Moderating Effect of Environmental Dynamism on the Relationship between a Firm’s Entrepreneurial Orientation and Financial Performance

Abstract

The relationship between entrepreneurial orientation and firm performance has been the focus of numerous empirical studies over the past decade. The conclusions and findings reported are diverse and often conflicting. One possible explanation for mixed findings is that past studies do not take into account the dynamic nature of the industry environment. Using a sample of 192 Swiss firms from several different industries, this study examines the direct effect of entrepreneurial orientation on financial firm performance along with the moderating effect of a dynamic environment on the relationship between entrepreneurial orientation and performance. Results of this study suggest that for firms competing in a highly dynamic environment, the positive effect of an entrepreneurial orientation on financial performance is enhanced.

Assessing the Impact of Corporate Entrepreneurship in the Financial Performance of Subsidiaries of Colombian Business Groups: Under Environmental Dynamism Moderation

“…The structural equation analysis could not prove these moderation relationships. This result is contrary to Tajeddini & Mueller (2018) who found that ED moderates the relationship between EO and the FP, using a sample of 192 Swiss firms from several industries. One possible explanation is that CE has boundary conditions associated with the context of each country (Demirkan et al, 2019;Liu & Vrontis, 2017;Miller, 2011).…”

“…Thus, hypothesis 4 did not find support. This result was contrary to the results of Tajeddini & Mueller (2018) and Ambad & Wahab (2016), who found that ED moderated the relationship between EO and the FP. Additionally, the effect size (f 2 ) of the IT, ED-EO, is marginal (f 2 = 0.0005) [Cohen, 1988].…”

“…The confidence interval based on bootstrap presents problems that don't allow to support this relationship. Although this result differs from those that proved the positive impact of EO on firm performance Ireland et al, 2009;Tajeddini & Mueller, 2018), this difference could be because the last ones did not report confidence intervals.…”

“…Thus, hypothesis 2 did not find support. Although this result differs from those that proved the positive impact of EO on firm performance Ireland et al, 2009;Tajeddini & Mueller, 2018), it was coherent with others who could not prove this relationship either (Covin, Slevin, & Schultz, 1994;George, Wood, & Khan, 2001).…”

“…The more dynamic and hostile environment, the higher the innovation is needed (Miller et al, 1988;Miller & Friesen, 1982). Although many studies in developed countries have emphasized that ED has a moderating effect between CE and FP (Lumpkin & Dess, 1996;Moreno & Casillas, 2008;Tajeddini & Mueller, 2018), the researchers have not proven to date whether this is true in SCBG. For these reasons, this paper proposes the next additional hypotheses.…”