Entrepreneurial orientation

Entrepreneurial orientation (EO) is a firm-level strategic orientation which captures an organization's strategy-making practices, managerial philosophies, and firm behaviors that are entrepreneurial in nature.[1] Entrepreneurial orientation has become one of the most established and researched constructs in the entrepreneurship literature.[2][3][4] A general commonality among past conceptualizations of EO is the inclusion of innovativeness, proactiveness, and risk-taking as core defining aspects or dimensions of the orientation.[5][6] EO has been shown to be a strong predictor of firm performance with a meta-analysis of past research indicating a correlation in magnitude roughly equivalent to the prescription of taking sleeping pills and getting better sleep.[5] Still, some research has argued that EO does not enhance the performance for all firms. [7] Instead, EO can be argued not to be a simple performance enhancing attribute but rather enhancing if it is applied under the right circumstances of the firm. In some cases, EO can even be disadvantageous for firms, if the situation of the firm does not fit with applying EO. Different situations (also known as context) can be the environment that the firm is situated within or internal situations such as structure and strategy. [7]

Entrepreneurial orientation has most frequently been assessed using a nine-item psychometric instrument developed by Jeff Covin and Dennis Slevin.[8][9] This instrument captures the perspective of Danny Miller that EO is a ‘collective catchall’ construct which represents what it means for a firm to be considered entrepreneurial across a wide range of contexts.[10] A seminal quote from Miller (1983, p. 780):

“In general, theorists would not call a firm entrepreneurial if it changed its technology or product line simply by directly imitating competitors while refusing to take any risks. Some proactiveness would be essential as well. By the same token, risk-taking firms that are highly leveraged financially are not necessarily entrepreneurial. They must also engage in product market or technological innovation.”

Reviews of the Entrepreneurial orientation literature indicate that the majority of prior studies have adopted Miller's perspective of EO as the combination of innovativeness, proactiveness, and risk-taking.[5][6]

Lumpkin and Dess[11] offer an alternative view of EO as the combination of five dimensions, those put forth by Miller/Covin and Slevin as well as competitive aggressiveness and autonomy. Moreover, they suggest that additional insights stand to be gained from investigating the dimensions independently. Proceeding research has suggested that there is value in examining EO according to either conceptualization depending upon the demands of the research question being addressed.[3][12] Research on the individual dimensions of risk-taking, proactiveness and innovativeness has found that the dimensions can combine in different ways to form configurations. [13]

Taken together, as a strategic orientation EO enhances firm performance as well as overall variance in a firm’s performance. Increased variance occurs as result of the observation that many entrepreneurial actions ultimately fail to generate an economic return thereby contributing to an increased distribution of firm performance outcomes.[14][15] As a core firm strategic orientation, the breadth and depth of research on EO continues to expand as the concept is adopted to understand the effects of being entrepreneurial across an increasing number of research contexts.[6]

References

  1. ↑ Anderson, Brian; Covin, Jeffrey; Slevin, Dennis (2009). "Understanding the Relationship between Entrepreneurial Orientation and Strategic Learning Capability: An Empirical Investigation". Strategic Entrepreneurship Journal. 3 (3): 218–40. doi:10.1002/sej.72. Retrieved 2015-02-04.
  2. ↑ Wales, William (2015). "Entrepreneurial orientation: A review and synthesis of promising research directions". International Small Business Journal. n/a (n/a): 1–13. doi:10.1177/0266242615613840.
  3. 1 2 Covin, Jeffrey; Lumpkin, G. T. (2011). "Entrepreneurial Orientation Theory and Research: Reflections on a Needed Construct". Entrepreneurship: Theory & Practice. 35 (5): 855–872. doi:10.1111/j.1540-6520.2011.00482.x. Retrieved 2015-02-05.
  4. ↑ Wales, William (2013). "Entrepreneurial Orientation". In Kessler, E. H. Encyclopedia of Management Theory. Thousand Oaks, CA: Sage Publications. pp. 243–246. doi:10.4135/9781452276090.n74. Retrieved 2015-02-05.
  5. 1 2 3 Rauch, Andreas; Wiklund, Johan; Lumpkin, G. T.; Frese, Michael (2009). "Entrepreneurial Orientation and Business Performance: An Assessment of Past Research and Suggestions for the Future". Entrepreneurship: Theory & Practice. 33 (3): 761–787. doi:10.1111/j.1540-6520.2009.00308.x. Retrieved 2015-02-05.
  6. 1 2 3 Wales, William; Gupta, Vishal; Mousa, Fariss (2013). "Empirical research on entrepreneurial orientation: An assessment and suggestions for future research". International Small Business Journal. 31 (4): 357–383. doi:10.1177/0266242611418261. Retrieved 2015-02-05.
  7. 1 2 Linton, Gabriel (2016). Entrepreneurial orientation: reflections from a contingency perspective. Örebro, Sweden: Örebro University. ISBN 978-91-7529-117-8.
  8. ↑ Covin, Jeffrey; Slevin, Dennis (1989). "Strategic Management of Small Firms in Hostile and Benign Environments". Strategic Management Journal. 10 (1): 75–87. doi:10.1002/smj.4250100107. Retrieved 2015-02-05.
  9. ↑ Wales, William. "Entrepreneurial Orientation". Retrieved 2015-02-05.
  10. ↑ Miller, Danny (1983). "The Correlates of Entrepreneurship in Three Types of Firms". Management Science. 29 (7): 770–791. doi:10.1287/mnsc.29.7.770. Retrieved 2015-02-05.
  11. ↑ Lumpkin, G. T.; Dess, Gregory (1996). "Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance". Academy of Management Review. 21 (1): 135–172. doi:10.5465/AMR.1996.9602161568. Retrieved 2015-02-05.
  12. ↑ Covin, Jeffrey; Wales, William (2012). "The Measurement of Entrepreneurial Orientation". Entrepreneurship: Theory & Practice. 36 (4): 677–702. doi:10.1111/j.1540-6520.2010.00432.x. Retrieved 2015-02-05.
  13. ↑ Linton, Gabriel; Kask, Johan (2017). "Configurations of entrepreneurial orientation and competitive strategy for high performance". Journal of Business Research. 70: 168–176 – via ScienceDirect.
  14. ↑ Wiklund, Johan; Shepherd, Dean (2011). "Where to from Here? Eo-as-Experimentation, Failure, and Distribution of Outcomes". Entrepreneurship: Theory & Practice. 35 (5): 925–946. doi:10.1111/j.1540-6520.2011.00454.x. Retrieved 2015-02-05.
  15. ↑ Wales, William; Patel, Pankaj; Lumpkin, G. T. (2013). "In Pursuit of Greatness: Ceo Narcissism, Entrepreneurial Orientation, and Firm Performance Variance". Journal of Management Studies. 50 (6): 1041–1069. doi:10.1111/joms.12034. Retrieved 2015-02-05.
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