The Complementary Effects of Market Orientation and Entrepreneurial Orientation on Profitability in Small Businesses*

Market orientation (MO) and entrepreneurial orientation (EO) are correlated, but distinct constructs. MO reflects the degree to which firms' strategic market planning is driven by customer and competitor intelligence. Entrepreneurial orientation reflects the degree to which firms' growth objectives are driven by the identification and exploitation of untapped market opportunities. When modeled separately, research has reported direct effects of both constructs on firm profitability. When modeled simultaneously, however, the direct effect of EO has disappeared. This has led some scholars to postulate that EO is an antecedent of MO. The results of this study contradict this presumption and suggest that EO and MO complement one another, at least in small businesses, to boost profitability. The major difference between this and previous studies is the inclusion of innovation success, which captures an indirect effect of EO on profitability. At least in small firms, the results suggest that EO complements MO by instilling an opportunistic culture that impacts the quality and quantity of firms' innovations.     

Entrepreneurial Orientation and International Performance: The Moderating Effect of Decision‐Making Rationality

This research examines how entrepreneurial orientation (EO) influences international performance (IP) of the firm taking into account the moderating effect of decision‐making rationality (DR) on the EO–IP association. Such an investigation is significant because it considers the interplay of strategic decision‐making processes supported by the bounded rationality concept in the entrepreneurship field. Drawing from a study on activities of 216 firms in the United States and United Kingdom, the evidence suggests that DR positively moderates the EO–IP association. The findings suggest that managers can improve IP by combining EO with rational (analytical) processes in their strategic decisions.     

Entrepreneurial Orientation and Performance of Chinese High-Tech Firms： The Mediating Role of Organizational Learning and Moderating Role of Firm Life Cycle

The evidence about how entrepreneurial orientation （EO） affects firms＇ performance remains inconclusive. This study joins the research by incorporating organizational learning （OL） as a micro-macro link and by extending empirical work to the largely underexplored context of Chinese high-tech industries. Results from a survey of 252 Chinese high-tech firms demonstrate： （1） entrepreneurial orientation is positively related to firm performance; （2） organizational learning is also positively related to firm performance; （3） organizational learning partly mediates the positive impact of entrepreneurial orientation on firm performance; and （4） high-tech companies in the start-up and growth stage are likely to demonstrate stronger linkages in the EO-OL-performance relationship than in mature stage, which shows that the EO-OL-performance relationship is moderated by firms＇ life cycle.     

Achieving Growth and Responsiveness: Process Management and Market Orientation in Small Firms*

Achieving a consistent market orientation is a challenge for entrepreneurial manufacturers. This research seeks improved understanding of how internal process management assists and hinders small growing manufacturers in achieving the responsiveness component of a market orientation. Under process management, firms implement internal systems, procedures, and performance measures to improve performance and responsiveness to changing markets. Benefits include improved market sensing, two‐way communication, and coordinated responses to market demands. Despite the potential benefits, researchers question whether the internal structure and control of process management will improve responsiveness in entrepreneurial firms. Process management may conflict with the organizational cultures, agility, and responsiveness of entrepreneurial companies. Research results identify how process management assists and hinders the responsiveness component of market orientation in small manufacturers. Management implications and strategies for coping with growth challenges are presented.     

Customer Orientation and Performance in Small Firms: Examining the Moderating Influence of Risk‐Taking,Innovativeness, and Opportunity Focus

Customer orientation is considered to be an essential element for small firm success despite relatively little empirical evidence to support such a claim. This research examines the customer orientation–performance relationship among 180 small firms, and the moderating influence of risk‐taking, innovativeness, and opportunity focus on that relationship. Results support the overall positive influence of customer orientation on performance and indicate that the influence is stronger as risk‐taking, innovativeness, and opportunity focus increase. Interestingly, customer orientation does not positively influence small firm performance under low levels of risk‐taking, innovativeness, and opportunity focus.     

The Effects of CEO Founder Status and Stock Ownership on Entrepreneurial Orientation in Small Firms

This paper studies how governance drives entrepreneurial orientation (EO) in small firms. We argue that founder status and ownership create powerful personal incentives for small firm CEOs to engage in behaviors that influence EO. Integrating stewardship theory and the principal‐principal branch of agency theory, we test our hypotheses on a sample of 339 Swedish firms, and find that CEO founder status is significantly and positively associated with EO, while CEO stock ownership significantly but negatively predicts EO. We additionally test two boundary conditions that show that the founder‐CEO's prior managerial experience in start‐up firms positively moderates the founder‐EO relationship, while contrary to expectations, CEO ownership diversification has no effect on the negative association between ownership and EO. Thus, our study adopts a corporate governance perspective to explain how variations in EO across small firms are driven by the goals and motivations of its leader. Our research also shows that in small, private firms the balance of power is tipped in favor of the CEO rather than the board of directors. Finally, we underline the importance of adopting alternative theoretical lens like stewardship and principal‐principal agency, given that traditional principal‐agent problems are largely mitigated in the small firm context.     

Organizational Ambidexterity and Innovation Performance: The Moderating Effect of Entrepreneurial Orientation

The influence of organizational ambidexterity on innovation and the growth of enterprises has gradually become an important research topic in the field of strategic management and organization theory. This paper builds up a theoretical framework of the relationship between organizational ambidexterity and innovation performance with regards to corporate entrepreneurship orientation. We select 175 companies from high and new technology industries in China’s three large cities, Beijing, Tianjin and Dalian, as samples to carry out an empirical test. We find that the balance and complement of organizational ambidexterity are positively correlated with the innovation performance of enterprises; a corporate entrepreneurial orientation has a significantly moderating effect on the relationship between the balance dimension of organizational ambidexterity and innovation performance, yet it has no significant positive moderating effect on the relationship between the combined dimension of organizational ambidexterity and innovation performance.     

Lagging Effects of the Use of Activity‐Based Costing on the Financial Performance of Small Firms*

This paper contributes to the earlier small business literature by investigating the lagging effects of the use of activity‐based costing (ABC) on small firms' performance. Moreover, we examine if the small firms' past financial performance drives the adoption of ABC and explore whether the extent of ABC use leads, in turn, to improvements in firms' financial performance in the immediate future. In sum, the survey results indicate that small firms with adequate financial resources as well as firms experiencing declining growth tend to use ABC and such use facilitates their subsequent growth and profitability. Small firms seem to benefit from using ABC.     

Market Orientation, Innovativeness, Product Innovation, and Performance in Small Firms

Most research on market orientation, innovation and performance is related to big enterprises and small and medium-sized enterprises (SMEs). In this study a model is developed to investigate the combined effect of market orientation and innovativeness on product innovation and company performance, for small firms. A specific feature of our research is that we use an objective measure for product innovation in contrast to the self-reported measures commonly used in research on innovation. To test our model data from 152 rose growers were used. This study's results show that the owner's innovativeness permeates all variables in the model and has a positive influence on market orientation, innovation, and performance. An interesting research result is also that customer market intelligence influences product innovation positively or negatively, depending on whether the innovativeness of the owner in the new product domain is weak or strong.     

The Long‐Term Impact of Entrepreneurial Self‐Efficacy and Entrepreneurial Orientation on Venture Performance

We collected multi‐wave survey data to assess the lagged effects of entrepreneurial self‐efficacy (ESE) and entrepreneurial orientation (EO) on firm performance over a five‐year period. The results of our study indicate that ESE and EO are both positively associated with firm performance but in different, and interesting, ways. Entrepreneurially self‐efficacious founder/managers may help improve the performance of very young firms but such benefits dissipate over time. An EO, on the other hand, does not appear to be particularly beneficial to very young firms. However, our results suggest an EO may play an increasingly valuable role as new firms mature.     

Small and Medium‐Sized Enterprise's Entrepreneurial versus Market Orientation and the Creation of Tacit Knowledge

The ability to create tacit knowledge is important to the competitive advantage of firms in general but is critical to the survival and growth of small and medium‐sized enterprises (SMEs). Consequently, SME strategic orientations that facilitate tacit knowledge creation, especially in hostile environments, are important factors that can enhance SME competitiveness. This paper shows that while an entrepreneurial orientation (EO) and environmental hostility are positively related to an SME's cultivation of tacit knowledge, market orientation (MO) is negatively related to SME's tacit knowledge. Additionally, we find that in benign environments, the relationship between an SME's MO and tacit knowledge becomes more strongly negative than in hostile environments.     

Having Arrived: The Homogeneity of High‐Growth Small Firms*

This study explores the homogeneity of small firms that have achieved and sustained high growth. Using a recent population of the 50 “Best Managed” Canadian firms identified as achieving high business growth for three or more consecutive years, firm homogeneity in terms of current management challenges is analyzed. In contrast to the rich body of literature available regarding the heterogeneity of managerial challenges and patterns during small business growth and development, this study finds that once small businesses begin to sustain high growth, their reported management challenges converge. We find that, controlling for location and performance, the high‐growth small firms in our population experience similar management challenges regardless of the specific firm size, revenue level, or industry. Our results challenge the “received wisdom” that suggests the managerial challenges faced by small firms during their business growth and development always vary. Management implications and future research directions are discussed.     

创业导向与中小企业创新绩效研究:小微金融的调节作用

本文以浙江省357家中小型制造业企业为研究对象,实证探讨了创业导向、小微金融支持与企业技术创新绩效之间的关系。数据分析结果表明:创业导向及其创新性、前瞻性和风险承担性三个构成维度均正向影响企业创新;小微金融的可获性及支持力度都正向调节创业导向与企业技术创新绩效之间的关系。     

Organizational Commitment in Mexican Small and Medium-Sized Firms: The Role of Work Status,Organizational Climate,and Entrepreneurial Orientation*

In this study, we examine the role of individuals' commitment in small and medium-sized firms. More specifically, we argue that employees will commit themselves to their firm based on their current work status in the firm, their perception of the organizational climate, and the firm's entrepreneurial orientation. We also examine how individuals' commitment affect the actual effort they exert vis-à-vis their firm. The study's hypotheses are tested by applying quantitative analyses to survey data collected from 863 Mexican small and medium-sized businesses. We found that individuals' position and tenure in the firm, their perception of psychological safety and meaningfulness, and the firm's entrepreneurial orientation all are positively related to organizational commitment. We also found a positive relationship between organizational commitment and effort. Finally, our findings show that organizational commitment mediates the relationship between many of the predictor variables and effort. We discuss the limitations and implications of our findings and provide directions for future research.     

Networks,Entrepreneurial Orientation,and Internationalization Scope: Evidence from Chilean Small and Medium Enterprises

During the last 20 years, the literature on internationalized small firms discussed at length the speed of internationalization, illustrating the importance of born globals. The geographic scope of small firm internationalization and its implications for international business and entrepreneurship theories has however been overlooked, especially with regard to firms based in Latin America. This study expands the research agenda on the effects of networks and entrepreneurship orientation for the internationalization strategy of small firms by examining their effects on internationalization scope. It uses survey data from small firms based in Chile. The findings suggest that the greater the number of networks utilized, the more entrepreneurs are likely to target markets based in diverse regions of the world. The study has managerial and policy implications, suggesting that nurturing diverse international networks can help entrepreneurs reach a broader number of markets.     

市场导向与出口绩效关系的研究

市场导向由顾客导向、竞争者导向和部门协作所组成,每一部分都包含对信息的获取、共享、认知和响应四个步骤。本文通过对浙江中小出口企业的实证分析,发现市场导向对出口绩效(除财务绩效)有着积极的促进作用,企业内部因素对市场导向的程度有着较高的相关性。从管理角度看。市场导向程度可以作为企业的标杆基准来识别企业的瓶颈和检验战略的有效性。     

Banking Relationships: Effects on Debt Terms for Small Spanish Firms*

This paper analyzes the effect of banking relationships on interest rates and the probability that guarantees must be provided in a sample of small and medium‐sized enterprises (SMEs). The results indicate that SMEs that work with fewer banks obtain debt at a lower cost. This seems to suggest that concentrated banking relationships reduce the uncertainty of lending to risky firms, which translates into lower interest rates. Reduction in risk could come from greater flexibility in negotiations, increased control over the investment, and mitigation of the free‐rider problem. When the relationship is exclusive, which would represent the maximum concentration, a bank can take advantage of its monopoly position and require more guarantees from a firm. SMEs that have longer‐term relationships with their bank are more likely to be required to provide guarantees. This result seems to suggest that SMEs involved in longer‐term relationships are subject to the information monopoly of the lender.     

Export Premium,Self‐selection and Learning‐by‐Exporting: Evidence from Chinese Matched Firms

This study empirically focuses on examining the hypotheses of export premium (exporters are more productive than non‐exporters), selection‐into‐exporting (more productive firms are ones that tend to become exporters) and learning‐by‐exporting (new export market entrants have higher productivity growth than non‐exporters in the post‐entry period). The propensity score matching method is used to adjust for observable differences of firm characteristics between exporters and non‐exporters, allowing an adequate ‘like‐for‐like’ comparison. We also use the difference‐in‐difference matching estimator to capture the magnitude of different productivity growth between matched new export market entrants and non‐exporters in the post‐entry period up to two years. Drawing on 2,340 Chinese firms in the period 2000–02, we find evidence for export premium and self‐selection, and once the firm has entered the export market there is additional productivity growth from the learning effect, in particular in the second year after entry.     

Board Composition in Small and Medium‐Sized Family Firms*

This study focuses on the determinants of board composition in Belgian small and medium‐sized family firms. It extends the empirical literature on board composition in private small and medium‐sized family enterprises by integrating several dimensions of the “family component” in the research model. Furthermore, using a multinomial logit model, we examine in which circumstances family firms opt for (1) a family board, (2) an inside board, or (3) an outside board. Results suggest that family‐related contingency variables are far more important than CEO‐related or control variables, giving support to the argument that board composition in family firms is a reflection of the family characteristics and objectives. Moreover, the results suggest that a resource dependence and added value perspective explain more of the variation in board composition than agency considerations.