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.     

Knowledge‐based resources,entrepreneurial orientation,and the performance of small and medium‐sized businesses

While theory suggests that management has discretion in manipulating resources in order to build competitive advantage, resource‐based research has focused on the characteristics of resources, paying less attention to the relationship between those resources and the way firms are organized. In explaining performance, entrepreneurship scholars have focused on a firm's entrepreneurial strategic orientation (EO), leaving its interrelationship with internal characteristics aside. We argue that EO captures an important aspect of the way a firm is organized. Our findings suggest that knowledge‐based resources (applicable to discovery and exploitation of opportunities) are positively related to firm performance and that EO enhances this relationship. Copyright © 2003 John Wiley & Sons, Ltd.     

Promoting innovation through the accumulation of intellectual capital, social capital, and entrepreneurial orientation

This study attempts to explore how a firm's operational mode can reinforce the advantages of intellectual capital on innovation. Specifically, the main purpose of this study is to develop a comprehensive research model to integrate the interrelationships among social capital, entrepreneurial orientation, intellectual capital, and innovation. In addition to identifying the influences of intellectual capital on innovation, this study focuses in particular on the mediating effect of intellectual capital and the moderating effects of social capital and entrepreneurial orientation on innovation, which have largely been neglected in previous literature. The results support the mediating role of intellectual capital and the moderating roles of entrepreneurial orientation and social capital on innovation. Specifically, firms that have higher levels of social capital and entrepreneurial orientation tend to amplify the effects of intellectual capital on innovation.     

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.     

Social capital and creativity in R&D project teams

The existing research contributes to our understanding about the value of social capital in a wide range of social science disciplines; however, it does not well address the role of social capital in creativity for research and development (R&D) project teams in a given context. Using a sample of 54 R&D project teams in high-technology firms of Taiwan, we examined the impacts of social capital on creativity of R&D project teams from an intra-team perspective. Results of factor analysis revealed four factors extracted from the concept of social capital, namely social interaction, network ties, mutual trust, and shared goals. Findings suggested that social interaction and network ties had significant and positive impacts on creativity of R&D project teams, but mutual trust and shared goals did not. Managerial implications for managing social capital in R&D project teams are discussed.     

Inter-organizational meets inter-personal: An exploratory study of social capital processes in relationships between Northern European and ethnic Chinese firms

This paper deals with social capital in a business network setting focusing on three aspects of social capital: social interaction, social bonds and trust. The paper argues that because of variations in underlying principles and inter-organizational business practices between different countries and culture, social capital processes will take different forms and place different levels of importance on relationships in different countries. The paper investigates how northern European managers perceive social interaction, social bonds and trust in conducting business with ethnic Chinese business partners. The explorative study builds on interviews with 28 Finnish and Swedish managers in Singapore, Malaysia and Thailand. The findings of the study indicate that when northern European and ethnic Chinese firms develop trading relationships, the resulting relationship is neither Nordic nor Chinese. Both parties deviate from their native behaviour and a new type of relationship evolves as the exchange partners interact.     

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.     

Effect of entrepreneurial orientation,collectivistic orientation and swift Guanxi with suppliers on market performance: A study of e-commerce enterprises

This study investigates the influence of entrepreneurial orientation (EO) and swift Guanxi (three dimensions: mutual understanding, reciprocal favor and relationship harmony) on perceived value of suppliers and market performance of e-commerce enterprises, and the moderating effect of collectivistic orientation on the relationship between EO and swift Guanxi. The results obtained from a sample of 153 Chinese e-commerce enterprises using SEM-PLS analysis show that market performance of this kind of businesses is favorably influenced by their EO, but not by their swift Guanxi with suppliers. The findings confirm EO’s direct effect on swift Guanxi and its indirect effects on perceived value of suppliers, mediated through reciprocal favor and relationship harmony. In addition, the findings verify the negative moderating effect of collectivistic orientation on the EO-mutual understanding link. The study's implications and future research directions are discussed.     

Entrepreneurial firms’ network competence,technological capability,and new product development performance

Successfully developing new products is critical to an entrepreneurial firm’s continued success. Based on the resource management model, this study aims to answer the key research question: how entrepreneurial firms leverage network competence and technological capability to enhance their new product development (NPD) performance in a turbulent environment. Using data collected from 134 entrepreneurial firms in China, we investigate the performance effects of network competence and technological capability, and the moderating effects of technological turbulence and market turbulence. Our findings show that network competence has a positive impact on NPD performance and technological capability plays a mediating role between network competence and NPD performance. Technological turbulence enhances the performance effects of network competence and technological capability; market turbulence advances the performance effect of network competence, but fails to exert significant negative impact on that of technological capability. We discuss managerial implications of our findings and offer directions for future research.     

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.     

Understanding firms’ relative strategic emphases: An entrepreneurial orientation explanation

Top management’s choices regarding strategic emphases (e.g., value-creation versus value-appropriation) are an important component of firms’ success. While extant research has explored the effects of strategic emphasis on firm performance, few studies have examined the factors that affect top management’s strategic emphasis choices. The study addresses this gap by examining the relationship between management’s entrepreneurial orientation and its relative strategic emphasis on value-creation versus value-appropriation. In addition, it investigates the moderating roles of relative performance, compensation strategy, and capital market patience, on the above relationship. Using a multi-source dataset of 337 Standard & Poor (S&P) 500 companies from 2007-2015, we find that entrepreneurially oriented managers tend to focus more on value-creation (e.g., new product development) over value-appropriation (e.g., advertising), but this influence is contingent on, at least, three factors: (1) relative firm performance, (2) compensation strategy, and (3) capital market patience. The study provides a broad theoretical foundation that explicates key factors that influence firms’ resource allocation decisions.     

Organizational boundaries and economic performance: An empirical study of entrepreneurial computer firms

This research examines the relationship between the organizational boundaries of entrepreneurial firms and their economic performance. The theoretical basis for this work is transaction cost economics research regarding when internalizing certain activities will be preferred over contracting. To consider the conditions under which contracting is costly we compare across three functional areas and three firm strategies. The results of a longitudinal analysis of 122 entrepreneurial firms in the computer industry show that performance effects are associated with contracting activities and that product market strategies moderate the performance effects of contracting. The results are mixed in their support for the predictions of transaction cost economics.     

Incorporating non-academics in academic spin-off entrepreneurial teams: the vertical diversity that can make the difference

To enhance the development of academic spin-offs, surrogate (external) entrepreneurs are often added to the entrepreneurial team comprising academics. Existing research focused on entrepreneurial team diversity (horizontal member differences) and has mixed results. Vertical member differences (i.e., inequality) between academics and non-academics are not addressed. However, strategic decision making is one of the main responsibilities of an entrepreneurial team. Decision-making power, as reflected in ownership, in particular, is thus of the essence. Based on a sample of 164 Italian academic spin-offs, this article investigates the impacts of both horizontal and vertical heterogeneity of entrepreneurial teams on the firms’ performance. The findings confirm that surrogate entrepreneurs generally make a positive contribution to academic spin-off performance but become counter-productive when their presence overpowers that of academics.     

Social networks and a new venture's innovative capability: the role of trust within entrepreneurial teams

This paper examines the effects of social networks and trust on a new venture's innovative capability. The concept of social networks is studied as the configuration of internal and external social networks for entrepreneurial team members. This study collected information about 112 technology-based entrepreneurial teams from the 65 research-based incubators in Taiwan. The results indicate that both internal and external social networks have marginally positive impacts on a new venture's innovative capability, and trust within the entrepreneurial teams is found to be as important a moderator for the relationship between external social networks and innovative capability. Moreover, results reveal that a higher level of trust between entrepreneurial team members can reduce the external social networks spanning the boundaries of the new venture and therefore may cause a 'not invented here' syndrome which will reduce its innovative capability.     

A cross-cultural comparison of the network capability development of entrepreneurial firms

The business-to-business network literature has made interesting and insightful contributions in relation to networks as a core trajectory for external resource acquisition for the small, entrepreneurial firm. Using the micro-brewing industry in Ireland and Belgium as an empirical base, the purpose of this paper is to extend this research through examining the relationship between national culture and the development of network capability in an entrepreneurial context. Findings from in-depth interviews with fourteen firms, and analysed in light of Hofstede's five dimensions illustrate that culture matters. Low power distance facilitated network capability development through wider network engagement. High masculinity and individualism negatively impacted network capability development as evidenced by a lack of experience in interaction, a desire for control and independence and minimal information sharing. Strong uncertainty avoidance scores allowed for joint problem-solving and industry cooperation whereas a short-term orientation led to more transaction-based exchange within the value chain. The core contribution of this paper stems from it being the first rigorous investigation regarding how national culture impacts network capability development in a business-to-business network context.     

Start-ups,entrepreneurial networks and equity crowdfunding: A processual perspective

This paper outlines findings from a large-scale interview based study of start-ups who obtained equity crowdfunding in the UK. It takes a novel integrative approach towards the analysis of entrepreneurial networks by examining both personal and business networks involved in the equity crowdfunding process. Adopting a processual perspective, the empirical findings show that networks and social capital play a critical role in the crowdfunding process. Start-ups leverage, build and draw upon a complex array of network actors and “ties” as they move through the different stages of their crowdfunding journey. The paper shows that this form of funding confers important relational benefits to recipients which amount to “more than money”. It concludes that equity crowdfunding is a highly “relational” form of entrepreneurial finance, requiring holistic forms of empirical investigation. Implications for theoretical development, managerial practice and further research are outlined.     

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.     

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.     

How entrepreneurial orientation can leverage innovation project portfolio management

Innovation project portfolio management (IPPM) is a key task in R&D management because this decision‐making process determines which R&D projects should be undertaken and how R&D resources are allocated. Previous research has developed a good understanding of the role of IPPM in R&D strategy implementation and of successful IPPM practices. But the fundamental orientations that drive the strategy formation and implementation process have never been investigated in the context of IPPM, and it is unclear whether successful practices are equally valid for different strategic orientations. This study, therefore, investigates the moderating impact of a firm’s entrepreneurial orientation on the relationship between strategic portfolio management practices and portfolio success. An empirical analysis of 257 firms shows that both innovativeness and risk taking as entrepreneurial orientation’s dimensions positively moderate the relationship between managerial practices and performance. Specifically, we find that firms high in innovativeness profit more from stakeholder engagement compared to firms low in innovativeness. Firms high in risk‐taking profit more from a clearly formulated strategy. With increasing innovativeness and risk‐taking propensity, firms also profit more from business case monitoring and agility in portfolio steering. The results suggest that a firm’s entrepreneurial orientation can leverage the effect of IPPM practices. Vice versa, a lacking entrepreneurial orientation can render these practices ineffective. Strategic orientation and IPPM practices should, therefore, be aligned with each other to enable firms to better implement their strategy and generate competitive advantage.     

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.