The power of posture: organizational reputation following product failures and the role of entrepreneurial orientation

Abstract

ABSTRACT Purpose The purpose of this research is to conceptually study the extent to which an entrepreneurial strategic posture intensifies or restrains the influence of a reputation-damaging event, namely, a product failure, on the subsequent Organizational Reputation. Much of the literature agrees on the idea that firms exhibiting an entrepreneurial behavior largely outperform more conservative firms, but the current research acknowledges a setting in which signaling a certain subdimension of entrepreneurial orientation can reduce or enhance the negative consequences of a product failure. Findings The current research offers propositions arguing that signals of an entrepreneurial orientation high in proactiveness, risk-taking, and innovativeness are likely to reduce the negative consumer-perceived Organizational Reputation resulting from a product failure, while signals high in competitive aggressiveness and autonomy are likely to trigger more severe negative perceptions of firm reputation. Research Limitations This research is limited by its focus on a specific setting, reputation-damaging events, and its focus on merely one strategic posture, entrepreneurial orientation. Another limitation is the lack of current empirical research to test our propositions. Contributions Integrating attribution and signaling theories contributes to the entrepreneurial orientation literature by recognizing a setting in which this type of strategic posture may prove to be detrimental to the firm.