuenzer, Strobl & Peters, 2017; Silver, Johanson & Berggren 2016; White & Vila 2017; Belgacem, 2015; Rodríguez-Gutiérrez, Moreno & Tejada, 2015; Gruber-Muecke & Hofer, 2015; Dai, Maksimov, Gilbert & Fernhaber, 2014; Filser & Eggers, 2014). Thus, a call for more researches to examine new

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International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471 variables in this relationship is required (Al-Dhaafri & Al-Swidi, 2016). Consequently, other determinants and moderators are required, and these determinants should be exposed in the relationship between EO and SMEs, and these variables should be deduced from theories. Theoretically, many studies overlooked to include RBV theory in explaining the relationship between EO and firm performance (Luu , 2017; Ibrahim & Mahmood, 2016; Choi & Williams, 2016; Fellnhofer, Puumalainen & Sjögrén 2016; Silver, Johanson & Berggren, 2016; Florén, Rundquist & Fischer, 2016; Altinay, Madanoglu, Vita, Arasli & Ekinci, 2016; Gunawan, Jacob & Duysters, 2015; Semrau, Ambos & Kraus 2015; Shan, Song & Ju, 2015). In addition to this, the studies not only missed to include RBV theory, but in actual fact there was no theory found in these studies explaining the relationship between the EO and performance. On the other hand, most of literature review revealed three dimensions to measure EO which are innovativeness, risk-taking, and pro-activeness (Al-Dhaafri & Al-Swidi, 2016), and all these famous dimensions were suggested by the work of Miller (1983) and Covin and Slevin (1989). Soon after, Lumpkin and Dess (1996) added two other dimensions competitive aggressiveness and autonomy.

Adding these two dimensions shed light on a debate between gurus whether to consider EO as uni- dimensional variable or multidimensional construct. Miller (1983) and Covin and Slevin (1989) suggested in their work that EO is a uni-dimensional construct, and insisted that these three dimensions (innovativeness, risk-taking, and proactiveness) can be combined into a single scale. On the contrary, Lumpkin and Dess (1996) and Kreiser (2002) claimed that dimensions of EO can be treated independently. Back to literature, EO was treated as uni-and multidimensional construct, but most of conducted researches consider it as multidimensional variable. The following Table 2 illustrates chronologically how EO is developed from uni-dimensional construct, to multi-dimensional construct, and then into both uni-and-multidimensional variable.

Table 2 : Entrepreneurial orientation dimensions

Perspective Dimensions Authors

Innovativeness, risk-taking, and Miller (1983). Covin and Slevin Uni-dimensional construct proactiveness. (1989).

Innovativeness, risk-taking, Multi-dimensional Lumpkin and Dess (1996). Kreiser proactiveness, competitive construct (2002). aggressiveness and autonomy.

Both uni-dimensional or Both uni or multidimensional are multi-dimensional are Covin, Lumpkin (2011, p. 863) correct correct.

Recently, Covin and Lumpkin (2011), posited, “both conceptualizations of the construct can lead to theoretically and practically significant contributions to the EO knowledge base” (p. 863), and they say “no compelling need to encourage the adoption of one EO conceptualization at the expense of the other”. This debate enriches the literature as it has been found that prior studies applied EO with both five dimensions and three dimensions, and with both uni-dimension and multidimensional construct.

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As a summary, EO is “the firm’s propensity to engage in innovative, proactive, and risk-seeking behaviors in order to achieve strategic and performance objectives” (Knight, 1997, p.355). EO as the independent variable in the present research is considered as multidimensional construct. Based on the above explanation, the following shows the first three hypotheses of this paper: H1. There is a positive relationship between innovativeness and SMEs performance H2. There is a positive relationship between proactiveness and SMEs performance. H3. There is a positive relationship between risk-taking and SMEs performance. 2.3 Organizational trust: Trust is the glue of effective, humane and efficient organizations (Simmons, 1981), as it strengthens the communication and communication helps employees to be more collaborative which leads to perform good as teams and as an organization as a whole. Trust has been viewed as an imperative element for organizational success (Meyerson et al., 2006), because opposite of trust “distrust or mistrust” can lead to suspicious behavior within the firm which influences negatively the overall performance. In other words, trust enhances cooperation (Schurr, Paul & Ozanne 1985), and increase firm performance (Jap & Sandy, 1999).

Therefore, trust is essential and crucial factor in organizations in which employees are required to develop cooperative social relationships to achieve outcomes (Chan, 1997). To date, research on trust has produced “no single consensual definition”, leaving trust “an elusive concept” (Welter, 2012, p. 195). However, the following table shows some definitions that found in the litereature.

Table 3: Definitions of trust Researcher Definition Anderson and Narus, 1990 Trust reflects the belief that each partner is interested in the other’s welfare and that a partner will not intentionally undertake actions that harm the other. Sable (1993) “The confidence between two parties with the understanding that no party will exploit the other’s vulnerability”. Moorman, Deshpande and Zaltman (1993, p93) “The willingness to rely on an exchange partner in whom one has confidence”. Mayer, Davis and Schoorman (1995, p. 712) “The willingness of one party to be vulnerable to the actions of another party based on the expectation that the other party will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.” Mayer et al., (1995). Trust is also viewed as the propensity of an individual who can depend on another person to complete a task without being monitored. Rousseau, Sitkin, Burt and Camerer (1998, p. “Trust is a psychological state comprising the 395), intention to accept vulnerability based upon positive expectations of the intentions or behavior of another.” Cummings and Bromiley (1996). “OT refers to the individual belief or common belief among a group of people in another individual or group, leading them (individual or group) to make efforts of good faith to behave in accordance with the commitment made explicitly or implicitly, to be honest in any negotiations that

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precede the commitment and to not take excessive advantage of the other (individual or group) when the opportunity occurs” (p. 303). McKnight, Cummings and Chervany (1998). Trust, to a significant degree, is an atomistic belief or faith, and such faith compensates for any incomplete information arising from conditions of uncertainty. Tschannen-Moran and Hoy, 2000, p. 556). Trust is one party’s willingness to be vulnerable to another party based on the confidence that the latter party is (a) benevolent, (b) reliable, (c) competent, (d) honest, and (e) open” Among the previous definitions, it can be noticed that trust is a dealing between trustor and trustee, and they rely on each other for four reasons. First, the trustee has the willingness to do actions for the interest of the trustor. Second, the belief that trustor will not exploit or harm the trustee. Third, the competency of the trustee to accomplish his/her task successfully and finally the credibility and integrity of the trustee. Kantsperger and Kunz (2010) summarized these criteria into five traits: reliability, honesty, competence, credibility and benevolence. It can be concluded that in the relationship between trustor and trustee, the latter can also act as a trustor. Trustor and trustee must have mutual belief of the aforementioned five traits of trust and violation to any of these traits will end up with negative result. Absence of any one of these criteria will lead to low trust, however, if the trustee possesses all of the traits, the trustor will view the trustee as trustworthy (Deconinck, 2011), and vice versa. 2.4 Conducting remarks on trust Most of previous studies conducted on trust take trust as an independent variable, mediator or moderator in relation to performance. So far, most relationship of trust as an antecedent, mediator or moderator has positive relation with performance. It is also noted that studies on trust as moderator are very limited. Thus, this study is interested to investigate more on this relationship to strengthen the earlier findings and to fill the theoretical gap exists in the literature. Moreover, different context may lead to different findings, and as Algerian people have their unique culture, values, and principals, these indicators are adequate as reasons to pursue this paper. The following table substantiates the gap concerning the limited researches on the usage of trust as moderator with performance.

Table 4: Summary of past studies of trust

Author Independent Mediator Moderator Variable Ali and Khalid, 2017 √ Cheng, Fu, Han and Zarifis, 2017 √ Niazi and Hassan, 2016 √ Eser, 2012 √ Jain, Jain and A. K, 2016 √ Robertson, Gockel and Brauner, 2012 √ Audenaert, Decramer, Lange and √ Vanderstraeten, 2016 Wai On, Liang, Priem and Shaffer, 2013 √ Chan and Mak, 2016 √ Fatima and Abdur Razzaque, 2014 √ Koohang, Paliszkiewicz, Paliszkiewicz, √ Goluchowski and Goluchowski 2017 Rodwell, McWilliams and Gulyas, 2017 √ Vigoda-Gadot and Talmud, 2010 √ Afzal and Umair Afzal, 2014 √ Hödl and Puck, 2014 √

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The Table 4 shown the number of studies established between trust and performance. It is clearly displayed more studies on trust being the variable and median rather than as moderator with different independent variables such as knowledge sharing, innovation, motivation, asset specificity and HR mechanism (Verma & Sinha, 2016; De Clercq, Thongpapanl & Dimov, 2010; Dirks, 1999; Hödl & Puck, 2014). Only some studies conducted to examine the independent variable with firm performance of the present study, but with different moderators such as marketing capabilities, marketing resources, politicization, international hostility (Sok, Snell, Lee & Sok ,2017; Thanos, Dimitratos & Sapouna, 2016). In the same context, and based on the limitation concerning to trust as moderator with performance, some researchers recommended that there should be more studies on trust as a moderator (Vigoda-Gadot & Talmud, 2010; Frost & Moussavi, 2011; Chang & Wong, 2010). From another angle, Bardon and Kenny (1986) claimed that “the moderator variables are typically introduced when there is an unexpectedly weak or inconsistent relation between a predictor and a criterion variable”. Hence, Bardon and Kenny recommended to utilize the moderator whenever there are mixed findings between the independent variables and dependent variables. Prior researches indicated inconsistent findings between EO and organizational performance (Buli, 2017; Filser & Eggers, 2014; Ambad & Wahab 2013; Yoon, 2012; Larsen & Korneliussen 2012). Additionally, the urge for this research to be established in Algeria by applying trust as a moderator is due to the fact that many previous studies had only been conducted in developed western countries (Jain, 2016; Romero, 2015; Audenaert, et al., 2016; Goris, Vaught & Pettit, 2003). As such, more similar studies on firm performance were conducted in sectors such banks and hospitals (Cheng, et al., 2017; Hassan, Nadeem & Akhter, 2016), and no study conducted in food sector in developing countries unto writing this paper. Therefore, social differences among nations may lead to different and interesting findings. On top of this, conducting the current study in food industry gives different results compared to other sectors. The food sector is chosen in this study because it becomes the priority of Algerian government in order to fulfill self-sufficiency and be independent from developed countries. Moreover, the increased fear of decision makers on the raise of Algeria population that will increase the import and bills of food comparing to the limited growth of local production. Based on the above explanation, the following are the rest hypotheses of this paper as follows: H4. Organizational trust moderates the relationship between innovativeness and SMEs performance. H5. Organizational trust moderates the relationship between proactiveness and SMEs performance. H6. Organizational trust moderates the relationship between risk-taking and SMEs performance. 2.5 Types of trust Based on literature review analysis, there are two main types of trust. Trust could be performed extern the organization (external trust) or within the organization (internal trust). Trust within organization operates at three levels individual, team, and organizational level (Legood, Thomas & Sacramento, 2016). In other words, trust could be interpersonal trust, group trust or OT. These three main types of trust are found within the organization. The second type of trust is external trust that is conducted outside the organization, and it is divided into interpersonal and inter-organizational trust. Inter-organizational trust occurs between organization and other one. In other words, inter-organizational trust appears when both the trustor and the trustee are organizations (Janowicz & Noorderhaven, 2006). However, interpersonal trust in external organization is definitely different from interpersonal trust within the organization. Interpersonal trust that performs in external organization is the personal trust between the key manager of the client company and the account manager of the service provider of another company (Qi & Chau, 2013). Chu and Fang (2006) defined inter-organizational trust as “a firm’s belief that another company will perform actions that will result in positive outcomes for the firm as well as not take unexpected actions that

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International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471 result in negative outcomes” (p. 224). Therefore, there are two main parts of external trust; interpersonal and inter-organization trust and both of them are excluded from this paper, because the researcher focus is to examine trust within the firm or internal trust. Internal trust is the second type of trust besides to external trust, and the two main aspects of trust can be encounter within the organization -according to the review- are interpersonal and OT. The literature showed many definitions of interpersonal trust within the organization, because it is the most frequently studied type among all other types of trust (Pearce & Klein, 2017). This type of trust is defined as the degree of trust employees have that the person with whom they interact will not exploit the vulnerability that interaction creates (Mayer et al., 1995). In other definition, interpersonal trust is a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behaviors of another (Rousseau et al., 1998). Therefore, interpersonal trust is based on the interaction with a particular relationship within the organization (Ellonen, Blomqvist & Puumalainen, 2008). OT is the second type of trust within the organization. OT is based on the collective trust of individual organizational members (Huff & Kelley, 2003). Cummings and Bromiley (1996) stated that OT refers to trust between all different people and parts of an organization. Arslantas and Dursun (2008) in other definition of OT said that it is the atmosphere, which, feelings such as sincerity, honesty, belief, loyalty that employees working towards organizational goals feel towards each other, add to the organization (cit. Ozan & Ozdemir, 2013). Ultimately, external and internal trust are the main categories of trust. Interpersonal and inter- organizational trust are the two main types of external trust. Otherwise, interpersonal trust, group trust and OT are the main three types of trust within the organization. OT is the appropriate and the selected type of trust among others because most studies on trust have focused on interpersonal trust (Zaheer, McEvily & Perrone, 1998), and it has dominated the literature (Tan & Tan, 2000), however, omission is surprising given to OT (Legood, Thomas & Sacramento, 2016). Moreover, OT is an organizational variable similar to EO, and this level similarity is methodologically correct. 2.6 Organizational trust and entrepreneurial orientation As above-mentioned, researches on the relation between trust and EO, or between trust and innovativeness, risk and proactiveness are very limited. However, among what is found in the literature, the following is a trial to disclose this relationship between these two constructs. Obviously, OT is a fundamental pillar in entrepreneurship, as it enhances cooperation (Schurr & Ozanne 1985), solves problems quickly (Claro, Hagelaar & Omta, 2003), and makes the employees sharing new ideas and their experience. OT can enhance innovative behavior in an organization because it reduces the levels of internal control and makes the organizational structure less rigid (Quinn, 1979; Block, 2013). In addition to that, it enhances the willingness of managers to implement risky actions and convert entrepreneurial opportunities into actions (Mom, Bosch & Volberda, 2007), and enables the emergence of new ventures (Pollack, Barr & Hanson, 2017). However, mistrust can damage the firm performance, as it can lead employees to choose to work in isolation rather than collaborate with team members (Al-Ani, Wilensky, Redmiles & Simmons, 2011), and it increases conflicts, reduces initiatives, and increases transaction cost. All these disadvantages can lead to low performance. Otherwise, Bromiley and Cummings (1996) believed that increased trust among employees enhances performance and contributes to organizational profitability. 3. METHODOLOGY 3.1 Sample and data collection This research focuses on SMEs that operate on the sector of food and beverage industry. is the capital of Algeria, the biggest country in Arab countries, and Africa continent. The capital is chosen to collect data among other regions because most of population and most of industry zones are located in the capital. The city's population is estimated to be around 3.335.418 divided into 13 districts called: Zéralda, Chéraga, , Bir Mourad Raïs, , Bouzaréah, , Sidi M'Hamed, , , Baraki, Dar El Beïda and Rouïba. However, the Algiers consists of 57 communes (municipalities). The following tables shows some districts with their communes.

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Table 5: Districts Population District Commune (Municipality) Population Zéralda Zeralda 51 552 Staoueli 47 664 29 105 19 396 28 758 Sidi M'Hamed Sidi M'Hamed 67 873 38 013 51 301 Alger-Centre 75 541 Rouïba Rouïba 61 984 Reghaïa 85 452 H'raoua 37 565 Hussein Dey Kouba 104 708 Hussein Dey 52 698 41 453 Belouizdad 58 050 El Harrach 42 062 El Harrach 53 869 81 661 Bachdjerrah 103 289 Draria Khraicia 37 910 41 070 Draria 44 141 Douera 56 998 33 756 Dar El Beïda Mohammadia 72 543 El Marsa 26 100 Dar El Beïda 102 033 151 950 52 816 101 657 Aïn Taya 39 501 Chéraga 47 604 El Hammamet 34 790 Dely Ibrahim 50 230 Cheraga 96 824 Aïn Benian 68 354 Bouzareah 57 332 Bouzareah 83 797 Beni Messous 39 191 33 838 Birtouta 29 847 37 196 Birtouta 30 575 Bir Mourad Raïs 41 690 Hydra 45 133 Not only the number of districts and communes are behind selecting Algiers among other cities, but also Algiers has the highest number of industry zones in the country which includes more than 22 industry zones, and the following shows some of them.

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Table 6: Industry Zones

Industry zones region Area size (Hectare) Oued Smar 400 El Harrach 78 Rouiba + Reghaia 1000 Sidi Moussa 100 Zeralda 142.616 Staouali 76.874 Saoula 200.004 Tessala El Merdja 68.105 El Achour 153.948 Douera 63.353 Cheraga 8.425 Bordj El Kifan 45.583 Dar El Beida 26.65 Eucalyptus 55.488 Ford of Constantine 90.6 Bab Ezzouar 8 Bir Mourad Rais 4.3 Hydra 2.72 Baraki 4 Bach-Djarrah 0.7155 Source : Monographies.caci.dz The above table shows the location of industry zones in Algiers. Most of Algerian small and medium enterprises run their business in these zones. Consistent with EU definition of small and medium enterprises, this study defined small and medium enterprises as firms with less than 250 employees according to the General Secretariat of the Algerian Government, and 210 is the sample size of this paper. 3.2 Validity and reliability Sekaran (2003) claimed “validity tests how well an instrument that is developed measures the particular concept it is intended to measure”. Validity refers to what extent the instrument measures this variable exactly. Therefore, validity aims to measure the accuracy of the variable instrument. Two ways to test the validity or the goodness of measures: face validity and content validity. Zikmund, Babin, Carr and Griffin (2010) argued that content validity indicates the appropriateness degree of all items to meet the purpose of the measurement instrument. In other words, content validity refers to what extent the items are suitable to measure the construct. However, according to Sekaran (2003), “face validity indicates that the items that are intended to measure a concept, do on the face of it look like they measure the concept”. The current questionnaire is pretested and evaluated by experts for face and content validity. Sekaran and Bougie (2016) defined pretesting as “the use of a small number of respondents to test the appropriateness of the questions and their comprehension which helps to rectify any inadequacies before administering the instrument orally or through a questionnaire to respondents, and thus reduces bias” (p 155). Therefore, the researcher presented the questionnaire individually to some academic, professional and industry experts in management, entrepreneurship and human resources in Utara- Malaysia University, Malaysia industry and Algeria industry. As the survey is accurate and clear, not many comments and rectified items provided.

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International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471

On the other hand, the reliability indicates, “the extent to which it is without bias (error free) and hence ensures consistent measurement across time and across the various items in the instrument” (Sekaran, 2003). However, the common way to measure the consistency of items is inter-item consistency reliability, and Cronbach-alpha coefficient is considered as a common method to test the internal consistencies of items (Onwuegbuzie & Daniel, 2003). Cronbach’s Alpha coefficient can be considered as excellent if it is more than 0.90, good if it is around 0.8, acceptable if it is around 0.7, and questionable if it is around 0.6, but unacceptable if it is less than 0.6. (Zikmund et al., 2010). A pilot study on 30 SMEs was conducted to test the reliability of the instruments that measure the constructs of this study. Thirty respondents is a reasonable sample size recommended for pilot study from the sample size of population (Johanson & Brooks, 2010), as the size of the group commonly ranges from 25 to 100 respondent (Cooper & Schindler, 2014). Therefore, 30 questionnaires were distributed to owner/manager of enterprises in the food industry in Algiers in order to test the reliability and the internal consistency of the items by using SPSS software. Table 7: Reliability Case Processing Summary N % Cases Valid 30 100,0 Excludeda 0 ,0 Total 30 100,0 a. Listwise deletion based on all variables in the procedure.

Reliability Statistics Cronbach's Alpha Cronbach's Alpha Based N of Items on Standardized Items ,823 ,849 29

The above Table 7 shows the total number of questionnaires that were distributed, and the number of items used to measure EO, OT and SME performance. The number of items that were used in this study is 29; and using SPSS to test the internal consistency of the survey. The results show that there is a good reliability statistic indicated 0.823 in Cronbach's Alpha. 4. Results and discussion The individual item reliability of the model was calculated by looking into the outer loadings of each of the constructs' measures (Hair, Sarstedt, Hopkins & Kuppelwieser, 2014; Duarte & Raposo, 2010; Hulland, 1999). As depicted in the following Table 8, all constructs’ items retained except the first item of innovativeness (INN1) and the fifth item of proactiveness (PRO5) due to low factor loading. The remaining items of the outer loading values revealed up to the threshold suggested and their loading is between .650 and .862 that is acceptable and good (Sekaran & Bougie, 2016; Hair et al. 2014). Table 8: Cross Loadings

INN OT PRO RT SME inn2 0.835 0.415 0.585 0.498 0.311 inn3 0.797 0.531 0.482 0.569 0.560 inn4 0.862 0.441 0.646 0.540 0.427 inn5 0.842 0.452 0.648 0.549 0.445 ot1 0.346 0.650 0.501 0.461 0.500 ot2 0.396 0.832 0.544 0.559 0.590 ot3 0.462 0.772 0.637 0.613 0.516 ot4 0.471 0.851 0.656 0.604 0.647 ot5 0.456 0.842 0.591 0.540 0.630

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International Journal of Advanced Science and Technology Vol. 29, No. 4s, (2020), pp. 453-471 ot6 0.313 0.740 0.490 0.489 0.488 ot7 0.429 0.796 0.585 0.577 0.607 ot8 0.420 0.753 0.575 0.524 0.609 ot9 0.395 0.738 0.576 0.527 0.564 pro1 0.779 0.450 0.727 0.496 0.386 pro2 0.516 0.632 0.836 0.686 0.650 pro3 0.554 0.643 0.830 0.724 0.626 pro4 0.534 0.630 0.805 0.680 0.670 rt1 0.534 0.562 0.659 0.826 0.617 rt2 0.488 0.594 0.658 0.815 0.566 rt3 0.546 0.584 0.677 0.838 0.587 rt4 0.545 0.567 0.677 0.814 0.561 sme1 0.407 0.667 0.641 0.586 0.861 sme2 0.438 0.643 0.627 0.621 0.852 sme3 0.337 0.566 0.504 0.575 0.769 sme4 0.416 0.630 0.647 0.603 0.842 sme5 0.365 0.591 0.583 0.553 0.794 sme6 0.367 0.568 0.613 0.567 0.830

The following Table 9 shows convergent validity for both EO, OT and SME. The 9 illustrates the loading, Cronbach’s Alpha, Composite Reliability (CR) and Average Variance Extracted (AVE). Table 9 Convergent and reliability analysis Constructs Dimensions Items Loadings Cronbach's Composite Average Alpha Reliability Variance (CR) Extracted (AVE) EO 0.920 0.933 0.557 Innovativeness INN2 0.835 INN3 0.797 INN4 0.862 INN5 0.842 Proactiveness PRO1 0.727 PRO2 0.836 PRO3 0.830 PRO4 0.805 Risk taking RT1 0.826 RT2 0.815 RT3 0.838 RT4 0.814 OT Organizational OT1 0.650 0.917 0.932 0.604 Trust OT2 0.832 OT3 0.772 OT4 0.851 OT5 0.842 OT6 0.740 OT7 0.796 OT8 0.753

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OT9 0.738 SME SME SME1 0.861 0.906 0.927 0.681 SME2 0.852 SME3 0.769 SME4 0.842 SME5 0.794 SME6 0.830 Composite Reliability (CR) = (Σ factor loading)2 / {(Σ factor loading)2) + Σ (variance of error)} Average Variance Extracted (AVE) = Σ (factor loading)2 / (Σ (factor loading)2 + Σ (variance of error)} Table 10 indicates the hypotheses results. The first hypothesis finding indicates a significant and positive relationship between innovativeness and SME performance. This finding is in coherence with previous studies (Mantok, Sekhon, Kaur Sahi & Jones, 2019; Filser & Eggers, 2014; Ambad & Abdul Wahab, 2013).

Similarly, the second hypothesis shows a significant and positive relationship between proactiveness and SME performance (Cannavale & Nadali, 2019; Lee, Chong & Ramayah, 2019; Buli, 2017). Likewise, the finding of the third hypothesis is in accordance with previous studies and the above hypotheses (Mahrous & Genedy, 2019; Belgacem, 2015). Likewise, OT moderates both the relationship between innovativeness, proactiveness and risk-taking and SME performance.

Table 10: hypotheses testing

Hypotheses Relationship Decision H1 There is a positive relationship between innovativeness and SMEs Accepted performance. H2 There is a positive relationship between proactiveness and SMEs Accepted performance. H3 There is a positive relationship between risk-taking and SMEs Accepted performance H4 OT moderates the relationship between innovativeness and SMEs Accepted performance. H5 OT moderates the relationship between proactiveness and SMEs Accepted performance. H6 OT moderates the relationship between risk-taking and SMEs Accepted performance.

5. Conclusion In this empirical paper, an investigation of EO, OT and SME performance in F&B sector in Algeria was conducted. This study investigated the relationship between innovativeness, proactiveness, risk- taking and performance, and the moderating influence of organizational trust in entrepreneurial orientation dimensions and SME performance.

The results reveal that there is a significant and positive relationship between innovativeness, proactiveness, risk-taking and SME performance. Moreover, OT moderates the relationship between innovativeness, risk-taking, proactiveness and SME performance. Therefore, the suggested hypotheses of this paper are all supported which reflect the importance of EO dimensions, OT with the performance of SME in Algerian food and beverage industry.

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ISSN: 2005-4238 IJAST 471 Copyright ⓒ 2020 SERSC