EO-performance Relationship Research Articles

Quit the Politicking? How Factors Within Strategic Business Unit Teams Shape Returns from Entrepreneurial Orientation

In this study, we examine the entrepreneurial orientation (EO), political behavior, and discretion of leaders within an organization’s strategic business unit (SBU) customer portfolio teams to determine whether and how an SBU team’s political environment affects its performance. Building upon EO as theory of new value creation, we argue that politically charged SBU teams are less capable of translating EO into improved performance. However, we observe the harmful influence of SBU team politics on the EO-performance relationship is partially alleviated when SBU team leaders have greater discretion over their units’ actions. We examine our theoretical model using robust data collected from 320 SBU team leaders and 1181 reporting SBU project managers within a large multi-national information technology firm headquartered in India. Implications for theory and practice are discussed.

Balancing entrepreneurial and learning orientations: A meta-analytic approach to understanding performance variability

The entrepreneurial orientation (EO)-performance correlation varies across firms, traditionally attributed to external moderators. This study introduces a novel perspective, examining the EO and learning orientation (LO) correlation as an internal moderator on the EO-performance relationship. Our meta-analysis of 418 samples from 400 studies and a total of 129,695 firms, reveals a strong positive association between EO and LO, indicating their synergistic potential. The combined effects of EO and LO on performance were found to be significantly greater than their individual impacts. Furthermore, the correlation between EO and LO significantly influences the EO-performance relationship, suggesting that firms with high levels of both EO and LO exhibit higher performance variability. With the right balance between EO and LO, the EO-performance relationship can be almost doubled, providing a strategic lever for managers to enhance firm performance.

The Role of Creating Shared Value and Entrepreneurial Orientation in Generating Social and Economic Benefits: Evidence from Korean SMEs

This study investigates the effect of entrepreneurial orientation (EO; one of the most broadly acknowledged firm-level constructs) on the performance of small- and medium-sized enterprises (SMEs). Furthermore, we analyze the moderator effect of creating shared value (CSV) on firm performance. Our analysis was conducted using a structural equation model on a stratified sampling method of 294 manufacturing and service SMEs in Korea. The results show that an SME’s efforts in some variables in EO constructs are statistically positively related to both its financial (economic benefits) and non-financial performance (social benefits). Our study results also reveal that there is a significant positive moderator effect of CSV on the EO-performance relationship. This implies that CSV, when bundled with EO, can boost firm performance and provide SMEs with not only a competitive and sustainable advantage but also reduces their risk. This research contributes to the extant literature by investigating the interactive effect of CSV on the relationship between EO and firm performance in the context of SMEs, which has received scant attention in the extant literature. In the last section, the limitations and future research agenda of this study are presented.

Many roads lead to Rome: How improvisation and absorptive capacity affect entrepreneurial orientation and new venture performance relationship.

This paper develops and tests a model that highlights the roles of improvisation and absorptive capacity as important mediating mechanisms through which entrepreneurial orientation (EO) influences new venture performance. Furthermore, we examine the interactive effect of improvisation and absorptive capacity on new venture performance. The results show that (a) improvisation and absorptive capacity both mediate the relationship between EO and new venture performance; (b) the interaction between improvisation and absorptive capacity is positively related to new venture performance; (c) improvisation moderates the indirect relationship between EO and new venture performance via absorptive capacity; and (d) absorptive capacity moderates the mediation of improvisation in the relationship between EO and new venture performance. With these findings, this paper provides insights into how different learning modes can enhance the EO-performance relationship.

Entrepreneurial orientation, sustainability practices and performance of small and medium enterprises: evidence from an emerging economy

PurposeDespite the growing scholarly interest in examining entrepreneurial orientation (EO)-performance link, the results have been inconsistent. However, studies have not explored firm-level and external factors that may serve as mechanisms or boundary conditions to explain this relationship. Therefore, the purpose of the study is to examine how and when EO influences performance by incorporating sustainability practices as a mechanism and competitive intensity as an important contingent factor.Design/methodology/approachUsing primary data obtained from 323 chief executive officers/entrepreneurs, the authors analyzed the data using structural equation modeling in LISREL and Hayes PROCESS in SPSS.FindingsThe authors found that sustainability practices serve as a mechanism through which EO influences small and medium enterprises' (SMEs) performance. The study further revealed that the relationship between EO and sustainability practices is weakened at high levels of competitive intensity. Still, the relationship between EO and performance through sustainability practices remains strengthened when competitive intensity is present at high levels.Originality/valueThis study contributes to the literature by examining how SMEs who are less endowed with resources can engage in sustainability practices that can match large firms with stronger EO to achieve increased performance. Additionally, the study contributes to the literature by examining the mediating effect of sustainability practices in the EO-performance relationship. Finally, the study contributes to the body of literature by testing how competitive intensity presents as a boundary condition to leverage the relationship between EO and performance.

Entrepreneurial Orientation, Strategic Networking, and Croatian SMEs Performance: A Configurational Approach

Abstract Background: Many studies on entrepreneurship indicate an affirmative entrepreneurial orientation (EO) and small firm performance interrelationship. However, the empirical results are inconclusive, especially when firms face certain contingencies. Objectives: Strategic networking and environmental dynamism are important to SMEs’ performance; therefore, the goal of this study is to apply a configurational approach for developing a model that promotes the roles of strategic networking and environmental dynamism as moderating variables in the EO-performance relationship. Methods/Approach: For determining which model fits the data best, a moderated linear regression analysis was used as an analytical method to test the proposed hypotheses. Specifically, configurational, contingency and universal models were examined. Results: Results reveal that a configurational model provides a statistically better explanation of variance in performance compared to both contingency and universal models. Conclusions: By adding strategic networking to the EO-performance relationship, our study helps explain why some firms, although restrained with internal resources, can still achieve entrepreneurial projects since required resources can be acquired from external network partners. Limitations of this study encompass the sample size, the use of a subjective scale, questioning of only one representative of the firm, and the short-term aspect of the study.

Growing up but still be entrepreneurial? The entrepreneurial orientation–performance relationship

The relationship between entrepreneurial orientation (EO) and performance has received significant attention within entrepreneurship research. Yet, the mechanisms that underpin the EO-performance relationship are not fully understood. Recent developments such as an improved theoretical understanding of the manifestation and pervasiveness of EO highlight the need for a more nuanced understanding of EO by investigating nonmanagerial employees’ behaviors and attitudes of EO. Via an in-depth case study of a high-tech venture in Germany, we examine a set of proactive, innovative, and risk-taking behavioral patterns that contribute to the proliferation of EO within firms as they grow. Our study reveals that the employee’s more inwardly focused orientation is directed towards coping with challenges the firm faces during growth-related organizational transformations, rather than introducing innovations in the business or experimenting with opportunities. We conclude that EO is an individual-level construct and a key element in the causal link between organizational performance.

Entrepreneurial orientation and firm performance in a sanctioned economy – does the CEO play a role?

PurposeEntrepreneurship, in many low-resilient economies, plays a critical role in overcoming external shocks. Thus, it is crucial in such situation that entrepreneurial firms can survive and even grow so that the whole economy can benefit from a higher level of resilience. The purpose of this study is to understand how entrepreneurial orientation (EO) brings about firms' performance through the moderating role of CEOs' self-transcendence values in the context of a low-resilient sanctioned economy.Design/methodology/approachThis is a quantitative research that employs hierarchical regression analysis of a sample of 114 Iranian entrepreneurial firms composed of 62 knowledge-based and 52 creative firms.FindingsThe analysis revealed that in the low-resilient sanctioned economy, Iran, EO-performance link is moderated by the level of CEOs' self-transcendence value, that is, higher level of CEO self-transcendence leads to stronger impact of EO on performance. This moderation is not different in creative sector vs. knowledge-based sector of the economy.Originality/valueThis paper addresses a major gap in the traditional EO-performance relationship which is related to the role of CEO values. Also, the context of Iran's low level of economic resilience adds more novelty to this study, emphasizing on the role of CEO personal values of self-transcendence in times of crisis. The results could also be generalized in many economies now facing the COVID-19 pandemic crisis during which CEOs' self-transcendence values are vitally important in overcoming the difficulties of doing business in such situation.

Entrepreneurial orientation, online credibility, and online performance: Evidence from SMEs in a B2B electronic market in China

ABSTRACT Entrepreneurial orientation (EO) is a major strategy for small and medium enterprises (SMEs). Prior studies have focused mainly on the EO-performance relationship in the traditional market. This article investigates the EO of online SMEs using a panel of secondary data for 149 SMEs from Alibaba.com over a three-month period. The results suggest that proactiveness and competitive aggressiveness have significant effects on online performance for SMEs in the business-to-business (B2B) electronic market. Online credibility plays an important role when SMEs adopt a strategy of proactiveness in the electronic market, but does not enhance the effectiveness of competitive aggressiveness. These findings offer managerial implications for online SMEs and suggestions for future research.

In search of mediators in the relationship between entrepreneurial orientation and performance: the mediating role of technology park support

Purpose – The aim of this paper is to determine the role of the technology park support in the relationship between entrepreneurial orientation (EO) and enterprise performance. Research method – A multi-stage statistical analysis with elements of econometrics was utilised. The reliability of individual scales by Cronbach’s alpha test was performed. Variables were treated as reflective and latent and exploratory and confirmatory factor analysis was performed. The relationship between the variables studied (analysis of Pearson correlation and Tau-B Kendall) was assessed. The Structural Equation Modelling (SEM) technique was used, including mediation analysis. Results – Technology park support is not a significant mediator of the relationship between EO and performance. Originality / value / implications / recommendations – The study results are a good starting point for further research to identify the variables which mediate the EO-performance relationship. They are also an inspiration to examine why companies in technology parks do not use the offer of support from these centres.

Operational flexibility-entrepreneurial orientation relationship: Effects and consequences

The purpose of this paper is to investigate entrepreneurial orientation (EO)—a performance relationship in the hospital industry, an important part of the world economy. We also examine the moderating role of operational flexibility (OF), a relatively new multi-dimensional construct grounded in the theory of operations management. We empirically investigate the EO and performance research model using survey data from 152 hospital administrators in the US. The findings confirm EO as a three-dimensional construct comprising innovativeness, proactiveness, and risk-taking, with proactiveness as the most significant dimension in enhancing hospital performance. Results indicate that OF and its three dimensions (input, process and output) moderate the effects of EO on hospital performance. This study contributes to the research stream by investigating the intersection of the corporate entrepreneurship and operations management fields. It provides a novel extension to the entrepreneurship literature, based upon the role of OF as a moderator in the EO-performance relationship.

Entrepreneurial orientation, network resource acquisition, and firm performance: A network approach

This study applies a network approach to develop a model that highlights the role of resource acquisition through networks as an important mediating mechanism through which entrepreneurial orientation influences firm performance. This approach provides an alternative explanation for the divergent findings of the EO-performance relationship. We also investigate how business and political ties, differently and configurationally, shape the relationship between EO and network resource acquisition. Empirical findings from a study of 251 firms provide general support for the hypotheses, highlighting the unique value of leveraging a network approach to reconsider the performance-enhancing mechanism of entrepreneurial orientation.

Entrepreneurial orientation, network brokerage, and firm performance

Arguing that entrepreneurial firms will adopt different behavioural strategies than their competitors, we find that firms exhibiting high levels of entrepreneurial orientation (EO) are more likely to obtain brokerage positions in their networks to external partners. Acting as brokers allows entrepreneurial firms to benefit with respect to the acquisition of important resources such as information and knowledge, which ultimately has positive effects on their performance. In other words, network brokerage represents an important strategic behaviour allowing firms to translate their EO into higher performance levels. Using data from 82 high-tech companies, we find that consistent with our theoretical assumption network brokerage partially mediates the EO-performance relationship and hence represents a missing link when studying the performance-related effects of EO.

Entrepreneurial Orientation: The Dark Triad of Executive Personality

ABSTRACTThe purpose of this study is to shed light on how certain executive personality traits, what we call the Dark Triad of Personality, impact the relationship between entrepreneurial orientation (EO) and small and medium-sized enterprise (SME) performance. Existing research has demonstrated a positive EO-performance relationship, and this study seeks to examine whether the strength of the EO-performance relationship depends upon executive narcissism, Machiavellianism, and psychopathy. A regression analysis was conducted to test the effect of executive personality over a sample of 131 executives of SMEs in Eastern Switzerland, Liechtenstein, and Vorarlberg (Austrian Rhine Valley). Very few studies focus on the moderating role of executive personality with regard to the EO-performance relationship. Even though our findings indicate a strong positive relationship between EO and SME performance, analysis of the contingency model produced no significant findings. Executive narcissism, Machiavellianism, and psychopathy hence only show insignificant negative effects on the EO-performance relationship.

Explicating the relationship of entrepreneurial orientation and firm performance: Underlying mechanisms in the context of an emerging market

This research examines the mechanisms through which entrepreneurial orientation (EO) affects firm performance in an emerging market context. We argue that EO drives firms to develop the dynamic capabilities of absorptive capacity (ACAP) and boundary-spanning (BS), and that these capabilities enhance firm performance. Moreover, the effectiveness of these knowledge- and network-based dynamic capabilities in mediating the EO-performance relationship is contingent on the institutional conditions firms are exposed to. We test our hypotheses using multi-sourced data on Chinese high-tech firms in business-to-business (B2B) markets. Our results show that ACAP and BS mediate the positive effect of EO on firm performance, and that as the development of market-supporting institutions improves, the mediating effect of ACAP becomes stronger while that of BS weakens.

The relationship between entrepreneurial orientation and firm performance: Influence of family governance

A growing number of recent studies highlight an avenue of entrepreneurship in family business. Previous studies have examined the relationship between entrepreneurial orientation (EO) and firm performance, and generate inconsistent results probably due to the omission of the moderating role of family governance. To explicitly address this gap, this study investigates how entrepreneurial orientation (EO) influences firm performance in the contingencies of family and nonfamily firms by considering the influence of family governance. Built on agency theory and stewardship theory, the empirical findings of this study show that EO is positively associated with the concurrent and sustaining performance of firms, and such positive relationships are particularly strong when family ownership is combined with active family management and control; while in passive family governance, the EO-performance relationship becomes insignificant. These findings suggest that the potential advantages of EO can be better realized in family firms because active family governance alleviates agency problems and facilitates stewardship within firms when family CEOs, family top management, family chairpersons, and family directors are in presence.

Entrepreneurial Orientation and Firm Performance: The Mediating and Moderating Effects

This study applies a network approach to develop a model that highlights the role of resource acquisition through networks as an important mediating mechanism through which entrepreneurial orientation (EO) influences firm performance. This approach provides an alternative explanation for the extant divergent findings of the EO-performance relationship. We also investigate how business ties and political ties differently and configurationally shape the proposed relationship between EO and network resource acquisition in an emerging economy setting. Empirical findings from a study of 251 firms provide general support for the theoretical framework and associated hypotheses, highlighting the unique value of leveraging a network approach to reconsider the unique performance-enhancing mechanism of EO.

Examining the Moderating Effect of Environmental Hostility on the Entrepreneurial Orientation -Performance Relationship

Abstract: While the EO-performance nexus has received extensive attention in entrepreneurship literature, other studies suggest that the magnitude of this relationship is dependent upon the external environment and internal organizational processes. The objective of this study was to measure the effects of EO (innovativeness, risk-taking, proactiveness, autonomy and competitive aggressiveness) on SME performance, as well as to examine the moderating effect of environmental hostility on the EO-performance relationship in South Africa. The study showed thatwhile innovativeness and proactiveness does not have a significant effect on SME performance; risk taking propensity, competitive aggressiveness, and autonomy have a significant positive effect on SME performance. It was also seen that while the risk taking-performance relationship is negatively moderated by environmental hostility, the competitive aggressiveness-performance relationship is positively moderated by environmental hostility. This suggest the need for SMEs to always align their business strategies with appropriate EO dimensions to mitigate some of the negative consequences of operating in hostile business environments and improve the performance of their businesses. Keywords: Entrepreneurial orientation, SME performance, Environmental Hostility, South Africa

Linking entrepreneurial orientation and small service firm performance through marketing resources and marketing capability

PurposeThe literature establishes complex relationships between entrepreneurial orientation (EO) and performance, with mixed findings suggesting the variability of the magnitude of the relationship between the two. Some studies report a positive relationship, some negative, while some report an insignificant relationship between EO and performance. These conflicting findings suggest that the EO-performance relationship is more complex than a simple main-effects-only relationship. The literature offers two distinct approaches – integrating moderating or mediation variables in advancing the EO-performance relationship. The purpose of this paper is to extend current knowledge by examining underlying processes through which EO contributes to performance and the specific conditions under which this process is facilitated.Design/methodology/approachTo test the hypotheses the authors chose small service firms in Australia. Industry representation included: accommodation and food services; health care services; rental, hiring and real estate services; transport, postal and warehousing; arts and recreation services; retail trade; construction and training services; and professional, scientific and technical services. The services sector offers a unique opportunity to analyze variances in entrepreneurial engagement and organizational outcomes given the competitive intensity within the service sector which requires firms to engage in venturing, renewal and innovation. The proposed hypotheses were tested through a hierarchical regression analysis.FindingsThis study finds the support for the mediation effect of marketing capability on the EO-performance relationship. Critically, this study also finds that marketing resources moderates on the indirect effect of EO on performance via marketing capability. The findings supporting both the mediation and moderation effects of marketing capability and marketing resources on the EO-performance relationship (moderated mediation model) suggests that greater insight into how EO influences small service firm performance can be achieved through considering in combination with other firm-level constructs (marketing capability and marketing resources in this study).Originality/valueIt addresses the call by prior studies to link the EO construct to theory by embedding marketing resources and marketing capabilities in the EO-performance relationship. Importantly, by accounting for both mediation and moderation effects the authors provide a more complete picture of the EO-performance relationship that highlights the mediating role of marketing capability and the moderating role of marketing resources. This approach helps to reconcile the critical but separate directions proposed by prior studies in advancing the EO-performance relationship.

Entrepreneurial orientation, passion for work, perceived environmental dynamism and firm performance in an emerging economy

Purpose– Previous scholarly studies have concluded that entrepreneurial orientation (EO) positively relates to firm performance and that relationship is dependent on several contingencies. The purpose of this paper is to show how managers’ passion for work and the external environment (i.e. environmental dynamism) within which firms operate interactively impact on EO-firm performance relationship.Design/methodology/approach– This theoretically derived research model is empirically validated using survey data from 250 small- and medium-sized enterprises (SMEs) operating in Ghana.Findings– The study’s empirical findings indicate that passion for work strengthens the EO-performance relationship in dynamic market environments.Research limitations/implications– The cross-sectional design of the study does not permit causal inferences to be made regarding the variables examined. Future studies may use longitudinal design to examine the causal links of the variables.Practical implications– The study’s findings provide managers with a deeper understanding of how to achieve superior product firm performance, especially when firms are entrepreneurially oriented. The understanding of this issue can promote the development and maintenance of further entrepreneurial ventures in developing economies.Originality/value– The paper has a strong theoretical value because to the best of authors’ knowledge, this study is the first to examine the moderating role of passion for work on the relationship between EO and firm performance in dynamic environments.