Academic journal article Multinational Business Review

Entrepreneurial Strategic Posture, International Diversification, and Firm Performance

Academic journal article Multinational Business Review

Entrepreneurial Strategic Posture, International Diversification, and Firm Performance

Article excerpt


Building on the entrepreneurship, marketing and strategic management literature, we propose a conceptual model to investigate the effects of entrepreneurial strategic posture (ESP), perceived environmental uncertainty and international diversification strategy on performance. The ESP-International diversification-Performance relationship is investigated using a contingency framework. Entrepreneurial strategic posture is postulated to influence the use of international diversification strategy of entrepreneurial firms. Moreover, perceived environmental uncertainty is hypothesized to strengthen the relationship between a firm's entrepreneurial strategic posture and international diversification strategy, which ultimately affect the firm's performance. Propositions for further empirical studies are provided in addition to managerial and theoretical contributions.


Amid globalization, where competition and uncertainty have increased intensely, firms need to develop certain capabilities and strategies to help them navigate successfully (Hitt, et al., 1998). Entrepreneurial strategic posture and international diversification strategy have been suggested as key factors to help firms succeed in the global marketplace (Gomez-Mejia and Palich, 1997; Knight, 2000; Zahra and Garvis, 2000). While the former is a firm's competitive orientation emphasizing innovativeness, risk taking, and proactiveness (Covin and Slevin, 1989), the latter refers to the "expansion across the borders of global regions and countries into different geographic locations or markets" (Hitt et al., 1997, p.767).

Environmental uncertainty evoked by globalization drives firms to diversify into different geographic markets, and requires firms to be innovative, proactive and risk taking; therefore, this study aims at investigating the relationships among these constructs and firm performance. In so doing, we hope to contribute to the literature in international entrepreneurship by exploring the roles of entrepreneurial strategic posture and international diversification strategy in enhancing firm performance in the presence of uncertainty.

In this paper, we define international entrepreneurship based on McDougal and Oviatt (2000, p. 903) as "a combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create value in organizations."

Entrepreneurship is recognized as critical for social and economic development of many countries (Reynolds, et al., 2001). Yet, most of the past research on entrepreneurship is devoted to the accomplishments of small businesses and new business ventures without much focus on its roles in an international context. International entrepreneurship deserves attention from researchers given the large number of small-medium enterprises (SMEs) and new ventures now going international to exploit profits from global markets (Hisrich, et al, 1996; McDougall and Oviatt, 2000; Organization for Economic Co-operation and Development, 1997; Oviatt and McDougall, 1994). This is especially true in today's global business era (Chang and Kozul-Wright, 1994; Lado and Vozikis, 1996). Apart from its contribution to development, entrepreneurship is also considered an important factor to the success of firms (Knight, 2000; Luo, 1999; Zahra and Neubaum, 1998). Hence, it seems worthwhile to investigate how entrepreneurship may enable firms to achieve superior performance.

To further our understanding of international entrepreneurship, we emphasize key entrepreneurial characteristics-innovativeness, risk taking, and proactiveness-discussed extensively in previous research (e.g., Antoncic and Hisrich, 2000; Lau and Chan, 1994; McDougall and Oviatt, 2000; Morris and Jones, 1999). These three major entrepreneurial characteristics are referred to as entrepreneurial strategic posture in previous studies (Covin and Slevin, 1989, 1990, 1991).

Here, we attempt to examine whether the fit among entrepreneurial strategic posture, international diversification strategy, and environment enhances firm performance. …

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