Entrepreneurial orientation as a theory of new value creation

Abstract

Explaining how and why entrepreneurial orientation (EO) enhances firm outcomes is critical as it explicates specific causal mechanisms and boundary conditions. However, despite over 40 years of inquiry, a theory gap is evident in much of the research that links EO to firm performance outcomes. In this study, we inductively derive EO as a theory of new value creation based upon an increase in consumer benefits (or reduction in costs) made possible through a commitment to continuous novelty within an organization’s product-market offerings. In addition to offering a theory explaining how and why EO creates new value through product-market variance as a new causal mechanism within the EO literature, our research affords practitioners greater insight into what to expect from EO and when it may be most gainfully employed in pursuing firm growth. To this end, our study considers relevant boundary conditions to applying our theory and what our theory implies for future research exploring organizational entrepreneurship.