Abstract
This study investigated the effect of entrepreneurial orientation on firm performance with the firm resource orchestration capability and environmental dynamics in moderating roles. Using survey data collected from 301 Korean manufacturing and service firms, we devised a three-way interaction model to uncover the complex and dynamic conditions that maximize the effect of entrepreneurial orientation on firm performance. We found a positive association between entrepreneurial orientation and firm performance. Moreover, our findings indicated that both the firm resource orchestration capability and environmental dynamics played positive moderating roles in the above relationship. The results also showed that, in the case of a high level of environmental dynamics, entrepreneurial orientation was more positively related to firm performance for firms with a high resource orchestration capability. In addition, in the case of low resource orchestration capability, entrepreneurial orientation was associated more positively with firm performance for firms with high environmental dynamics. Thus, this study confirmed the importance of interaction between the three factors for enhancing firm performance. Furthermore, our investigation of substantial moderators provided key insights regarding the conditions that better explain how entrepreneurial orientation promotes firm performance. In addition to two-way interaction, the support for a three-way interaction suggests that moderators of the relationship interact to further explain the relationship. The theoretical and practical implications are discussed.
Highlights
In modern society, firms can adapt to the rapidly changing business environment, achieve sustainable and long-term success by constantly adopting new technologies, exploring new business opportunities, and increasing their market value
Despite the consensus on the significance of entrepreneurial orientation (EO), findings on its association with various types of firm performance have been inconsistent and mixed [8,9,10,11]. While recognizing this problem and in an attempt to address the limitations of past literature, this study took a more systematic and comprehensive approach toward examining the conditions in which EO impacts firm performance from the following theoretical and empirical perspectives: First, in light of the concerns that the effect of EO may vary depending on the complex contingency factors surrounding a firm and that an empirical analysis needs to be performed to study ways to overcome these factors and create new business opportunities [14], we considered the environmental dynamics of firms in general
In the fourth stage, the three-way interaction model was tested by analyzing the interaction terms, entrepreneurial orientation, the firm resource orchestration capability, and environmental dynamics
Summary
Firms can adapt to the rapidly changing business environment, achieve sustainable and long-term success by constantly adopting new technologies, exploring new business opportunities, and increasing their market value. To survive in this fiercely competitive business environment, firms must continue to develop the ability to meet customers’ needs and create market value more efficiently and effectively than their competitors. EO is considered an essential element that boosts the performance and sustainable growth of small ventures by propelling them toward adapting to the consistently evolving new markets and effectively motivating technology innovation In view of such significance, many Korean firms consider EO-based technology innovation as a basis of their progress, and numerous studies are examining the process of fostering innovative small ventures, which would lead to the creation of new jobs and propel national economic development
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