Exploring an Inverted U–Shape Relationship between Entrepreneurial Orientation and Performance in Chinese Ventures

Abstract

The critical role of entrepreneurial orientation (EO) in firm performance has been widely studied in the U.S. context. However, the examination of this key construct in emerging regions such as China has been very limited. In this article, we hypothesize that the relationship between EO and firm performance is best represented as curvilinear, as opposed to linear, in China. We use a two-study approach to test the link between EO and performance, as expressed in both perceptual and objective performance. Findings of both studies demonstrate an inverted U-shape relationship. Implications for future research on EO are discussed.

Linking Entrepreneurial Orientation with Organizational Performance of Small and Medium Sized Enterprises: A Conceptual Approach

“…Some of the studies have been measuring the effects of EO on performance of the organization (Lumpkin & Dess, 2001;Hughes & Morgan, 2007;Tang, Tang, Marino, & Li, 2008;Moreno & Casillas, 2008;Casillas, Moreno, & Barbero, 2010;Frank, Kessler, & Fink, 2010), while other studies have been focusing on indentifying the determinants of EO (Lee & Peterson, 2001;Dickson, 2004;Kellermanns & Eddleston, 2006;Casillas, Moreno, & Barbero, 2011;Weismeier-Sammer, 2011;Cruz & Nordqvist, 2012). However, regardless of this classification, all the studies have measured the EO construct either with three dimensions (Dickson, 2004;Kellermanns & Eddleston, 2006;Tang et al, 2008;Casillas et al, 2010;Frank et al, 2010;Cruz & Nordqvist, 2012) or five dimensions (Lee & Peterson, 2001;Hughes & Morgan, 2007;Li, Huang, & Tsai, 2009). The current study will measure the EO construct with five dimensions.…”

“…Proactiveness fosters the organization to get ready for grabbing the market opportunities. This characteristic carries risk taking behaviour that can be seen in form of introducing new products or services and entry into a new market (Tang et al, 2008). Risk taking approach of the organization may lead to creative and innovative ideas (Wagener, Gorgievski, & Rijsdijk, 2010) thereby earning more profits for the organization in the long run (Wiklund & Shepherd, 2005).…”

“…Risk taking propensity of an organization is basically the result of opportunity seeking attitude. The management tends to get the benefit of market opportunities in pursuit of earning high returns (Lumpkin & Dess, 1996;Tang et al, 2008;Rauch et al, 2009). …”

The change of production systems through consultancy involved projects: a multiple case study in Chinese SMEs

“…Cunningham (2010) points out that many Chinese SMEs provide limited training opportunities to their employees and most of their training programmes lack the content of sophisticated and specialised practices. Tang et al (2008) argue that Chinese SME owners and managers lack sufficient knowledge of business planning and human resource management and actually only 20% of colleges and universities in China provide formal entrepreneurship programmes to SME managers. Singh et al (2010) further demonstrate that SME owners and their senior managers lack expertise of management and finance.…”

When is brand orientation a useful strategic posture?

“…Additionally, it can be argued that brand orientation, like any strategic orientation, may have a curvilinear relationship with performance (Cadogan, 2012;Tang, Tang, Marino, Zhang, & Li., 2008). While we searched but did not find evidence of a curvilinear association in our data, we suggest that future research should explore these possibilities to broaden our perspective on the benefits and costs associated with brand orientation.…”