The role of entrepreneurial orientation for entrepreneurial firm start-up and/or growth.
“Entrepreneurship is all about deferred gratification”, (Murthy, n.d.)
Entrepreneur as defined by Merriam-Webster is “one who organizes, manages, and assumes the risks of a business or enterprise” (merriam-webster, 2017), and the phenomenon of setting up that business or enterprise is termed entrepreneurship.
What makes a person a successful entrepreneur? According to Steve Tobak “perseverance” is the most important trait for an entrepreneur. He believes that one must be patient and passionate with one’s idea for it to grow. He uses the examples of Larry Page and Sergey Brin, founders of Google Inc. who began with just $ 100,000. He also further points out that in 1999 Google had only 7.8 % of the search engine market share (Tobak, 2016). It becomes very crucial for any aspiring entrepreneur to understand how entrepreneurial orientation will affect the growth of the firm.
The choice between viewing EO as a dispositional versus behavioural phenomenon should be made in consideration of two key observations. First, while we are sympathetic to the argument that many different units or levels of analysis can manifest entrepreneurship, the scholarly community has largely coalesced around the understanding that EO is a firm-level phenomenon (more precisely, EO is a strategic business unit (SBU) level phenomenon where the “unit” can range from a non-diversified small to medium-sized enterprise (SME) to a single business unit of a multi-business firm. As such, EO levels can vary considerably across SMEs or across the units of multi-business organizations.) This is not to suggest that individuals cannot, for example, exhibit a proclivity toward entrepreneurial thought and action. However, stretching the EO concept to other levels or units of analysis for the sake of generalizability may dilute the construct's value by creating ambiguity, for example, about the appropriate indicators of the construct at a particular level.
Entrepreneurial orientation is a multi-faceted paradigm which is usually applied to an organisational level, characterising the firm’s entrepreneurial behaviour and including one or more of the three dimensions of risk taking, (lexicon.ft.com, n.d.). Market Orientation is When a business concentrates on designing and selling products that satisfy customer needs in order to be profitable. (exicon.ft.com, 2017).
This essay will critically review the following two articles with regards to entrepreneurial orientation in terms of different roles while also looking at the study of entrepreneurial firms in a developing country. The following articles have been chosen for this purpose.
1.Dai, L., Maksimov, V., Gilbert, B. A. & Fernhaber, S. A., 2013. Entrepreneurial orientation and international scope: The different roles of innovativness, proactiveness and risk-taking. Journal of Business Venturing, 03 09, 29(4), pp. 511-524.
2. Boso, N., Story, V. M. & Cadogan, J. W., 2013. Entrepreneurial orientation, market oreintation, network ties and performance: Study of entrepreneurial firms in a devloping country. Journal of Business Venturing, 28 05, 28(6), pp. 708-727.
The articles were sourced from ELSEVIER online database after searching for journals rated 4 and above from the the Association of Business Schools 2015 document which lists various journals catagorised under various headings like finance, human resource, entrepreneurship and accouting etc., the articles are from the Journal of Business Venturing which is rated 4 in the ABS Journal. The articles were searched online and found in the ELSEVIER online database.
The articles were published in 2013 and 2014. The articles were searched using various key words like entrepreneaurial orientation, growth, startup, small medium enterprises, social network ties, market orientation, relation between growth and orientation and business. while one article deals with the entrepreneurial orientation in terms of key variables the other article is a study of an entrepreneruial firm in a developing country. Therefore both the articles together help one understand the relationship between entrepreneurial oreintaion and growth in terms of innovativeness, proactiveness and risk-taking and the same time also offereing an insight into how entreperneurial firms develop.
The first article ‘Entrepreneurial orientation and internation scope: The diffential roles of innovativeness, proactivness and risk-taking’ by (Dai, et al., 2013) follows a qualitative approach. A qualitative appraoch is based on data obtained through surveys and interviews of a well defined sample. The authors for this article used a sample of 500 small medium enterprises that responded to a survey under the agesis of National Fedration of Independent Business (NFIB). The poll was titled National Small Business Poll on International Trade. The sample was drawn from the national Dunn & Bradstreet files by following a two step process.
Fristly the SME’s were selected through a random stratified sample for a extremely varied distribution of firms based on number of individuals employed (1-9). Similarly a second sample was also selected from firms with less than 250 employees. To ensure that there was no bias due to National Fedration of Independent Business survey being self reported, the use of SME’s key decision maker as an informant was ensured.
There are two variables for this method, dependent and independent. The dependent variables were the number of foreign countries in which sales were received over a 3 year period. The independent variables were measured using Covin and Slevin (1989) nine item scale.
Table 1: Comparison between the two articles.
The second article “Entrepreneurial orientation, market oreintation, network ties and performance: Study of entrepreneurial firms in a devloping country” is case study of entrepreneurial firms based in Ghana. The sample size was intially 312 firms which had to meet set criteria. The study was conducted in two phases with a one year lag, phase 1 was done by conducting interviews and surveys using a questionaire which was done face to face. Of the 312 firms 229 sent in complete responses and of these 229 firms 221 firms sent in the complete response for the second phsase. A year after the second study a follow up study was conducted. This ensures sufficent data for final calculation.
There are defined measures of construct in the article namely, firm performance, entrepeneurial orientation, market oreintation, social network ties, informant evaluation and also control variables like complexity and firm size.
From the findings of the article by (Dai, et al., 2013) it appears clearly that the authors have established the hypothesis raised by them in the article have been proved with certain limitations still remaining.
The article has a very clear structure and has been well researched. The auothrs have ensured that fallacies like the hawthorne effect are avoided and the data obtained be of the utmost validty. The authors also acknowledge the scope for further research and improvements on their findings.
The second article by (Boso, et al., 2013) has more detailed findings as they have used both qualitative data and quantitative data to answer their hypothesis. The article presents its findings in two parts, firstly, it disagrees with the earlier findings of previous researchers and shows that entrepreneurial orientation and market orientation are equally important for the success of an entrepreneurial firm. Secondly, the social process out side the firm are further enhanced when when the entrepreneurial oreintation and market oreintation are high.