An Entrepreneurial Paradox: The Moderating Effect of the External Environment (original) (raw)
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Although entrepreneurial orientation (EO) has been shown to play a key role in increasing firm performance (FP), the effects of EO have been extremely oversimplified. The plethora of empirical studies on EO and FP suggest that the EO –FP relationship is linearly positive regardless of the amount of EO investment. The results show that EO increases FP at the bounded level (i.e. an inverted U-shape). We argue that the excessive use of EO, organisational incapability and institutional constraints may contribute to the non-linearity of such effects. We also find that environmental dynamism has no significant effect. Further, contrary to the normative contention, we find that environmental hostility has a negative effect on the EO –FP relationship. The effect of environmental hostility on EO may vary depending on various factors such as firm size, resources, and institutional settings. We present prescriptive implications to practitioners on the antecedent conditions for EO practices.
Entrepreneurial Orientation and Business Performance – A Replication Study
We examine the effect of entrepreneurial orientation (EO) and hypothesize that EO has a positive impact on business performance. We create a contingency model and a configuration model and compare their results to those derived from a main-effects model. The study replicates the work of Wiklund and Shepherd (2005) and tests the validity of their results in a different national context. Our analysis indicates a positive connection between EO and business performance only in cases in which a dynamic environment is combined with high access to financial capital and when a stable environment is combined with low access to financial capital. Our analysis also indicates that EO may have a negative effect on performance in certain configurations.
The role of entrepreneurial orientation on corporate performance: A moderated mediation model
Entrepreneurial orientation (EO), corporate entrepreneurship (CE) and their connections with corporate performance attract more attention during last decades. Researchers claimed that the EO-performance relationship is very complicated. Future studies should incorporate moderator and mediator factors in their models to precisely explain that complexity. In this paper we have chosen the most common environmental characteristics include environmental dynamism and environmental hostility to investigate their moderation effects. In this study EO refers to tendency of firms to have entrepreneurial activities while CE points out to the their actual entrepreneurial activities. Previous studies mentioned EO as the basis and necessary condition of CE. Therefore, we have supposed a mediation role for CE in EO-performance relationship. By incorporating this mediation model with environmental moderators, the final moderated mediation model of EO-CEperformance and environmental characteristics i...
Effect of entrepreneurial orientation on firm performance and failure : a longitudinal analysis
2018
This thesis aimed to examine the longitudinal effects of entrepreneurial orientation (EO) and each of its dimensions, innovativeness, proactiveness, and risk taking, on firm performance, among surviving and failed firms, as well as on the risk of firm failure. By utilising the theoretical framework of organisational learning theory and prospect theory, this thesis advances knowledge on EO by challenging the dominating EO-as-Advantage perspective. This research adopted a quantitative methodology by objectively measuring EO at the firm-level and examining its effects along a longitudinal timeframe from the pre-crisis (fiscal year 2000) to the post-crisis period (fiscal year 2014). The thesis utilised secondary data from Compustat and CRSP databases to collect financial and market information on a sample of US large firms in the high-technology industry. The sample consisted of a total of 742 firms with 5,011 observations. Study 1 used fixed effect panel regression to examine the effec...
Exploring Curvilinear Relationship between Entrepreneurial Orientation and Firm Performance
Introduction – The vital role of entrepreneurial orientation (EO) on firm performance has been widely studied in developed countries. Most studies have found a positive linear relationship between EO and firm performance. However, the empirical findings are inconclusive. According to the recent literature, one possible reason for these inconsistent findings may be the nature of the relationship between EO and firm performance is not linear as assumed by many researchers. Objective – The objective of this study is to examine the relationship between EO and firm performance and specially to determine the best representation is whether linear or curvilinear. Methodology – This study utilizes a sample of 580 small medium enterprises (SME’s) from two provinces in Sri Lanka and hierarchical regression analyses was employed for analyzing the relationships. Findings – Findings demonstrate a S-shape curvilinear relationship between EO and firm performance in the context of SME’s in Sri Lanka.