Abstract
This study aims to examine the relationship between top managers’ entrepreneurial orientation and firms’ research and development (R&D) investment and the moderating effects of environmental uncertainty on this relationship. Using a sample of 337 Korean technology firms, we implemented a multiple regression analysis with R&D intensity as a dependent variable, top managers’ entrepreneurial orientation as an independent variable, and environmental uncertainty as a moderating variable. The findings reveal that the entrepreneurial orientation of top managers has significant and positive relationships with firms’ strategic decisions regarding R&D investment. This implies that the tendencies and characteristics of top managers significantly influence firms’ innovation efforts, especially during an economic recession. Furthermore, environmental munificence intensifies the entrepreneurial orientation and R&D investment relationship, while environmental dynamism has a negative moderating effect. On the other hand, environmental hostility does not have any impact on this relationship. The moderating effects of environmental uncertainty imply that firms should carefully consider environmental dynamism and munificence to intensify the positive effect of top managers’ entrepreneurial orientation on firms’ innovation efforts.
Highlights
When parts of the global market are in economic recession, innovation becomes the most important factor for technology firms to obtain sustainable competitive advantage [1,2]
We develop theoretical arguments concerning how top managers’ entrepreneurial orientation affects the long-term research and development (R&D) investment of Korean technology firms and how this relationship can be modified by the three different dimensions of environmental uncertainty
These findings indicate that the entrepreneurial orientation of top managers can help explain the managerial processes that strengthen R&D investment and firms’ innovation to respond to environmental uncertainty
Summary
When parts of the global market are in economic recession, innovation becomes the most important factor for technology firms to obtain sustainable competitive advantage [1,2]. Top managers often reveal an unwillingness to accept changes for innovation They begin with new ideas and technologies but fail to understand the extent to which the former will be beneficial to their customers. They often intentionally underestimate the impact of innovation due to the high risk associated with it [3,4,5]. Top managers have reservations regarding whether the firm’s stakeholders understand the benefits of innovation. They often fail to involve employees, business partners, and customers in innovation initiatives [6]
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