Entrepreneurial Orientation and Business Performance: An Assessment of past Research and Suggestions for the Future

Abstract

Entrepreneurial orientation (EO) has received substantial conceptual and empirical attention, representing one of the few areas in entrepreneurship research where a cumulative body of knowledge is developing. The time is therefore ripe to document, to review, and to evaluate the cumulative knowledge on the relationship between EO and business performance. Extending beyond qualitative assessment, we undertook a meta-analysis exploring the magnitude of the EO-performance relationship and assessed potential moderators affecting this relationship. Analyses of 53 samples from 51 studies with an N of 14,259 companies indicated that the correlation of EO with performance is moderately large (r = .242) and that this relationship is robust to different operationalizations of key constructs as well as cultural contexts. Internal and environmental moderators were identified, and results suggest that additional moderators should be assessed. Recommendations for future research are developed.

Customer integration and operational performance: The mediating role of information quality

“…It has been argued that EO can be regarded as a multi-dimensional construct (Lumpkin and Dess, 1996); however, it has been equally suggested that EO is a unidimensional construct, and it should be analysed as such (Covin and Slevin, 1991). Meta-analyses of the entrepreneurship literature reveals that most studies have summed across innovativeness, proactiveness and risk taking to create an individual dimension of EO (Rauch et al, 2009;Rosenbusch et al, 2013). Further, it was found that these three dimensions are of equal importance explaining organizational performance across most studies, and thus it is reasonable to support the use of a summed index in future research (Covin et al, 2006;Rauch et al, 2009;Tang et al, 2009).…”

“…Innovativeness is the tendency to engage in creativity/experimentation through the introduction of new products/services, technology and R&D. Proactiveness is an opportunity-seeking behaviour, characterised by the introduction of new products/services ahead of the competition in anticipation of future demand. Risk taking refers to taking bold actions and committing important resources to ventures in uncertain environments (Rauch et al, 2009). It has been argued that EO can be regarded as a multi-dimensional construct (Lumpkin and Dess, 1996); however, it has been equally suggested that EO is a unidimensional construct, and it should be analysed as such (Covin and Slevin, 1991).…”

Do Entrepreneurial SMEs Perform Better Because They are More Responsible?

“…Others note that proactiveness in this domain remains a guarantee of success, particularly at the financial level (Aragon-Correa et al 2008;Jenkins 2009), and that the flexibility of SMEs may allow them to act more rapidly than large firms and competitors (Dixon-Fowler et al 2013). These elements-business opportunities/innovation and proactiveness in SD-emphasize SMEs' ability to take risks by exploiting new markets, products, and processes, which in turn, allows them to perform better (e.g., Rauch et al 2009;Wiklund and Shepherd 2005). SD practices can thus interact with EO and performance because the actions that they imply allow SMEs to develop intangible assets.…”

“…This capacity for innovation, associated with risk taking, and proactiveness constitute the three dimensions of an entrepreneurial management style, defined by Covin and Slevin (1988) as the entrepreneurial orientation (EO). These three factors may improve SME performance in certain cases (Rauch et al 2009;Wiklund and Shepherd 2005).…”

“…First, beyond the generally established positive link between EO and performance, various factors have been shown to affect this relationship (Messersmith and Wales 2013;Rauch et al 2009). Nevertheless, little research has examined these mediating variables, which limits our understanding of this relationship and the factors that influence performance (Kollmann and Stöckmann 2014;Lechner and Gudmundsson 2014;Rauch et al 2009), particularly when SD practices are implemented (Dixon-Fowler et al 2013). Second, research into the link between SD practices and financial performance remains controversial (Hart and Dowell 2011), and the link between SD practices and non-financial performance has received very little attention to date.…”