Entrepreneurial orientation and firm performance in different environmental settings

Galina Shirokova · Karina Bogatyreva · Tatiana Beliaeva · Sheila M. Puffer

152 citations0/0 files storedJournal of Small Business and Enterprise Development

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Entrepreneurship Studies and Influences Innovation and Knowledge Management Firm Innovation and Growth

Abstract

Purpose – The purpose of this paper is to explore the relationship between entrepreneurial orientation (EO) and firm performance across different levels of environmental hostility and market growth. The contingency approach of two-way interactions of EO with each environmental variable is contrasted with the configurational approach of three-way interactions of EO simultaneously with different levels of both environmental variables. Design/methodology/approach – Hierarchical regression analysis is applied for the pooled data set of 163 Finnish and Russian small- and medium-sized enterprises, and supplemented withpost hocanalysis of the differences in regression slopes across environmental configurations. Findings – Results show that EO is directly and positively associated with firm performance. However, the strength and direction of this relationship varies by configurations of the external environment variables. Firms achieve superior performance when adopting EO in environments with high levels of both hostility and market growth. In contrast, in favorable environments with low hostility and high market growth, EO adoption leads to lower firm performance. Research limitations/implications – The study contributes to the EO literature by demonstrating different effects of EO on firm performance across various environmental configurations. It uses cross-sectional data from two countries. Replication studies using different samples may further corroborate the results. Practical implications – In order to take advantage of opportunities and achieve better performance, managers of firms should analyze multiple elements of the environment concurrently and align EO to those conditions. Originality/value – The configurations of environmental hostility and market growth, representing both favorable and unfavorable elements of business context, have not been previously investigated together in one model of the EO-performance relationship.

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References

1991Firm Resources and Sustained Competitive Advantage 2004Firm resources and sustained competitive advantage 1997Dynamic capabilities and strategic management 2007Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance 1970Back-Translation for Cross-Cultural Research 1996Clarifying the Entrepreneurial Orientation Construct and Linking It To Performance 1991The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation 1994The Management of Innovation

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