Understanding the role of entrepreneurial orientation in creating ambidextrous competitive advantage: a comparative-design, longitudinal study

Abstract

PurposeThis research aims to investigate how entrepreneurial orientation influences a firm’s differentiation–cost advantage ambidexterity (DCAA) and performance indirectly through dynamic capabilities, while also investigating the impact of the interactive effect of the level and consistency of entrepreneurial orientation on dynamic capabilities. The goal of this study is to better understand the importance of consistently following an entrepreneurial orientation, as well as the linkage of such a consistently implemented strategy upon gaining both a cost and differentiation positioning enhancement.Design/methodology/approachTwo empirical studies are conducted to test the proposed hypotheses – one longitudinal with multiple forms of data (i.e. text data, survey data and archival data) from 100 Taiwanese electronics firms and the other using primary data from a survey of senior managers.FindingsEntrepreneurial orientation improves dynamic capabilities, which in turn promote superior DCAA and enhanced firm performance. In addition, as captured through a unique measure of consistency allowed through computer-aided text analysis, the results indicate that the effect of entrepreneurial orientation on dynamic capabilities is amplified when a firm consistently adopts entrepreneurial decisions and actions.Research limitations/implicationsThe specific context was a sample of electronics firms in Taiwan. This limits the generalization of findings, as would be possible with assessing the hypotheses in other industries.Practical implicationsThis research clearly demonstrates the significance of consistency in pursuing a strategic orientation. The consistent support and deployment of resources facilitates an organization’s achieving positive outcomes associated with an entrepreneurial orientation.Originality/valueWhile entrepreneurial orientation contributes to firm performance, extant knowledge on the internal process through which entrepreneurial orientation affects performance is relatively limited. The findings not only highlight the full mediating role of dynamic capabilities and DCAA, but also shed light on the importance of consistency in entrepreneurial orientation over time.