Academic journal article South Asian Journal of Management

Strategic Entrepreneurial Orientation: Development of a Multi-Dimensional Construct Based on Literature Review

Academic journal article South Asian Journal of Management

Strategic Entrepreneurial Orientation: Development of a Multi-Dimensional Construct Based on Literature Review

Article excerpt

Research in the field of entrepreneurship and strategy has largely developed independent of each other. While entrepreneurship has focused on opportunity seeking approach, strategic management has focused on advantage seeking behavior increasingly researchers have highlighted some overlapping areas in these two disciplines. This study talks about inter-linkage of entrepreneurship and strategy and the emergence of strategic and entrepreneurial orientation construct (EO). Increasingly entrepreneurship is considered as making a new entry and the process of making this new entry is called firm's strategic orientation. This led to development of firm's strategic and entrepreneurial orientation (EO) construct which talks about entrepreneurship as a firm level phenomenon and highlights the process of making new entry through its strategic approach. Most of the studies in this field tend to examine firm's strategic and entrepreneurial construct through three most commonly used dimensions of innovativeness, pro-activeness and risk-taking and put them together into a gestalt or uni-dimensional construct where these three dimensions co-vary. Prior research highlights that EO contributes positively to business performance but some studies have found the opposite or insignificant influence. This study tries to overcome this inconsistency by building on literature highlighting that EO construct is better explained by five dimensions rather than three by the addition of competitive aggressiveness and autonomy to the existing three dimensions and these dimensions vary independently rather than co-varying. This study argues the need to consider EO as a multidimensional construct rather than a uni-dimensional one and highlights that some of these dimensions may have a positive influence on firm performance whereas some may have a negative or insignificant influence and further this influence may vary across firm life-cycle.

INTRODUCTION

The origin of the term entrepreneurship can be traced back to the French word entreprendre that means to undertake, consequently, it is the alertness to new opportunities. Entrepreneurship includes new business venture creation or rejuventation and would address questions like - What business do one enter and how do one make the new business successful. Schumpeter (1934) argued that the driving force of economic growth is entrepreneurs who introduce new products, new methods of production, and other innovations that stimulate economic activity. He described entrepreneurship as a process of "creative destruction in which an entrepreneur continually displaces or destroys existing products, processes, or methods of production with new ones. Evf r since Schumpeter, the emergence of new businesses has been explored, not only in terms of opportunities, but also, in terms of resources combined in specific ways that best lead to competitive advantages (Barney, 1992). Entrepreneurship is defined as "identifying opportunities and taking advantage of opportunities by novel combination of resources in ways which have impact on the market" (Wiklund, 1999), and entrepreneurial actions as "creating new resources or combining existing resources in new ways to develop and commercialize new products, move into new markets, and /or service new customers" (Hitt et ah, 2001).

Strategic management is defined as set of decisions, commitments, and actions that result in the formulation and implementation of plans designed to achieve firm's objectives and produce a competitive advantage. Strategy reflects a firm's awareness of how, when and where it should compete; against whom it should compete; and for what purpose it should compete. A business competes on the basis of its available resources, skills and expertise, competitive capabilities, and its strategically valuable assets. Firms may look for entrepreneurial opportunities and utilize strategic management processes to identify and develop distinctive capabilities and competencies in the goal of acquiring competitive advantage and improved performance. …

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