Incentive Mechanisms,Entrepreneurial Orientation,and Technology Commercialization: Evidence from China's Transitional Economy*

Scholars view entrepreneurial orientation as an essential element of high‐performing firms. The extant research has focused extensively on the construct development related to and performance implications of entrepreneurial orientation. Prior research has also identified the significant positive impact of entrepreneurial orientation on technology commercialization. The research community has, however, yet to examine critical antecedents of entrepreneurial orientation and to investigate relevant antecedents and consequences of entrepreneurial orientation in transitional settings such as that of China. Most Chinese firms are embracing significant changes in governance incentive mechanisms as China deepens the economic reform. The extant literature provides limited insight as to how incentive mechanisms such as chief executive officer (CEO) ownership and turnover may affect firm entrepreneurial orientation in China's transitional setting. Furthermore, given the significant changes and uncertainty in the market place, China provides an ideal laboratory to examine the influence of technological turbulence on the relationship between entrepreneurial orientation and technology commercialization. Aimed at filling in these glaring gaps, this study develops a conceptual model, with institutional theory as its underpinning, to examine the relationships among governance incentive mechanisms, entrepreneurial orientation, technological turbulence, and technology commercialization. The empirical results from a sample of 607 Chinese firms reveal several important findings. The CEO ownership has a significant positive effect on entrepreneurial orientation, and CEO turnover frequency has an inverse U curvilinear impact on entrepreneurial orientation. Furthermore, entrepreneurial orientation positively affects technology commercialization, with technological turbulence positively moderating this relationship. This study makes several important contributions. First, the present article brings into sharper focus the differing impacts of CEO ownership and CEO turnover on entrepreneurial orientation. The theoretical deliberation and empirical testing offer useful insights into the formation process of entrepreneurial orientation. Second, the examination of the moderating effect of technological turbulence provides additional richness to the extant literature. In addition, different from prior studies, this study was conducted under China's transitional economy context. By integrating unique institutional arrangements and the turbulent technological environment, two key characteristics of China's transitional economy setting, the study broadened and deepened understanding of key antecedents and consequences of entrepreneurial orientation. The article also discusses managerial implications of the findings and suggests directions for future research.     

Innovativeness: Its antecedents and impact on business performance

In this study, we address three research questions: (1) Why are some industrial firms more innovative than others? (2) What effect does innovativeness has on business performance? (3) Does the linkage between innovativeness and business performance depend on the environmental context? Accordingly, we draw on various theoretical perspectives to develop hypotheses that propose market orientation, entrepreneurial orientation, and learning orientation as key antecedents to innovativeness, as well as a direct relationship between innovativeness and business performance. A model is devised and tested that examines these relationships in general and in the context of varying market turbulence. Findings confirm the validity of the model and afford various insights on the role of market turbulence in the proposed relationships. Lastly, implications are offered on the antecedents and consequences of organizational innovativeness.     

Whose Innovation Performance Benefits More from External Networks: Entrepreneurial or Conservative Firms?

The primary contribution of this research is positing and empirically supporting the proposition that learning through external networks disproportionately benefits conservative, risk‐averse firms. The construct, entrepreneurial orientation (EO), is used to discriminate conservative, risk‐averse firms from proactive, risk‐seeking firms. Organizational learning theory and social capital theory are employed to support our hypotheses. Based on a study of 1978 U.S. firms, the paper suggests that the utilization of external networks (i.e., the process of learning from information, perspectives, and insights embedded in external networks) may act as a primary driver for innovation for those firms that are either not inclined and/or do not have the capabilities to adopt entrepreneurial culture. Specifically, weak EO firms' innovation performance benefits from utilizing external networks more than strong EO firms'. This research also tests for the moderating role of firm size and finds that the negative moderating effect of EO on the external network utilization–innovation performance relationship is more pronounced in small and medium sized enterprises (SMEs) than large firms.     

Business model innovation: The effects of exploratory orientation,opportunity recognition,and entrepreneurial bricolage in an emerging economy

Business model innovation takes shape through a process of experimentation. This study holds that exploratory orientation is a key initiating factor of the experimentation process, and opportunity recognition and entrepreneurial bricolage both are actions constituting this process and thereby serve as conduits between exploratory orientation and business model innovation. Based on a survey data of Chinese firms, this study finds the positive relationship between exploratory orientation and business model innovation is mediated by opportunity recognition and entrepreneurial bricolage. The findings not only enrich the discipline’s knowledge on the antecedents of business model innovation but also extend the implications of exploratory orientation, opportunity recognition, and entrepreneurial bricolage to business model innovation.     

Entrepreneurial Orientation and Firm Performance: Drawing Attention to the Senior Team

Prior studies have argued entrepreneurial orientation (EO) plays an important role in explaining firm performance. This study aims to assess how senior team attributes moderate the relationship between EO and firm performance. For this purpose, an attention‐based perspective is adopted, focusing on attention scope as well as distributed and situated attention. By considering the role of senior team heterogeneity in broadening the attention scope of senior teams and the role of senior team shared vision in aligning distributed attention across organizational functions, this research investigates how senior teams may enhance the value‐creating potential of EO. In addition, we assess situated attention by including the notion of environmental dynamism and examining whether the role of the senior team attributes is contingent upon environmental conditions. Using a time‐lagged sample of 346 firms operating in various industries, we find that senior team heterogeneity helps firms to leverage their EO and improve their performance. Moreover, once environmental conditions are taken into account, results indicate that the absence of heterogeneity at senior team level may be particularly detrimental for firms operating in stable environments. The direct moderating effect of shared vision on the relationship between EO and performance is not substantiated. However, senior team shared vision has a positive impact for firms operating in dynamic environments, providing a premium for firms aiming to realize the inherent value of EO. Our research provides important implications for senior teams aiming to leverage their EO into increased firm performance. Evidence shows that while a heterogeneous team composition and senior team shared vision may provide several benefits, these advantages may fluctuate across environmental conditions.     

Winning through innovation and marketing: Lessons from Australia and Vietnam

We examine the role of innovation and marketing, two functional capabilities that have the capacity to play a major role in creating superior marketplace performance in firms. Our study of the two capabilities and firms' marketplace performance also takes into account the contribution of entrepreneurial orientation (EO) and market orientation (MO) to our focal functional capabilities and marketplace performance. The results of a study of firms in Australia and Vietnam show innovation capability, marketing capability mediate the effects of the firm's MO on its marketplace performance. The results also show that the interaction of innovation and marketing capabilities significantly influences firms' marketplace performance more than they do individually. Finally, our results show that MO partially mediates the relationship between EO and innovation and marketing capabilities.     

Many roads lead to Rome: How entrepreneurial orientation and trust boost the positive network range and entrepreneurial performance relationship

Due to liabilities of smallness and newness for entrepreneurial firms, decisions surrounding the sufficient leveraging of diverse information, knowledge, and resources used to pursue market opportunities are critical. Prior research has emphasized that network range is essential to improve entrepreneurial performance. However, research on boundary conditions of this relationship is still scant. Based on the social capital theory, this study advances research on the aforementioned relationship by integrating different dimensions of social capital and focusing on the three-way interaction of entrepreneurial orientation (EO) and trust. Based on data from a time-lagged two-wave survey of 389 firms in an emerging economy, we confirm the positive network range-performance relationship and find that EO strengthens the relationship between network range and entrepreneurial performance. Furthermore, findings suggest that network range can generate superior performance when aligned with the high levels of EO and cognitive trust, thus confirming the proposed three-way interaction. Overall, these findings contribute to a better understanding of how to facilitate network connections to enhance entrepreneurial performance.     

To be different,or to be the same? The interactive effect of organizational regulatory legitimacy and entrepreneurial orientation on new venture performance

New ventures often encounter a strategic dilemma of whether to differentiate themselves from or to conform to other businesses in the industry. The present study joins this ongoing debate by asking the following question: How will organizational regulatory legitimacy and entrepreneurial orientation (EO) interactively impact new venture performance (NVP) in the context of emerging economies? Drawing on institutional theory, we developed competing hypotheses regarding the interactive impact of organizational regulatory legitimacy and EO on NVP. Employing a dataset of 116 entrepreneurial firms in China, results indicate that although organizational regulatory legitimacy and EO improve NVP independently, their interaction is negatively linked to performance. We derive several implications from these findings in an effort to guide future research.     

How does slack affect product innovation in high-tech Chinese firms: The contingent value of entrepreneurial orientation

Innovation scholars are interested in how slack affects product innovation in high-tech Chinese firms. We highlight that slack–innovation linkages may differ depending on whether slack is absorbed or unabsorbed, and argue that entrepreneurial orientation (EO) moderates the slack–innovation connection. Our empirical study of 308 high-tech Chinese firms suggests that unabsorbed slack is more strongly positively related with product innovation than is absorbed slack in high-tech settings. Meanwhile, firms with high levels of EO enjoy better effects between unabsorbed slack and innovation, but worse effects between absorbed slack and innovation. We also provide theoretical and practical implications and directions for future research.     

Do not miss the boat to outside-in open innovation: Enable your employees

In a highly competitive business environment, firms are increasingly opening up to external partners and gathering their knowledge to improve internal innovation processes. Although researchers have found that outside-in open innovation (OI) has a multitude of positive outcomes (e.g., improved innovation performance), few have studied its antecedents, and especially the “softer” ones. Thus, this study aims to empirically examine three “softer” drivers of outside-in OI (i.e., entrepreneurial culture, OI support, and OI enablement), based on a cross-industry sample of 104 firms. The results show that the relationship between entrepreneurial culture and outside-in OI is fully and positively mediated by OI enablement, whereas the mediating role of OI support in such relationship is not significant. This implies that entrepreneurial culture is unlikely to increase the level of outside-in OI, unless firms enable their employees, through systematic training and the deployment of teams, to effectively gather relevant knowledge from external partners.     

Solving the innovation problem in state-owned firms: The role of entrepreneurial orientation and high-commitment HR practices

Due to the inefficiency in utilizing the rich resources they have, state-owned firms in China are generally not competitive as private firms in developing innovation-related organizational capabilities. This study contributes to the existing literature by identifying an alternative mechanism that can potentially explain the negative association between state ownership and innovation capability. Specifically, this study suggests that state-owned firms have less competitive advantage in innovation because they lack entrepreneurial orientation. To provide a potential solution for this problem, this study examines an important but understudied firm strategy, high-commitment HR practices (HCHR), and investigates the roles it plays on enhancing innovation capability by promoting an entrepreneurial orientation in state-owned firms. More importantly, by studying the contingent effect of firm business nature, this study identifies the boundaries of the positive effect of HCHR.     

Entrepreneurial orientation and SME performance in China’s changing environment: The moderating effects of strategies

Recent research has found an inverted U-shape relationship between entrepreneurial orientation (EO) and firm performance in the Chinese context. Building on Miles and Snow??s (1978) strategy framework and Scott??s (1995) country institutional profile, we propose that prospector and analyzer strategies align better with entrepreneurial orientation to allow firms to fully benefit from their risk-taking, proactiveness, and innovativeness. Data collected from 155 SMEs in China confirmed that prospector and analyzer strategies alleviated the curve significantly. The defender strategy enhanced the curvilinearity, yet this moderating effect was insignificant. Implications for policy-makers, international businesses, and entrepreneurial firms in China are discussed.     

Can entrepreneurial orientation improve R&D alliance performance? An absorptive capacity perspective

Research and Development (R&D) alliance studies maintain that alliance partners’ entrepreneurial interactions that pursue innovation opportunities through collective exploitation and exploration of knowledge resources lead to alliance success. Despite the importance of productive resource exchange and generation through such interactions, performance-by-alliance mechanisms remain under-researched. In this study, we develop a theoretical framework hypothesizing that the entrepreneurial orientation (EO) of alliance firms, which underlies their approach to seeking and utilizing resources productively, has a potential impact on their R&D alliance performance, depending on their absorptive capacity (AC). To specify the value creation and capture mechanism in the alliance, we adopt two performance indicators: technological competitiveness and business performance. Findings from a study of 218 small technology-intensive firms conducting R&D alliance projects show that EO translates into business performance through technological competitiveness and that AC leverages the alliance performance implications of EO. The results suggest that EO–AC complementarity is a strategic stimulant that triggers firms to extract greater benefits from R&D alliances.     

Antecedents and Consequences of Unlearning in New Product Development Teams

Unlearning, which first appeared almost 30 years ago as a subprocess of the organizational learning process, has received only limited attention in the literature. Rather than building on empirical research, the existing scholarship is largely anecdotal, aimed at reviewing the literature and generating new insights. Further, unlearning studies tend to analyze the organizational level and neglect smaller units such as work groups and teams. To address this gap in the understanding of unlearning, this article empirically investigates unlearning in work groups in general and new product development (NPD) teams in particular. This study, based on the literature of organizational memory and change, operationalized team unlearning as changes in beliefs and routines during team‐based projects and then discussed the importance of unlearning behavior in NPD teams. Specifically it was argued that unlearning guards beliefs and routines against rigidity to cope with environmental turbulence. This is of particular note when rigid product development procedures and group beliefs inhibit the reception and evaluation of new market and technology information and reduce the value of perceived new information. To test the antecedents and consequences of the team unlearning model, 319 NPD teams were investigated. Using structural equation modeling, it was found that (1) team crisis and anxiety have a direct impact on team unlearning; (2) environmental turbulence also has a direct impact on both team crisis and anxiety and team unlearning; and (3) after team beliefs and project routines have changed, implementing new knowledge or information positively affects new product success. Specifically, the findings revealed that changes in team members' collective beliefs in accordance with environmental changes and the in‐process planning or adjustment of project work activities and procedures as the projects evolve enable teams to develop and launch new products successfully. Also, results indicated that team crisis and anxiety in NPD projects assist team members in revising their previous beliefs and routines when project teams are performing in turbulent environments. This article suggests that managers can enhance team unlearning by (1) creating a sense of urgency by introducing an artificial crisis; and (2) avoiding the groupthink phenomena by bringing in an outsider to challenge existing policies and procedures, and training the team on lateral thinking. In addition, managers can plan project activities in a flexible manner that allows changes as the project evolves to facilitate team unlearning. However, managers should also be cautious when promoting team unlearning. Without careful and considerable evaluation, change in beliefs and routines can cause information/knowledge loss.     

Analyzing the Effects of Market and Resource Orientations on Innovative Outcomes in Times of Turbulence*

Innovation and new product success are often a core precursor to superior performance. Although research has examined the resource‐based view (RBV) and market orientation (MO) individually, limited research has evaluated and compared their effect on innovation and new product success in one study. Furthermore, relative to MO, comparatively less research has been conducted to evaluate the relationship between organizational learning (OL) and the RBV to examine their effects on a firm's ability to innovate and succeed. The purpose of this paper is to investigate the role of environmental variables (i.e., market turbulence and technological turbulence) on the relationship between two strategic orientations and performance and to extend a previous study. Specifically, it aims to evaluate whether a focus on the customer or the firm will impact innovation, product quality, new product success, financial performance, and customer value in settings of varying environmental turbulence. Data were collected from more than 200 senior executives. LISREL was applied to evaluate the relationships under examination. Interaction effects were assessed using a nested goodness‐of‐fit strategy using a multiple‐group solution. Results depicted significant relationships between organizational learning and both resource and market orientations. Significant relationships also emerged between each strategic orientation and various performance indicators. Interaction effects were observed for market turbulence on customer value and market orientation as well as for resource orientation (RO) on innovation in times of high technological turbulence. The paper concludes with a review of theoretical and managerial implications to stimulate further debate. These results suggest that managers seeking innovation and new product success cannot afford to ignore the environment and do so at their peril. The provision of customer value is essential for positive financial performance. Thus, management needs to monitor environmental contexts so that they are able to adjust their investment in market orientation and the requisite processes that enable its implementation. Conversely, the effects of RO on performance are more robust across industry conditions, presenting an alternative avenue for management to achieve market superiority. The paper concludes with a review of theoretical and managerial implications to stimulate further debate.     

Antecedents and consequences of the strategic orientations in new product development: The case of Chinese manufacturers

The objective of the present study is to advance the understanding of the role of the strategic orientation of the firm for successful new product development (NPD), in the context of Chinese manufacturing firms. Through field research accompanied by a review of the related literature, this study identifies customer orientation and technology orientation as crucial strategic components that are important to successful new product development. This research proposes a conceptual model of strategic orientations, in which firm-internal (organizational support) and -external (environmental turbulence) factors are expected to influence strategic orientations, which, in turn, impact NPD performance. The model is tested using data collected from a large-scale survey of 232 manufacturing firms in China. The results largely support the hypotheses derived from the conceptual model. First, organizational support and environmental turbulence have a positive influence on the implementation of strategic orientations. Second, the two strategic orientations show a different pattern of performance implications.     

When Does Customer Orientation Hinder (Help) Radical Product Innovation? The Role of Organizational Rewards

Prior marketing literature offers a compelling theoretical rationale in support of two contradictory propositions, namely, that customer orientation is negatively related to (i.e., hinders) radical product innovation and that customer orientation is positively related to (i.e., helps) radical product innovation. In this research, the contextual conditions that determine the validity of these contradictory propositions are identified. Drawing from the literature on organizational rewards, two types of organizational rewards—outcome based and strategy based—are identified as being the key contextual conditions. It is hypothesized that when outcome‐based rewards are in effect, customer orientation is negatively related to radical positive innovation and, that when strategy‐based rewards are in effect, customer orientation is positively related to radical product innovation. Results from a survey of 156 manufacturing firms, and from a survey of 97 of their customers, provide support for these hypotheses. While prior research has attempted to explain the contradictory nature of the relationship between customer orientation and radical product innovation using typology‐based and mediator‐based approaches, the contextual condition‐based approach has not been well developed. This gap is addressed by the present research. From a practitioner perspective, the research is important because it identifies a concrete mechanism that new product development managers can deploy, in tandem with customer orientation, if they intend to generate radical product innovations. Given the potential gains that flow from radical product innovation, the research findings are expected to be of considerable interest to managers of new product development projects.     

Inconclusive Innovation “Returns”: A Meta‐Analysis of Research on Innovation in New Product Development*

This research on studies that have empirically examined the construct innovation provides a meta‐analysis of the marketing, management, and new product literatures. The study extends previous meta‐analytic works by drawing on 70 independent samples from 64 studies (published from 1970 to 2006) with a total sample size of 12,921. The overall objective is to propose a synthesized model that includes technological turbulence, market turbulence, customer orientation, competitor orientation, organizational structure, innovation, and new product performance. Six baseline hypotheses were developed and tested. The goal is not only to derive empirical generalizations from these literatures but also to investigate sources of inconsistencies in the findings. Four substantive and two methodological artifacts were tested to determine whether they moderate model relationships (i.e., whether the effect sizes differ for any of the six baseline hypotheses). The potential moderators were project versus program level of analysis, the nature of change required by the innovation, service versus product, country of the data's origin, continuous versus categorical measurement, and the number of scales used. From a theoretical perspective, the results corroborated the resource‐based view framework regarding the determinants and the performance outcome of innovation. New product performance (the performance outcome) is a direct consequence of innovation, and this effect is stronger when the data are collected from Western countries. This relationship holds regardless of whether the level of analysis is the new product program versus project or whether the innovation is a product or a service, a robust result relevant to researchers and managers alike. As for the determinants of innovation, the results were as follows. While market turbulence is overall not a direct antecedent to innovation, technological turbulence is overall positively related (especially when market discontinuities are considered or when the data are collected from Asian countries). Customer orientation encourages new product innovation overall, but especially at the program (as opposed to project) level in Western countries. The effect of competitor orientation is also positive. The results for either orientation construct or either turbulence construct held whether the level of analysis was project versus program or whether services versus products were examined. However, the relationship of mechanistic organizational structures to innovation, although positive in the overall sample, did vary by product (positive) versus service (negative).     

An empirical study of SOEs' market orientation in transitional China

Using institutional theory, this paper investigates the antecedents and outcomes of market orientation in state-owned enterprises (SOEs) in transitional China. A survey of 274 SOEs demonstrates a strong positive relationship between market orientation and various measures of organizational performance. Additionally, market competitive pressure, formalized corporate governance, and less government control are found to promote market orientation of SOEs in the transitional period. These results support the views that market orientation leads to better performance and that institutional factors should be considered in studies of strategy in Chinese firms. This paper was supported by NSFC (70472039, 70272023).     

Effects of entrepreneurial marketing on new ventures' exploitative and exploratory innovation: The moderating role of competitive intensity and firm size

EM is a strategic orientation that draws on seven elements: proactiveness, opportunity-focus, risk-taking orientation, innovation orientation, customer satisfaction orientation, value creation and resource leveraging. These elements reinforce each other in a synergistic manner. We investigate how EM affects a new venture's exploitative and exploratory innovation activities. To identify conditions under which EM is more or less effective, we analyze the relationship between EM and exploitative and exploratory innovation under conditions of high and low environmental competitiveness and high and low levels of firm size. Based on survey data from 146 German new ventures up to ten years old in the B2B sector, our results provide evidence of a significant and positive effect of EM on exploitative and exploratory innovation. We find, further, that under conditions of high competitive intensity, the effects of EM on exploratory innovation strengthen, while low levels of competitive intensity do not affect the relationship between EM and exploratory innovation. Our results also show that for larger firms, the positive effects of EM on exploitative innovation are weaker, while for smaller firms, those effects are stronger.