The Mediating Role of Entrepreneurial Orientation in the Task Environment–Performance Relationship

Abstract

Despite the importance of the external task environment for firm performance, little is known about the mechanisms that enable firms to benefit from a specific environmental setting. The authors argue that firms adjust their entrepreneurial orientation (EO) to the external environment and use it as a mechanism to transform the advantages provided by the environment into above-average performance levels. Specifically, the authors use meta-analysis supplemented by structural equation modeling to explore the links among environmental munificence, hostility, dynamism and complexity, EO, and firm performance in a mediation model. The results suggest that environmental munificence, dynamism, and complexity affect EO and, in turn, firm performance. The authors discuss the meta-analytical findings with respect to their theoretical contribution and their practical implications.

Do Entrepreneurial SMEs Perform Better Because They are More Responsible?

“…However, as in most research on EO (Rosenbusch et al 2013), we do not demonstrate causal links because only qualitative methods allow for the establishment of causality. SMEs with better financial performance can thus be better positioned to develop SD practices (Dixon-Fowler et al 2013;Orlitzky 2008).…”

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).…”

“…Organizations respond to external environments (e.g., environmental munificence, hostility, complexity and dynamism) by entrepreneurial behaviour, which helps to exploit opportunities provided by the environment (Khandwalla, 1987;Rosenbusch et al, 2013). Specifically, entrepreneurial behaviour influences strategic decisions and actions that enable firms to successfully translate resources into capabilities to suit the environment (Rosenbusch et al, 2013).…”

“…Specifically, entrepreneurial behaviour influences strategic decisions and actions that enable firms to successfully translate resources into capabilities to suit the environment (Rosenbusch et al, 2013). Entrepreneurial action stimulates strategic objectives and facilitates the combination of processes, the development of organizational structures, and acquisition of technologies on which specific capabilities are built (Lichtenstein and Brush, 2001;Covin and Lumpkin, 2011;Rosenbusch et al, 2013;Tatikonda et al, 2013;Ojha et al, 2016). Accordingly, it can be argued that EO stimulates firm-strategic objectives (e.g., quality focus, dependability, flexible response, competitive price) and supports the development of means through which capabilities such as manufacturing capabilities are built to pursue those objectives.…”

“…For instance, it has been argued that high EO is stimulated in environments characterized by environmental munificence (i.e., high growth, low competitive intensity, profitability and early stage in industry life cycle) (Tersejen et al, 2011;Rosenbusch et al, 2013). In such high-growth environments, superior product quality has been found to be a consistent strategy that generates competitive advantage among entrepreneurial firms (Covin et al, 2000).…”