understanding entrepreneurship_innovation and performance_research paper_final

8/9/2019 Understanding Entrepreneurship_Innovation and Performance_Research Paper_Final

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Understanding Entrepreneurship: The Relation between EntrepreneurialOrientation (Opportunity, Knowledge and Risk Taking), Innovation and

ir! "er#or!an$e


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%bstra$t

Entrepreneurship is regarded as a modern area of examination, study into which is gaining

the interest of an increasing amount of researchers. Moreover, entrepreneurship includes acts

of managerial formation, regeneration or innovation taking place inside or outside a firm. On

the other hand, entrepreneurship orientation is observed as an essential aspect of optimistic

results at organizational performance.

The purpose of this research paper is to understand the relation between entrepreneurial

orientation and firm performance. Moreover, this research paper considered innovation

performance as the most important elements, and examined the connection between EO,

innovation and firm performance.

This research paper reviewed various literatures theories and models proposed by different

authors in order to gain understanding on the importance of entrepreneurship and associated

aspects with regards to innovation. This research has utilized primary and secondary data

sources. The primary analysis of the data set was derived from structural euations

modelling. !tructural euations models were produced in various educational standards in

order to validate the theory. "t last, conclusion was made to support the findings.


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Table o# &ontents

#. $ntroduction.........................................................................................................................#

#.#. %roblem !tatement.......................................................................................................#

#.&. "ims and Ob'ectives....................................................................................................&

#.(. !ignificance of the !tudy.............................................................................................&

&. )iterature *eview...............................................................................................................(

&.#. Entrepreneurial Orientation +EO................................................................................(

&.&. Organizational )earning -apability............................................................................(

&.(. Opportunity *ecognition.............................................................................................

&.. $nnovation %erformance..............................................................................................

&./. 0nowledge Management............................................................................................./

(. *esearch 1ypotheses........................................................................................................../

. *esearch Methodology.......................................................................................................2

.#. 3ata -ollection............................................................................................................2

.&. Measurements..................................................................................................................4

.(. 3ata "nalysis...............................................................................................................5

/. *esults.................................................................................................................................5

/.#. !tructural Euations Model.............................................................................................5

/.&. -orrelations.....................................................................................................................6

2. -onclusion........................................................................................................................#7

*eferences................................................................................................................................##

"ppendix..................................................................................................................................#/


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' Introdu$tion

%romoting entrepreneurship is an efficient manner of producing employment, raising

efficiency and decreasing paucity +OE-3, &77/. Moreover, entrepreneurship is regarded as a

modern area of examination, study into which is gaining the interest of an increasing amount

of researchers +$reland, *eutzel and 8ebb, &77/. !harma and -hrisman +#666 purported

that entrepreneurship includes acts of managerial formation, regeneration or innovation

taking place inside or outside a firm. On the other hand, Entrepreneurial Orientation +EO is

regarded as the methods, activities and managerial functions that cause entrepreneurship

+)umpkin and 3ess, #6629 *ichard, :arnett, 3wyer and -hadwick, &77. This theory is

same as -ovin and !levin;s +#656 entrepreneurial strategic posture which is categorized by

numerous and broad innovation, insistent competitive orientation and a wellarver,

&777. This is for the reason that the performance of a form relies basically upon several

elements both internal and external to the firm +Thoumrungro'e and Tansuha', &77/, or that

the advantages of EO freuently take a longer time to come to completion +=ahra and -ovin,

#66/9 Madsen, &774. Therefore, in order to examine the EO


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'* %i!s and Ob+e$tives

The aim of this research paper is to understand the relation between entrepreneurial

orientation and firm performance.

More specifically, the ob'ectives are?

To analyze entrepreneurial orientation

To examine elements of entrepreneurial orientation

To examine the relation between entrepreneurial orientation and firm performance

To consider the impact of entrepreneurial orientation performance of an organization

To evaluate the relation between entrepreneurial orientation +opportunity, knowledge

and risk taking, innovation and firm performance

' igni#i$an$e o# the tudy

)umpkin and 3ess +#662, any relationship between EO and performance seems to be

context specific, i.e. internal or external factors influence how an EO will be configured to

achieve high performance. 1owever, despite previous research on these factors, these authors

call for further studies to clarify the role of contingency approaches in explaining the EO@

firm performance relationship. *esearch should focus on identifying the underlying processes

that determine the contribution of EO to performance +=ahra et al., #666. 3ess et al +&77(

highlight the importance of corporate entrepreneurship in promoting organizational learning.

They affirm that entrepreneurship creates new knowledge, and that organizational learning

mediates this relationship. Aurthermore, 8ang +&775 has recently introduced the mediating

role of learning orientation into the EO


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* -iterature Review

*' Entrepreneurial Orientation (EO)

Entrepreneurship is considered as an approach to management that aspires to emphasize

innovation, suppleness and openness determined by the observation of opportunity, while

offering more refined and competent management +Cuth and Cinsberg, #6679 >aman and

!levin, #66(9 Bogaratnam et al. #666. Entrepreneurial Orientation +EO is regarded as the

methods, actions, beliefs and managerial operations that guide firms to entrepreneurship

+)umpkin and 3ess, #662. -ovin and !levin +#656 purported that EO is considered as a

strategic attitude to symbolize regular and essential innovation, tough competitive course or

proactiveness and a tough risk


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# 3ialogue

& Experimentation

( $nteraction with the external environment

%articipative decision making.

/ *isk taking

3ialogue is described as a continued combined examination into the methods, suppositions,

and convictions that comprise daily understanding +$saacs, #66(.

Experimentation is described as the amount to which latest ideas and propositions are

handled considerately +Tannembaum, #664.

$nteraction with the external environment is described as the extent of associations with the

external situation +:apu'i and -rossan, &77.

%articipative decision making is described as the degree of control workforce has in the

decision


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$nnovation outcomes comprise product and process innovations9 these two types of

innovation outcomes are very much related with each other and form an extremely compound

method that usually contains all organizational operations +tterback and "bernathy, #64/.

" Fproduct; is considered as a good or service given to consumers, and a Fprocess; is the

manner the good or service is created and offered +:arras, #652. Thus, product innovation is

described as the product or service launched in order to fulfil the reuirements of the industry

or customer on the other hand, process innovation is described as a new aspect established

into production processes +3amanpour and Copalakrishnan, &77#.

*0 Knowledge 1anage!ent

"ccording to -orso et al +&77&, knowledge management is of rising attention to researchers

of firms and management due to its believed function in shaping innovation potential of an

organization.

0nowledge management has been examined by various regulations from diverse measures

+)opez et al, &77. :arney +#66# purported that an organization reuires maintaining and

controlling knowledge in the form of recognized measures, rights, training models or

organization schedules to continue its competitive advantage and to survive in the industry.

Resear$h 2ypotheses

"ccording to the theory of entrepreneurial orientation, organizational learning capabilities

and innovation performance, the following conceptual model is proposed +Aigure (.#. The

debate of the proposed model is that the influence of EO on innovation performance is

governed by O)-. Moreover, innovation performance has an optimistic impact on firm

performance. Therefore, hypotheses were developed about +# the association between EO

and firm performance9 +& the association between EO and O)- and +( the connection

between O)- and innovation performance of a firm

5


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Aigure (.#? -onceptual Model

Therefore, the research has following hypotheses?

1ypothesis #? EO is completely connected to innovation performance of a firm.

1ypothesis &? $nnovation performance is completely associated with the firm

performance.

1ypothesis (? $nnovation performance plays an important role in mediating the

relationship between EO and performance of a firm.

1ypothesis ? Entrepreneurial orientation is completely associated with organizational

learning capability.

1ypothesis /? There is an optimistic connection between organizational learning

capability and innovation performance of a firm.

/ Resear$h 1ethodology

/' 3ata &olle$tion

This research has utilized primary and secondary data. The primary data was collected with

the help of uantitative techniue through a uestionnaire. On the other hand, the secondary

data was collected from the previous literatures and researches.

" key informant techniue in relation to the previous researches was employed to collect data

for the research+0umar et al, #66(. The uestionnaire was distributed to managers of

6


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several global firms.Moreover, the categories of the managers of the firmswere classified

into three categories, for example, uestions regarding the firm performance were distributed

to the Ceneral Managers, uestions regarding innovation performance were distributed to

%roduct 3evelopment Managers, and on the other hand uestions regarding O)- were

distributed to 1uman *esource Managers. The firms were randomly selected from the online

global corporate database.

The uestionnaire was distributed to &77 firms globally through emails that were obtained

from the 1* list of the companies. Out of these, only #5& completed uestionnaires were

received, therefore making the total sample size of the study to #5&.

/* 1easure!ents

a) Entrepreneurial Orientation

Entrepreneurial Orientation was evaluated through the extensively used nine


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/ 3ata %nalysis

The primary analysis of the data set was derived from structural euations modelling.

!tructural euations models were produced in various educational standards in order to

validate the theory. Therefore, this method encompassed producing measurement models to

specific underlying elements and then forming associations or connections or structural

euations among these elements.

0 Results

0' tru$tural E4uations 1odel

The figure below +Aigure /.# represents the results derived from the structural euations

analysis. Moreover, the chi


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O)-, $%, and A% are aspects of second order. Moreover, EO and !ize are aspects of firstowadays, entrepreneurship has gained a significant amount of attention. Though EO is

freuently believed to have an optimistic effect on the performance of the firm, this express

association does not appear to be practically certain and absolute. $n the present research,

innovation performance was included in the EO


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Re#eren$es

:apu'i, 1., and -rossan, M., &77. Arom raising uestions to providing answers?

*eviewing organizational learning research. Management )earning, (/? (64


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$reland, *.3., *eutzel, -.*. and 8ebb, B.8. &77/. Entrepreneurship research in "MB?

what has been published, and what might the future hold "cademy of Management

Bournal, 5 +? //2


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!chumpeter, B.". #6(. The theory of Economic 3evelopment. -ambridge. M"?

1arvard niversity %ress.

!eibert, !.E., 0raimer, M.). and )iden, *.-. +&77#. P" social capital theory of career

success;. "cademy of Management Bournal, ,


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