The contribution of the entrepreneurial orientation to SMEs profitability: a contingent analysis that considers the environment role
Main Article Content
Keywords
Entrepreneurial Orientation, Environmental Hostility, Financial Performance, SMEs.
Abstract
This paper aims first to show the effect of the Entrepreneurial Orientation (EO) on SMEs financial performance, and second, to propose a contingency model which explores the moderating effects of environmental hostility of the relationship EO –financial performance. To examine the research hypotheses, a sample of 121 manufacturing SMEs located in Catalonia, Spain has been used. The results confirm a positive EO– financial performance relation, and suggest that a more positive relation exists when there is an adjustment between the EO and the environment. Finally, the academic and entrepreneurial implications related to the EO and the SMEs environment are presented and discussed.
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References
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Brown, T. E., Davidsson, P. & Wiklund, J. (2001). An Operationalization of Stevenson’s Conceptualization of Entrepreneurship as Opportunity-based Firm Behavior. Strategic Management Journal, 22, 953-968.
Brush, T. H., Bromiley, P. & Hendrickx, M. (2000). The Free Cash Flow Hypotheses for Sales Growth and Firm Performance. Strategic Management Journal, 21, 455-472.
Casillas, J. C., & Moreno, A. M. (2010). The Relationship Between Entrepreneurial Orientation and Growth: The Moderating Role of Family Involvement. Entrepreneurship & Regional Development, 22, 265-291.
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Chen, G., Firth, M. & Xu, L. (2009). Does the Type of Ownership Control Matter? Evidence from China’s Listed Companies. Journal of Banking & Finance, 33, 171-181.
Chow, I. H. (2006). The Relationship Between Entrepreneurial Orientation and Firm Performance in China. SAM Advanced Management Journal, 71, 11-20.
Covin, J. G. & Slevin, D. P. (1989). Strategic Management of Small Firms in Hostile and Benign Environments. Strategic Management Journal, 10, 75-87.
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Covin, J. G. (1991). Entrepreneurial versus Conservative Firms: A Comparison of Strategies and Performance. Journal of Management Studies, 28, 439-462.
Covin, J. G., Green, K. M. & Slevin, D. P. (2006). Strategic Process Effects on the Entrepreneurial Orientation-sales Growth Rate Relationship. Entrepreneurship Theory and Practice, 30, 57-81.
Dewenter, K. L. & Malatesta, P. H. (2001). State-owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labour Intensity. The American Economic Review, 91, 320-334.
Dimitratos, P., Lioukas, S. & Carter, S. (2004). The Relationship Between Entrepreneurship and International Performance: The Importance of Domestic Environment. International Business Review, 13, 19-41.
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Estrialgo, M., Fernández, E. & Vázquez, C. J. (2000). Characteristics of Managers as Determinants of Entrepreneurial Orientation: Some Spanish Evidence. Enterprise and Innovation Management Studies, 1, 187-205.
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Ferreira, J., Azevedo, S. G. & Ortiz, R. F. (2011). Contribution of Resource-based View and Entrepreneurial Orientation on Small Firm Growth. Cuadernos de Gestión, 11, 95-116.
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Hair, J. F. J., Anderson, R. E., Tatham, R. L. & Black, W. C. (1998). Multivariate Data Analysis, 5a. ed. Upper Saddle River, NJ: Prentice-Hall.
Jensen, M. C. (1986). Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. American Economic Review, 76, 323-329.
Kaynak, E. & Kuan, W. K. (1993). Environment, Strategy, Structure, and Performance in the Context of Export Activity: An Empirical Study of Taiwanese Manufacturing Firms. Journal of Business Research, 27, 33-49.
Khandwalla, P. N. (1976/77). Some Top Management Styles, Their Context and Performance. Organisation and Administrative Sciences, 7, 21-51.
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Madsen, E. (2007). The Significance of Sustained Entrepreneurial Orientation on Performance of Firms: A longitudinal Analysis. Entrepreneurship & Regional Development, 19, 185-204.
Miller, D. & Friesen, P. H. (1982). Innovation in Conservative and Entrepreneurial Firms: Two Models of Strategic Momentum. Strategic Management Journal, 3, 1-25.
Miller, D. & Friesen, P. H. (1983). The Correlates of Entrepreneurship in Three Types of Firms. Management Science, 29, 770-791.
Moreno, A. M. & Casillas, J. C. (2008). Entrepreneurial Orientation and Growth of SMEs: A Causal Model. Entrepreneurship Theory and Practice, 32, 507-528.
Naman, J. L. & Slevin, D. P. (1993). Entrepreneurship and the Concept of Fit: A Model and Empirical Tests. Strategic Management Journal, 14, 137-153.
Nasrallah, W. F. & Qawasmeh, S. J. (2009). Comparing Multi-dimensional Contingency fit to Financial Performance of Organizations. European Journal of Operational Research, 194, 911-921.
Prior, D. (2003, 3 de marzo). Rendibilitat i generació de tresoreria a l’empresa industrial catalana. Perspectiva Econòmica de Catalunya, 63-69.
Randolph, W. A., Sapienza, H. J. & Watson, M. A. (1991). Technology-structure fit and Performance in Small Businesses: An Examination of the Moderating Effects of Organizational States. Entrepreneurship Theory and Practice, 16, 27-41.
Rauch, A., Wiklund, J., Lumpkin, G. T. & Frese, M. (2009). Entrepreneurial Orientation and Business Performance: An Assessment of Past Research and Suggestions for the Future. Entrepreneurship Theory and Practice, 33, 761-787.
Richard, O. C., Wu, P. & Chadwick, K. (2009). The Impact of Entrepreneurial Orientation on Firm Performance: The Role of CEO Position Tenure and Industry Tenure. The international Journal of Human Resource Management, 20, 1078-109
Ripollés, M. & Blesa, A. (2005). Personal Networks as Fosterers of Entrepreneurial Orientation in New Ventures. International Journal of Entrepreneurship and Innovation, 6, 239-248.
Robertson, C. & Chetty, S. K. (2000). A Contingency-based Approach to Understanding Export Performance. International Business Review, 9, 211-235.
Tang, J., Tang, Z., Marino, L. D., Zhang, Y. & Li, Q. (2008). Exploring an Inverted U-shape Relationship Between Entrepreneurial Orientation and Performance in Chinese Ventures. Entrepreneurship Theory and Practice, 32, 219-239.
Tang, J., Tang, Z., Zhang, Y. & Li, Q. (2007). The Impact of Entrepreneurial Orientation and Ownership Type on Firm Performance in the Emerging Region of China. Journal of developmental Entrepreneurship, 12, 383-397.
Wiklund, J. & Shepherd, D. (2005). Entrepreneurial Orientation, and Small Business Performance: A Configurational Approach. Journal of Business Venturing, 20, 71-91.
Wiklund, J. (1999). The Sustainability of the Entrepreneurial Orientation: Performance Relationship. Entrepreneurship Theory and Practice, 24, 37-48.
Yamada, K. & Eshima, Y. (2009). Impact of Entrepreneurial Orientation: Longitudinal Analysis of Small Technology Firms in Japan. The Academy of Management Proceedings, Annual Meeting Proceedings (Conference Theme:
Green Management Matters).
Yeoh, P. & Jeong, I. (1995). Contingency Relationship Between Entrepreneurship, Export Channel Structure and Environment: A Proposed Conceptual Model of Export Performance. European Journal of Marketing, 29, 95-115.
Zahra, S. A. & Covin, J. G. (1995). Contextual Influences on the Corporate Entrepreneurship- Performance Relationship: A Longitudinal Analysis. Journal of Business Venturing, 10, 43-58.
Brown, T. E., Davidsson, P. & Wiklund, J. (2001). An Operationalization of Stevenson’s Conceptualization of Entrepreneurship as Opportunity-based Firm Behavior. Strategic Management Journal, 22, 953-968.
Brush, T. H., Bromiley, P. & Hendrickx, M. (2000). The Free Cash Flow Hypotheses for Sales Growth and Firm Performance. Strategic Management Journal, 21, 455-472.
Casillas, J. C., & Moreno, A. M. (2010). The Relationship Between Entrepreneurial Orientation and Growth: The Moderating Role of Family Involvement. Entrepreneurship & Regional Development, 22, 265-291.
Chandler, A. D. (1962). Strategy and Structure, Chapters. En History of the American Industrial Enterprise. Cambridge, MA: MIT Press.
Chen, G., Firth, M. & Xu, L. (2009). Does the Type of Ownership Control Matter? Evidence from China’s Listed Companies. Journal of Banking & Finance, 33, 171-181.
Chow, I. H. (2006). The Relationship Between Entrepreneurial Orientation and Firm Performance in China. SAM Advanced Management Journal, 71, 11-20.
Covin, J. G. & Slevin, D. P. (1989). Strategic Management of Small Firms in Hostile and Benign Environments. Strategic Management Journal, 10, 75-87.
Covin, J. G. & Slevin, D. P. (1991). A Conceptual Model of Entrepreneurship as Firm Behaviour. Entrepreneurship Theory and Practice, 16, 7-25.
Covin, J. G. (1991). Entrepreneurial versus Conservative Firms: A Comparison of Strategies and Performance. Journal of Management Studies, 28, 439-462.
Covin, J. G., Green, K. M. & Slevin, D. P. (2006). Strategic Process Effects on the Entrepreneurial Orientation-sales Growth Rate Relationship. Entrepreneurship Theory and Practice, 30, 57-81.
Dewenter, K. L. & Malatesta, P. H. (2001). State-owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labour Intensity. The American Economic Review, 91, 320-334.
Dimitratos, P., Lioukas, S. & Carter, S. (2004). The Relationship Between Entrepreneurship and International Performance: The Importance of Domestic Environment. International Business Review, 13, 19-41.
Donaldson, L. (2001). The Contingency Theory of Organizations, United Kingdom: Sage.
Estrialgo, M., Fernández, E. & Vázquez, C. J. (2000). Characteristics of Managers as Determinants of Entrepreneurial Orientation: Some Spanish Evidence. Enterprise and Innovation Management Studies, 1, 187-205.
Ferreira, J. & Azevedo, S. G. (2008). Entrepreneurial Orientation (EO) and Growth of Firms: Key Lessons for Managers and Business Professionals. Problems and Perspectives in Management, 6, 82-88.
Ferreira, J., Azevedo, S. G. & Ortiz, R. F. (2011). Contribution of Resource-based View and Entrepreneurial Orientation on Small Firm Growth. Cuadernos de Gestión, 11, 95-116.
Griffin, P. A., Lont, D. H. & Sun, Y. (2010). Agency Problem and Audit Fees: Further Tests of the Free Cash Flow Hypothesis. Accounting and Finance, 50, 321-350.
Hair, J. F. J., Anderson, R. E., Tatham, R. L. & Black, W. C. (1998). Multivariate Data Analysis, 5a. ed. Upper Saddle River, NJ: Prentice-Hall.
Jensen, M. C. (1986). Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. American Economic Review, 76, 323-329.
Kaynak, E. & Kuan, W. K. (1993). Environment, Strategy, Structure, and Performance in the Context of Export Activity: An Empirical Study of Taiwanese Manufacturing Firms. Journal of Business Research, 27, 33-49.
Khandwalla, P. N. (1976/77). Some Top Management Styles, Their Context and Performance. Organisation and Administrative Sciences, 7, 21-51.
Khandwalla, P. N. (1977). The Design of Organizations. Jovanovich, NY: Harcourt Brace.
Lawrence P. & Lorsch, J. (1967). Organization and Environment. Cambridge: Harvard Business School.
Levenburg, N. M. & Schwarz, T. V. (2008). Entrepreneurial Orientation Among the Youth of India: The Impact of Culture, Education and Environment. The Journal of Entrepreneurship, 17, 15-35.
Lumpkin, G. T. & Dess, G. G. (1996). Clarifying the Entrepreneurial Orientation Construct and Linking it to Performance. Academy of Management Review, 21, 135-172.
Lumpkin, G. T. & Dess, G. G. (2001). Linking Two Dimensions of Entrepreneurial Orientation to Firm Performance: the Moderating Role of Environment and Industry Life Cycle. Journal of Business Venturing, 16, 429-451.
Lumpkin, G. T., Wales, W. J. & Ensley, M. D. (2006). Entrepreneurial Orientation Effects on New Venture Performance: The Moderating Role of Venture Age. Academy of Management Best Conference Paper 2006, ENT: N1-N7.
Madsen, E. (2007). The Significance of Sustained Entrepreneurial Orientation on Performance of Firms: A longitudinal Analysis. Entrepreneurship & Regional Development, 19, 185-204.
Miller, D. & Friesen, P. H. (1982). Innovation in Conservative and Entrepreneurial Firms: Two Models of Strategic Momentum. Strategic Management Journal, 3, 1-25.
Miller, D. & Friesen, P. H. (1983). The Correlates of Entrepreneurship in Three Types of Firms. Management Science, 29, 770-791.
Moreno, A. M. & Casillas, J. C. (2008). Entrepreneurial Orientation and Growth of SMEs: A Causal Model. Entrepreneurship Theory and Practice, 32, 507-528.
Naman, J. L. & Slevin, D. P. (1993). Entrepreneurship and the Concept of Fit: A Model and Empirical Tests. Strategic Management Journal, 14, 137-153.
Nasrallah, W. F. & Qawasmeh, S. J. (2009). Comparing Multi-dimensional Contingency fit to Financial Performance of Organizations. European Journal of Operational Research, 194, 911-921.
Prior, D. (2003, 3 de marzo). Rendibilitat i generació de tresoreria a l’empresa industrial catalana. Perspectiva Econòmica de Catalunya, 63-69.
Randolph, W. A., Sapienza, H. J. & Watson, M. A. (1991). Technology-structure fit and Performance in Small Businesses: An Examination of the Moderating Effects of Organizational States. Entrepreneurship Theory and Practice, 16, 27-41.
Rauch, A., Wiklund, J., Lumpkin, G. T. & Frese, M. (2009). Entrepreneurial Orientation and Business Performance: An Assessment of Past Research and Suggestions for the Future. Entrepreneurship Theory and Practice, 33, 761-787.
Richard, O. C., Wu, P. & Chadwick, K. (2009). The Impact of Entrepreneurial Orientation on Firm Performance: The Role of CEO Position Tenure and Industry Tenure. The international Journal of Human Resource Management, 20, 1078-109
Ripollés, M. & Blesa, A. (2005). Personal Networks as Fosterers of Entrepreneurial Orientation in New Ventures. International Journal of Entrepreneurship and Innovation, 6, 239-248.
Robertson, C. & Chetty, S. K. (2000). A Contingency-based Approach to Understanding Export Performance. International Business Review, 9, 211-235.
Tang, J., Tang, Z., Marino, L. D., Zhang, Y. & Li, Q. (2008). Exploring an Inverted U-shape Relationship Between Entrepreneurial Orientation and Performance in Chinese Ventures. Entrepreneurship Theory and Practice, 32, 219-239.
Tang, J., Tang, Z., Zhang, Y. & Li, Q. (2007). The Impact of Entrepreneurial Orientation and Ownership Type on Firm Performance in the Emerging Region of China. Journal of developmental Entrepreneurship, 12, 383-397.
Wiklund, J. & Shepherd, D. (2005). Entrepreneurial Orientation, and Small Business Performance: A Configurational Approach. Journal of Business Venturing, 20, 71-91.
Wiklund, J. (1999). The Sustainability of the Entrepreneurial Orientation: Performance Relationship. Entrepreneurship Theory and Practice, 24, 37-48.
Yamada, K. & Eshima, Y. (2009). Impact of Entrepreneurial Orientation: Longitudinal Analysis of Small Technology Firms in Japan. The Academy of Management Proceedings, Annual Meeting Proceedings (Conference Theme:
Green Management Matters).
Yeoh, P. & Jeong, I. (1995). Contingency Relationship Between Entrepreneurship, Export Channel Structure and Environment: A Proposed Conceptual Model of Export Performance. European Journal of Marketing, 29, 95-115.
Zahra, S. A. & Covin, J. G. (1995). Contextual Influences on the Corporate Entrepreneurship- Performance Relationship: A Longitudinal Analysis. Journal of Business Venturing, 10, 43-58.
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Published
Dec 15, 2012
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Martins, I., Uribe, F., & Mesa, D. (2012). The contribution of the entrepreneurial orientation to SMEs profitability: a contingent analysis that considers the environment role. Ecos De Economía, 16(35), 45–71. https://doi.org/10.17230/ecos.2012.35.3
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