Entrepreneurial Orientation

by

Sandhya Balasubramanian, William J. Wales, Joshua V. White, Vishal K. Gupta

• LAST REVIEWED: 26 August 2020
• LAST MODIFIED: 26 August 2020
• DOI: 10.1093/obo/9780199846740-0193

Introduction

Entrepreneurial orientation (EO) has its roots in the literature on organizational strategy-making processes. EO is conceived as an organizational attribute that exists to the degree that an organization supports and exhibits a sustained pattern of entrepreneurial behavior reflecting incidents of new entry. That is, as a fundamental organizational attribute, EO captures an overarching strategic posture toward entrepreneurial activity. Though researchers have explored a number of aspects of EO, three primary areas continue to propel the advancement of the EO research agenda: conceptualization, measurement, and levels of analyses. Variations in these three aspects in turn have key implications for the antecedents and consequences of EO. Research on EO has explored its antecedents, moderators, mediators and has done so across various organizational forms, levels, and contexts. Notably, there has been a steady increase in the number of publications exploring EO over the years, within field journals in entrepreneurship (e.g., Entrepreneurship Theory and Practice; Journal of Business Venturing), in general management journals (e.g., Journal of Management; Strategic Management Journal), and in journals of other academic fields (e.g., Journal of Marketing; Journal of Operations Management). Since the late 1980s, EO has emerged as one of the most popular and robust constructs in entrepreneurship, strategy, and management research.

Origins of EO

The origins of EO are often traced back to Mintzberg 1973, which was the first study to highlight the potential of an entrepreneurial strategy-making mode. Notably, the credit for first formalizing the idea of an entrepreneurially oriented firm and proposing initial boundaries for the concept of EO is typically given to Khandwalla 1976 and Miller 1983. Covin and Slevin 1989 began EO research in earnest, offering the first widely established scale for measuring EO. Lumpkin and Dess 1996 expands upon the concept of EO, offering a new perspective on how firms can be entrepreneurial in terms of their organizational disposition toward new entry. These two papers—Covin and Slevin 1989 and Lumpkin and Dess 1996—played a pioneering role in formalizing the idea of an entrepreneurially oriented firm and defining the boundaries of the EO construct. Capturing the nuanced nature of EO, Gupta and Gupta 2015 highlights that EO has been variously described in terms of its characteristics, capabilities, culture, and cognition (or, the 4Cs of EO). Providing an overview of the concept, Wales, et al. 2020 observes that firms manifest EO in many ways: as a top management style capturing the top managerial goals, beliefs, logics, decisions, and communications that demonstrate organizational commitment to EO; as an organizational configuration that captures internally directed conduct to create complementary organizational processes, routines, structural choices, and cultural climates that foster a pattern of entrepreneurial behavior; and as new entry initiatives that capture externally directed conduct in the pursuit of opportunities for new value creation in the market.

• Covin, Jeffrey G., and Dennis P. Slevin. “Strategic Management of Small Firms in Hostile and Benign Environments.” Strategic Management Journal 10.1 (1989): 75–87.

  Introduces a nine-item scale to measure EO. Argues that performance is a function of the fit between an organization’s strategic posture and its environment. Predicts and finds support for the notion that small firms competing within hostile or resource-constrained environments will perform better by adopting entrepreneurial strategic postures and “aggressively trying to gain or maintain a competitive advantage”(p. 77).

• Gupta, Vishal K., and Alka Gupta. “The Concept of Entrepreneurial Orientation.” Foundations and Trends in Entrepreneurship 11.2 (2015): 55–137.

  Categorizes extant EO literature according to purpose, theory, focus, levels of analysis, time, and methods. Offers a typology for the various conceptualizations of EO, labeling it the 4Cs: characteristics, capabilities, culture, and cognition. Identifies voids in the EO knowledge base and spotlights areas for future research.

• Khandwalla, Pradip N. “Some Top Management Styles, Their Context and Performance.” Organization and Administrative Sciences 7.4 (1976): 21–51.

  First to measure an entrepreneurial management style. Created precedent for future EO measurement. Studied entrepreneurial strategies of Indian firms and found that a relationship exists between top management style and organizational structure. A conservative top management style was most effective for smaller organizations in more-stable environments, while an entrepreneurial style, including measures of risk-taking, innovation, and proactiveness, was most effective for smaller firms in hostile environments.

• Lumpkin, G. Tom, and Gregory G. Dess. “Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance.” Academy of Management Review 21.1 (1996): 135–172.

  Introduces a five-pillar disaggregated conceptualization of EO by incorporating competitive aggressiveness and autonomy-seeking behavior into the Miller 1983 model of risk-taking, innovativeness, and proactiveness. Additionally, argues that the five EO dimensions can vary independently and may or may not influence performance equally across measures. Defines entrepreneurship as “new entry” and justifies EO as the driver of new entrepreneurial activity.

• Miller, Danny. “The Correlates of Entrepreneurship in Three Types of Firms.” Management Science 29.7 (1983): 770–791.

  First to articulate an entrepreneurial firm as one that “engages in product–market innovation, undertakes somewhat risky ventures, and is first to come up with ‘proactive’ innovations, beating competitors to the punch.” Conceptualizes EO as reflected in the shared variance of the behaviorally focused manifestations of the three dimensions—risk taking, innovativeness, and proactiveness.

• Mintzberg, Henry. “Strategy-Making in Three Modes.” California Management Review 16.2 (1973): 44–53.

  Distinguishes strategic decision-making processes in terms of three modes—entrepreneurial, adaptive and planning—that can be combined and alternated by managers acting under different conditions. Established precedent for future studies of firm’s entrepreneurial strategic processes.

• Wales, William J., Jeffrey G. Covin, and Erik Monsen. “Entrepreneurial Orientation: The Necessity of a Multilevel Conceptualization.” Strategic Entrepreneurship Journal (2020).

  DOI: 10.1002/sej.1344

  Demonstrates that past—often viewed as divergent—conceptualizations of EO can be reconciled if EO phenomena are considered across multiple levels of analysis. Unifies the EO construct by exploring three fundamental ways in which entrepreneurship can be manifest as an organizational attribute: as top management style, organizational configuration, and new entry initiatives.