E U R O P E A N M A S T E R S O F B U S I N E S S S T U D I E S
LINKINGENTREPRENEURIALORIENTATIONTOFIRMPERFORMANCEINAPOST-
SOCIALISTMARKETCONTEXT:THEMODERATINGROLEOFENVIRONMENTAND
AGE
08Fall
DAVIDKOVACS
2015-2017
MASTERTHESISEXPOSÉ
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 2
ABSTRACT
Title: Linking entrepreneurial orientation to firm performance in post-socialist
market context: the moderating role of environment and age
Keywords: strategic management, entrepreneurial orientation, business performance,
environmental dynamism, environmental hostility, age as a moderator
Background: Nowadays, corporate entities obsessively chase “new entries” and “blue
oceans” (Mauborgne & Chan, 2005) to gain competitive advantage and positive financial
indicators. The tendencies evince an optimist impact of entrepreneurial orientation on
business performance, namely on financial and non-financial measures. Beyond the
aforementioned relationship, there are permanently presented impulses effecting the
business environment, in which the companies operate such as environmental and
organizational factors.
Purpose: The research outcome of this study aims to get a better understanding of the
effect of entrepreneurial orientation on business performance in a post-socialist context.
Different moderators are introduced into the bivariate relationship in order to get a deeper
knowledge about the chosen market. The market of the United States is overwhelmingly
was studied retrospectively, with this study we aim to penetrate into a so far untouched
country of Europe, namely Hungary. The reason behind why the referred country was
selected is further explained in the description.
Methodology: A mixed, hybrid technique applied to collect the desired data, which
investigated further with statistical methods to detect the factors’ interrelationship.
Qualitative technique carries out the core of the study, supplemented with in-depth, face-
to-face qualitative interviews to gain more insights from CEOs and upper managers. Laid
down control variables are lacking from the sample criteria in order to obtain a superior
representative database.
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 3
TABLE OF CONTENTS
ABSTRACT ....................................................................................................................... 2
TABLE OF CONTENTS ................................................................................................. 3
LIST OF ABBREVIATIONS .......................................................................................... 4
INTRODUCTION AND BACKGROUND .................................................................... 5
Defining Entrepreneurial Orientation ................................................................................. 8
Concept of Business Performance ...................................................................................... 9
Business environment ....................................................................................................... 12
Firm age as an exogenous variable ................................................................................... 15
LITERATURE REVIEW .............................................................................................. 16
METHODOLOGY, RESEARCH DESIGN AND SAMPLING ................................. 20
Sampling and control variables ......................................................................................... 21
Applied statistical model ................................................................................................... 22
WORK PLAN ................................................................................................................. 22
OVERVIEW OF CHAPTERS ...................................................................................... 23
REFERENCES ................................................................................................................ 25
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 4
LIST OF ABBREVIATIONS EO – Entrepreneurial Orientation
U.S. – United States
SBU – Strategic Business Unit
R&D – Research and Development
FDI – Foreign Direct Investment
ROI – Return On Investment
ROE – Return On Equity
SME – Small and Medium-sized Enterprises
C-level – Chief - level
LIST OF FIGURES Figure 1: Circumscribing the domain of business performance
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 5
INTRODUCTION AND BACKGROUND Entrepreneurial orientation (EO) magnetized numerous studies retrospectively, a
fortiori in the recent past. Today’s dynamic and turbulent nature of business environment
constantly shortens model and product life cycles and forces companies to apply new
strategies. Consequently, “the future profit streams from existing operations are
uncertain” and firms have to employ adaptability and engage in rejuvenation to survive
(Wiklund & Shepherd, 2005, p. 72). Entrepreneurship activities according to Covin and
Slevin (1981) are responsible for the improvement of man’s standard of living and the
development of economic welfare. A substantial body of EO literature provides evidence
that firms engaged with entrepreneurial guidance outperform their more conservative
counterparts (Anderson, Kreisen, Kuratko, Hornsby, & Eshima, 2015).
Schumpeter’s (1976) "gale of creative destruction" employed by entrepreneurship, which
commits oneself to an explicit ongoing phenomena in our global economy. Corporate
entities are constantly persecuting new opportunities, products and business models in
order to establish superiority above their competitive environment. This simultaneous
progress permanently replaces existing models and processes with “new entries”,
haunting for the perfect design and a more profitable outcome, making destructive and
simultaneous innovativeness closely related to entrepreneurship. A “new entry”
incorporates any innovative action undertaken by an individual, strategic business unit
(SBU) or on a corporate level (Lumpkin & Dess, 1996). Those actions are responsible for
the constant changes and distortions of existing market segments and opening up new
“blue oceans”. EO redounds “new entries” and venture boldness in a domestic and cross-
national context, where innovativeness and risk-taking represents the core of those action.
Certain authors (e.g., Knight, 1997; Thomas & Mueller, 2000) indicated that dimensions
of EO may vary across countries, thus through cultures (Rauch,Wiklund, Lumpkin&
Frese, 2009). We presuppose that an innovative ad-hoc managerial decision within a
hostile and turbulent business environment might magnetize stakeholder’s accolade in a
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 6
country where uncertainty avoidance is low, such as Sweden, while in Japan it may get
punished and perceived as an absolute un-respectful and negative action.
After a comprehensive literature review on EO, we found that post-socialist, transforming
economies attracted significantly less attention from authors and researchers in the past.
There is an overwhelming literature on developed economies, such as the United States,
while other large-scale markets such as Europe, have remained partly unexplored
(Hermann, Alexander, & Matthias, 2010; Zulauf et. al., 2015; Peshkova, Urkmez &
Wagner, 2015). Ha-Brookshire (2009) noted firm entrepreneurship “has long been shown
to play a significant role in firms’ competitiveness, revitalization, and superior
performance” not just in developed economies, but also in transitional economies (p.
131). Markotte (2011) argued that; “to researchers and policymakers, the comparative
assessment of individual and organizational entrepreneurial activity may be more
revealing than the country rankings based solely on venture creation or business
ownership. These rankings have been notably used to monitor or predict the economic
performance of countries” (p. 194). Analysts, policymakers and occasionally researchers
have the tendency and willingness to make entrepreneurial intensity equal with economic
growth, as for example the Commission of the European Communities (2004).
Laukkanen, Nagy, Hirvonen, Reijonen & Pasanen (2013) conducted a research on the
role of strategic orientation on business growth between Hungary and Finland.
Emphasizing how earning orientation, entrepreneurial orientation, market orientation, and
brand orientation effect business performance in an SME context. Danis and Shipilov
(2002) concentrated on entrepreneurial development in the context of post-socialist
economies analyzing Hungary and Ukraine. They involved systematic, historical,
cultural, economic and societal factors alongside with government policies, and measured
the influence of those on entrepreneurial ventures. Although, the aforementioned, and
other studies slightly have involved the field of entrepreneurship, however, investigating
the EO – performance relationship only in Hungary is still untouched by any literature.
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 7
According to Global Entrepreneurship Monitor (GEM, 2014) the entrepreneurial activity
in Hungary is lower than the economic level would indicate. The study shows high
standards of entrepreneurial intention, which may serve as a catalyzer for
entrepreneurship and corresponding economic activities. On the other hand, Slevin and
Terjesen (2011) found there are differences in entrepreneurship perception favorability of
country populations, distinguishing between highly favorable (e.g. Ireland and United
States) and less favorable (e.g. Hungary and Japan). Hungary’s post-social, transitional
market nature and the drawn up contradictions among studies suggest further researches
are needed to understand more deeply these markets, and how the turbulent environment
effects the entrepreneurial actions. We truly believe this study will boost future
researches in Central and Eastern Europe, respectively to the upward trend of foreign
direct investment (FDI), outsourcing, and venture investment in emerging and developing
markets. In addition, this study further develops the conceptual and a posteriori
framework of scholar literature and provides another research literature to meta-analyses
towards a universally understood body.
THEORETICAL BACKGROUND AND RESEARCH QUESTIONS
We employ circumspective attempt to differentiate between entrepreneurship and
EO (Miller, 2011). Bourgeois’ (1980) strategic management literature distinguishes
between content and process of entrepreneurship; in the early stages entrepreneurship
was adequate with “going into business” and “what kind of business shall we launch?”
Alongside with the field development of strategic management, emphasis reallocated to
entrepreneurial processes embracing risk taking, experimenting with existing and future
technologies and adopting propensity to seize new opportunities (Bourgeois, 1980;
Lumpkin & Dess, 1996). The cardinal distinctive point between the two concepts is
hidden in the decoupling of “what” from “how” (Miller, 2011). Lumpkin and Dess
(1996) noted a corresponding distinction, as EO represents an entrepreneurial process that
implies how a new-borne venture is undertaken. On the other hand side entrepreneurship
refers to the substance of the process itself, highlighting the decision by addressing
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 8
attention to what is undertaken. Miller (1983) suggested a firm has an entrepreneurial
orientation if the entity “engages in product market innovation, undertakes somewhat
risky ventures, and is first to come up with proactive innovations, beating competitors to
the punch” (p. 771). From the aforementioned statement we arrive accordingly to
“innovativeness”, “risk taking” and “proactiveness” used by Lumpkin and Dess to
characterize and test the fundament of EO.
Defining Entrepreneurial Orientation
In this study we adopt Miller’s (1983) three-dimension construct in order to
measure the corporate entities’ EO. The psychometric characteristics of EO scale divide
authors into two groups regarding whether it is a reflective indicator (unidimensional
measure) (e.g., Covin & Slevin, 1989; Miller, 1983; Wiklund & Shepherd, 2005) or a
formative indicator (multidimensional measure) (e.g., Lumpkin & Dess, 1996, 2001;
Wagner, Wetzels & Winklhofer, 2005). Miller (1983) defined his three-dimension EO
scale a basic, unidimensional strategic orientation:
“In general, theorists would not call a firm entrepreneurial if it changed its technology or
product-line ('innovated' according to our terminology) simply by directly imitating
competitors while refusing to take any risks. Some proactiveness would be essential as
well. By the same token, risk-taking firms that are highly leveraged financially are not
necessarily entrepreneurial. They must also engage in product market or technological
innovation“ (p. 780).
We adopt a similar method, excluding the other two possible dimensions of EO:
competitive aggressiveness and autonomy. Studies have argued (e.g., Covin & Slevin,
1989, 1991; Covin & Covin, 1990) that if competitive aggressiveness and proactiveness
are distinct, independent concepts suggest that proactive organizations compete with
competitors on the market. Based on Miller’s (1983) three-dimension strategic posture
scale, Covin and Slevin (1989) described the factors in the following way:
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 9
“An entrepreneurial strategic posture is characterized by frequent and extensive
technological and product innovation, an aggressive competitive orientation, and a strong
risk-taking propensity by top management” (p. 79).
The overwhelming majority of literature measuring EO use autonomy as the extent to
which freedom is granted to individuals, teams and SBUs inside a corporate culture to
boost productive brainstorming sessions and to generate promising ideas to foster
entrepreneurship occur. Organizational autonomy is often hallmarked by a two-step
process involving a project definition undertaken by one or several organizational
members or teams, and a project impetus carried out by individuals or champions who
sustain the autonomous effort (Lumpkin & Dess, 1996). Our research study places
business organizations as entities under the spotlight, so we adopt Miller’s (1983) three-
dimension strategic posture scale to measure EO.
Therefore a scale will be developed in order to measure strategic posture on these three
dimensions according to Covin and Slevin’s (1989), Miller’s (1983) scales and
Khandwalla’s (1977) “ENTRESCALE”.
Concept of Business Performance
Business performance improvement is the heart of strategic management
suggesting that the relationship between EO and performance is within an inch
inseparable serving as a supreme benchmark of EO researches. Not just in longitudinal,
but within chronologically ad-hoc studies, business performance serves as a “time test of
any strategy” and utilized as the foremost measure of success (Venkatraman &
Ramanujam, 1986). To define business performance, we adapt Venkatraman and
Ramanujam’s (1986) domain model (Figure 1) that “reflects the perspective of strategic
management” in which business performance is “the subset of the overall concept of
organizational effectiveness” (p. 803). We employ two additional dimensions inside the
financial performance core to deepen the model and in parallel to bring it closer to the
study.
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 10
To measure EO’s impact on business performance, the “question is whether the treatment
of business performance should be differentiated from the overall discussion on
organizational effectiveness” (Venkatraman & Ramanujam, 1986, p. 802). According to
Venkatraman and Ramanujam (1986) it is a subset of the overall concept organizational
effectivess, while business performance is augmented by organizational effectiveness
(Figure 1):
Figure 1: Circumscribing the domain of business performance
Modified from: Venkatraman and Ramanujam, 1986
The narrowest two circles inside the ‘domain of financial performance’ are representing
two of the three most commonly used financial dimensions among all of them, namely
‘growth’ and ‘profitability’ (Murphy, Trailer & Hill, 1996). The next circle as the core of
the model, on which the other two augmented layers build on, is the financial
Domain of Organizational Effectiveness
Domain of Financial performance + Operational
Performance (Business Performance)
Domain of Financial Performance
Growth
Profitability
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 11
performance of organizations reflecting the accomplishment of economic goals. Sales
growth, return on investment (ROI), return on equity (ROE) would be typical indicators
of such a measure. The second layer of the model incorporates operational (non-
financial) performance in addition to the financial core. Under this framework
manufacturing value-added, market share position and other technological measures
would be representative. The aforementioned two indicators are encompassed into a
complex domain tracking organizational effectiveness as an entity (Venkatraman &
Ramanujam, 1986). On theoretical ground the relationship between EO and performance
called in question particularly with financial performance, whereas economic indicators
are the most sensitive to strategic planning and implementation of firms (Rauch et al.,
2009). Rauch et al. (2009) argue the straightforwardness of operational (non-financial)
performance as an EO indicator due to tenuous direct effect:
“If non-financial goals are of prime importance, the uncertainty associated with the bold
initiatives and risk taking implied by an EO could potentially lead to agony, sleepless
nights, and less satisfaction. However, satisfaction may increase because of better
financial performance.”…“Therefore, it appears reasonable to assume that the
relationship should be higher for EO and financial performance than for EO and
nonfinancial performance” (p. 10).
In accordance with Rauch et al. (2009) we apply financial performance as the supreme
measure of EO’s impact on business strategy. Financial performance employed as a
formative indicator (multidimensional measure), assuming EO – depending on the
construct – might influence the financial statements distinctly. From the studies of
Venkatraman and Ramanujam (1986), Murphy, Trailer and Hill (1996) and Hermann,
Alexander and Matthias (2010) indicators will be applied to measure the impact of EO on
financial performance.
Miller (1983) defined “a non-entrepreneurial firm is one that innovates very little, is
highly risk averse, and initiates the moves of competitors instead of leading the way” (p.
771). EO’s positive impact on business performance is hypothesized since Zahra and
Covin (1995) describe EO as a “potential means for revitalizing established companies”
(p. 43), while Lumpkin and Dess (1996) define that “EO refers to processes, practices,
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 12
and decision-making activities that lead to a new entry” (p. 136). As stated before:
business performance improvement is the heart of strategic management and “conceptual
arguments suggest that EO leads to higher performance” (Rauch et al., 2004, p. 8). We
hypothesize that firms with higher EO has a better performance.
H1: Firms with higher EO have a better performance, than the ones with lower EO
Business environment
To measure the EO – performance construct, firstly, it is indispensable to define
the dimensionality of each single variable. The application of the aforementioned
construct and their attachment between the drawn up theoretical framework and its
empirical utilization vary widely across the disposable literature. Basically, it is up to the
author(s) in which direction the study develops and what sort of dependent, independent
and control variables are formulated in order to extract the real-time correlations among.
The EO – financial performance is a bivariate relationship, however it can be improved
with other key variables. Contingency theory holds the same ground, wherein a
“congruence fit” among key variables positively impact the outcome. Introducing
moderators into bivariate relationship reduces the possible research failures and leads to
an advanced result and understanding of the interrelationship (Rauch et al., 2009). Zahra
and Covin (1995) argue that “contextual influences affect the level of success achieved
by firms” that practice EO (p. 48). Corporate entities have to adopt to distinct conditions
depending on the industry, competitors and their environmental aggressiveness and to
many moderating variables. Contextual influences are divided into two broad groups as
we distinguish between “internal factors” (e.g., organizational structure) and “external
factors” (e.g., industry life-cycle, competition, industry globalization) (Zahra & Covin,
1995). Dess and Beard decreased the “codification of six environment…to three:
munificence (capacity), complexity (homogeneity-heterogeneity, concentration-
dispersion), and dynamism (stability-instability, turbulence)” (p. 52). Basically, these
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 13
dimensions rely on two commonly held conceptualized environmental notions: “as a
source of information” and “as a stock of resource” (Lumpkin & Dess, 2001, p. 436;
Aldrich & Mindlin, 1978). Dynamism and complexity strictly relates to the uncertainty
faced by the players of the industry, while munificence is a dependent on the mentioned
factors to reach dissimilar resources (Lumpkin & Dess, 2001). We apply accordingly to
Lumpkin & Dess and earlier researches two environmental construct; namely dynamism
and hostility. “Dynamism relates to the rate of unpredictable change in the firm’s
environment” (Lumpkin & Dess, 2001, p. 436), but it also undermines the general
manager’s ability to predict the future of the given industry, alongside with their eroding
impact deriving from their knowledge and experience (Lumpkin & Dess, 2001;
Khandwalla, 1977). Since a dynamic environment brings unpredictable changes, and EO
through its dimensions – innovativeness, proactiveness and risk-taking – involves
opportunity seeking actions, engages in “creativity and experimentation” and takes “bold
actions by venturing into the unknown” while “borrowing heavily and/or committing
significant resources to ventures” (p. 9-10), we suggest that EO has a positive effect on
performance in a dynamic environment (Rauch et al., 2009).
H2a: Dynamic environment has a positive moderating effect on the entrepreneurial
orientation performance relationship.
H2b: Static environment has a negative moderating effect on the entrepreneurial
orientation performance relationship.
To measure environmental dynamism we will rely on Miller’s (1987) work.
Hostility, which is often observed as the obverse of munificence, is “indicative of the
scarcity and intensity of competition for environmental resources” (Lumpkin & Dess,
2001, p. 436; Covin & Slevin, 1989; Zahra & Covin, 1995). The intensity of competition
in such circumstances is increased and the pressure is higher on business organizations in
turn. In addition to that, there is “less slack of experimentation” for further and new
strategies due to limited financial resources located for (Lumpkin & Dess, 2001). Hostile
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 14
environment contains less opportunity due to its saturated nature and more active
competition (Covin & Slevin, 1989). Successful firms operating in such circumstances
should provide something new for consumers and incorporate some newborn aspects of
corporate management in order to stand out from the crowd. To achieve the foresaid
egression, firms should have reasonable resources to re-invest in innovations and
proactivity – which in case of additional success – may be further re-invested as a cycle.
Covin and Slevin (1989) state “successful firms in hostile environments will gear their
competitive efforts to prevailing conditions by aggressively trying to gain or maintain a
competitive advantage” (p. 77). To reach such an advantage we hypothesize it results
from innovative, proactive and risk-taking actions of entrepreneurial firms, than the non-
entrepreneurial, passive and reactive firms (Covin & Slevin, 1989).
H3a: Hostile environment has a positive moderating effect on the entrepreneurial
orientation performance relationship.
In benign environment business organizations are faced with much less intense
circumstances, greater level of munificence and rationally they are not forced towards
pulling uncertain steps and resource-consuming endeavors (Covin & Slevin, 1989).
“Thus, while an entrepreneurial posture may just as easily result in a sustainable
competitive advantage in a benign environment as in a hostile environment, such a
posture may not be essential for superior performance, and could possibly represent an
unwarranted risk” (p. 77) and might backlash the firm engaging with EO (Covin &
Slevin, 1989). We hypothesize that EO in a benign environment could hit back the
company, since it is an unnecessary risk to endeavor to reach competitive advantage and
superior business performance.
H3b: Benign environment has a negative moderating effect on the entrepreneurial
orientation performance relationship.
To measure environmental hostility we will adopt Khandwalla’s (1977) and Miller’s
(1987) studies.
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 15
Firm age as an exogenous variable
Usually studies use firm age and size as a control variable, but in our case we
want to investigate if firm age has any implication on the EO – performance relationship.
On a generalized scale and in favorable conditions a firm grows with time in size and
revenue. Following the concept, alongside with the employee number increase the upper
management’s direct impact on the organizational entrepreneurial set might decrease
accordingly. Since the top of the corporate hierarchy makes the prime decisions, we
hypothesize that with the growth of corporate size, the EO of the firm will decrease in
parallel. Considering the limited resource and network capabilities of micro firms and
SMEs, companies face a higher uncertainty towards external environment, than large
firms. Thus the EO – especially innovativeness and risk-taking – tends to be higher in
order to obtain not just ongoing evolution, but stagnation in economic indications (Ha-
Brookshire, 2009). Highlighting a chronological axis of a firm’s birth towards the present
would start with a start-up with one or few founders and grow by the lapse of time. Based
on the sketched theoretical framework, we hypothesize that the age of a corporate entity
would have a moderating effect on the EO, thus the business performance.
H4a: Higher firm age has a negative moderating effect on entrepreneurial orientation
performance relationship.
H4b: Lower firm age has a positive moderating effect on entrepreneurial orientation
performance relationship.
To measure firm age we will adopt Loderer and Waelch’s (2010) study, while Amadeus
database is also at hand, which encompasses comparable financial information for public
and private firms across Europe.
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 16
LITERATURE REVIEW
# Title Author Year Published Contribution
Articles, Journals and books on entrepreneurial orientation (EO)
1 Entrepreneurial
orientation and business performance: an assessment of past research and suggestion for the future
Rauch A.; Wiklund J.; Lumpkin G. T.; Frese M.
2009 Article Entrepreneurship: Theory & Practice, 33(3), pp. 761-787
- Dimensions of EO -Relationship among EO, financial and non-financial measures - Measurement of performance - Implications on EO-performance and culture correlation
2 Clarifying the entrepreneurial orientation construct and linking it to performance
Lumpkin G. T.; Dess G. G.,
1996 Article Academy of Management Review, 21(1), pp. 135-172
- Clarifying EO construct - Alternative models for measuring EO-performance relationship
3 The structure of organizations
Mintzberg, H. 1979 Book Prentice Hall
- Organization structuring and grouping
4 Capitalism, socialism and democracy
Schumpeter, J. A.,
1976 Book George Allen & Unwin Ltd.
- The bible of strategic management and entrepreneurship study - Clarifying basic and fundamental concepts
5 Strategic orientation of business enterprise: the construct, dimensionality and measurement
Venkatraman, N.
1986 Article Management Science, 35(8), pp. 942-962
- STROBE construct - Dimensionality questions
6 The correlates of entrepreneurship in three types of firms
Miller, D. 1983 Article Management Science, 29(7), pp. 770-791
- Chief determinants of entrepreneurship, the process by which organizations renew themselves and their markets by pioneering, innovation, and risk taking
7 Miller (1983) revisited: a reflection on EO research and some suggestions for the future
Miller, D. 2011 Article Entrepreneurship: Theory & Practice, 35(5), pp. 873-894
- Difference between entrepreneurship and EO - Distinction between initiatives and ‘new entry’ - Basic guidelines for quantitative research in our field
8 Entrepreneurial orientation and business performance – a replication study
Hermann, F.; Alexander, K.; Matthias, F.
2010 Article Schmalenbach Business Review, 62(2), pp. 175-198
- Dimensionality of EO and performance: reflective or formative indicator approach - Statistical analysis methods: main-effect -, contingency -, configuration approach
9 Cross-cultural reliability and validity of a scale to measure firm entrepreneurial orientation
Knight, G. A. 1997 Article Journal of Business Venturing. 12(3), pp. 312-225
- ENTRESCALE
10 The design of organizations
Khandwalla, P. N.
1977 Book Harcourt Brace Jovanovich, Inc.
- One of the most important studies on organizational design
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 17
11 Linking two dimensions of entrepreneurial orientation to firm performance: the moderating role of environment and industry life cycle
Lumpkin, G. T. & Dess, G.
2001 Article Journal of Business Venturing, 16(5), pp. 429-451
- The study concentrates on only competitive aggressiveness and proactiveness - Investigates how these two approaches are related to each other
12 Contextual influences on the corporate entrepreneurship, performance relationship: a longitudinal analysis
Zahara, S. A. & Covin J. G.
1995 Article Journal of Business Venturing, 10(1), pp. 43-58.
- Longitudinal analysis of EO – performance relationship
13 The promise of entrepreneur as a field of research
Shane, S. & Venkatraman S.
2000 Article Academy of management review, 25(1), pp. 423-444
- Conceptual framework for entrepreneurship
14 Entrepreneurial orientation and small business performance: a configurational approach
Wiklund, J. & Shepherd, D.
2005 Article Journal of Business Venturing, 20(1), pp. 71-91
- Configurational approach among EO, performance and dynamic environment - Three-way interaction model
15 Reconceptualizing entrepreneurial orientation
Anderson et al.
2015
Article Strategic Management Journal, 36(10), pp. 1579–1596
- Focusing on the question of whether EO is an attitudinal construct, a behavioral construct, or both
16 A conceptual model of entrepreneurship as firm behavior
Covin, J. G. & Slevin, D. P.
1991 Article Entrepreneurship: Theory & Practice, 16(1), pp. 7-25
- Defining entrepreneurship as a conceptual model on organization-level phenomena
17 Does the firm size matter on firm entrepreneurship and performance?: US apparel import intermediary case
Ha-Brookshire, J. E.
2009 Article Journal of Small Business and Enterprise Development, 16(1), pp. 132-146
- This paper investigates whether the relationship between firm entrepreneurship and performance is dependent on firm size within a small and medium-size enterprise (SME)
18 Country entrepreneurial profiles - assessing individual and organizational levels of entrepreneurship across countries
Marcotte, C. 2011 Article Journal of Enterprise Culture, 19(1), 169-200
- Compares individual and organizational indicators of entrepreneurial activity in 22 member countries of the Organization for Economic Co-operation and Development (OECD).
19 A Missing Operationalization: Entrepreneurial Competencies in Multinational Enterprise Subsidiaries.
Pavlos, D.; Ioanna, L. & Stephen, Y.
2014 Article Long range planning, 47(1/2), 64-75
- Provides a comprehensive operationalization of firm-specific variables that constitute multinational enterprise subsidiary entrepreneurial competencies.
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 18
20 The effect of strategic orientations on business performance in SMEs: A multigroup analysis comparing Hungary and Finland
Laukkanen, T.; Nagy, G.; Hirvonen, S.; Reijonen, H. & Pasanen, M
2013 Article International Marketing Review, 30(6), 510-535
- One of the studies found on Hungary which touches partly EO - Part of the work: collecting all studies on Hungary
21 A comparison of entrepreneurship development in two post-communist countries: the cases of Hungary and Ukraine
Danis, M. & Shipov V.
2002 Article Journal of Developmental Entrepreneurship, 7(1), 67-94.
- One of the studies found on Hungary which touches partly EO - Part of the work: collecting all studies on Hungary
22 Entrepreneurial orientation: Reviewing three papers and implications for further theoretical and methodological development
Slevin, P. & Terjesen, A.
2011 Article Entrepreneurship Theory and Practice, 35(5), 973-987
- It evaluates the contributions to entrepreneurial orientation (EO) in three articles: Wales, Monsen, and McKelvie;Wiklund and Shepherd; and Morris,Webb, and Franklin, commenting on key findings and their implications for further development of EO.
Articles, Journals and books on (business) performance
23 Measuring
performance in entrepreneurship research
Murphy, G. B.; Trailer, J. W. & Hill, R. C.
1996 Article Journal of Business Research, 36(1), pp. 15-23
- Dimensionality of performance - Meta- analysis of EO literature on business performance indicators
24 Measurement of business economic performance: an examination of method convergence
Venkatraman, N. & Ramanujam V.
1987 Article Journal of Management 13(1), pp. 109-122
- Explicitly evaluates the degree of convergence across statistical models measuring performance
25 Measurement of business performance in strategy research: a comparison of approaches
Venkatraman N. & Ramanujam V.,
1986 Article Academy of Management Review, 11(4), pp. 801-814
- 10 different approaches to measure business performance
Articles, Journals and books on business environment
26 Strategy and
environment: a conceptual integration
Bourgeois, L. J.
1980 Article Academy of Management Review, 5(1), pp. 25-39
- Relationship between strategy and environment - We apply it in order to crystalize the difference between entrepreneurship and EO
27 Blue Ocean Strategy: how to create uncontested market space and make competition irrelevant
Mauborgne R.; Chan W. K.
2005 Book Harvard Business Review
- ‘Blues Ocean Strategy’ concept
28 Strategic management of small firms in hostile and benign environment
Covin J. G. & Slevin D. P.
1989 Article Strategic Management Journal, 10(1), pp.
- Environmental hostility’s impact on corporate performance - Dimensionality of EO through a strategic posture approach
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 19
75-87 29 Dimensions of
organizational task environments
Dess, G. G. & Beard, D. W.
1984 Article Administrative Science Quarterly, 29(1), pp. 52-73
- Operational definitions of both industrial and organizational task environment - Three dimensions of environment: munificence (capacity), complexity (homogeneity-heterogeneity, concentration-dispersion), and dynamism (stability-instability, turbulence)
30 The development and testing of organization-level entrepreneurship scale
Covin, J. G. & Slevin, D. P.
1981 Article - Designed instruments (scales) to measures organization-level entrepreneurial behavior
31 International corporate entrepreneurship: The moderating effect of international environmental hostility
Zahra, S. A. & Garvis, D. M.
2000 Article Journal of Business Venturing, 15(5/6), pp. 469-492
- Study on international corporate entrepreneurship (ICE)
32 The structural and environmental correlates of business strategy
Miller, D. 1987 Article Strategic Management Journal, 8(1), pp. 55-76
- Environmental scales are adopted and/or modified from this study - Examines several environmental dimensions
Articles, Journals and books on statistical methods
33 The concept of fit in
strategy research: toward verbal and statistical correspondence
Venkatraman, N.
1989 Article Academy of Management Review, 14(3), pp. 423-444
- Develops a conceptual framework and identifies six perspectives of fit-fit as moderation, fit as mediation, fit as matching, fit as gestalts, fit as profile deviation, and fit as co-variation - each implying distinct theoretical meanings and requiring the use of specific analytical schemes
34 Representing and testing organizational theories - a holistic construal
Bagozzi, R. P. & Phillips L. W.
1982 Article Administrative Science Quarterly, 27(3), pp. 459-489
- Represents and test organizational, theories, using examples from contemporary organizational theory and data
Online sources
35 Amadeus database - - - Financial indicators of European companies
36 PLS statistical software
- - -
37 Ec.europe.eu - - - Eurostat To understand company sizes (SMEs)
38 Gemconsortium.org - 2014 Hungary profile - To understand the entrepreneurship as a phenomena inside the Hungarian market
39 Ftp.cordis.europa.eu - 2004 Action Plan: The European Agenda for Entrepreneurship
- Analysing entrepreneurship activities inside the EU
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 20
METHODOLOGY, RESEARCH DESIGN AND SAMPLING
Method of research: Hybrid technique
The research design of this study will embody two widely used techniques: a
quantitative survey-exploratory method via online survey and qualitative in-depth face-
to-face interviews. The survey will target the top of the hierarchy of the corporate entities, since C-level
(Chief-level; referred to the highest management executives) executives and upper
management have the most reliable line of sight on the given firm. It will ask them to
indicate on 7-level Likert-scale their corporate entities’ EO – innovativeness,
proactiveness, risk-taking – the hostility and dynamism of the business environment in
which they operate. Age will be measured through pre-set interval possibilities, but these
should be reachable through the Amadeus database.
• To indicate EO: ENTRESCALE (Khandwalla, 1977), Covin and Slevin’s
(1989), Miller’s (1983) studies’ applied scales
• To indicate financial performance: Venkatraman and Ramanujam (1986);
Murphy, Trailer and Hill (1996); Hermann, Alexander and Matthias (2010)
studies are applied
• To indicate environmental dynamism: Miller’s (1987) work
• To indicate environmental hostility: ENTRESCALE (Khandwalla, 1977) and
Miller’s (1987) work
• To indicate age:
To extract confidential financial indicators from an online-based survey, even if
anonymity to the respondents is granted and financial measures are treated confidentially,
might be cumbersome. Thus, if needed we will gain the financial indicators from
Amadeus database and adopt them accordingly to the pre-set measurement scales used in
the online survey. In summary, primary data collection will be implemented through
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 21
online surveys and qualitative face-to-face interviews targeting firm C-level and upper
management. Secondary (archival) financial indicators will be extracted from the
Amadeus database, but only if necessary. Finally, after collecting the data from
enterprises PLS statistical software will be used in order to gain the moderating (main-
effect) and contingency effect of independent variables (EO, environmental hostility,
environmental dynamism and firm age) on the dependent variable (financial
performance).
Instrument(s): Software used for online survey – Sphinx
Archival data: Database used to gain e-mail addresses of firms and financial information
about public and private companies from Hungary if needed – Amadeus database
Statistical software: PLS
Quantitative questionnaires combined with qualitative research technique due to two
main reasons. Firstly, to acquire insights from upper managers to support the online
collected data through the survey. Market insights are expected from professionals from
higher positions to obtain a better understanding, and to perceive EO’s importance and
feasibility as strategic orientation in this specific economy. Secondly, to assist the
quantitative research, because the possibility of not reaching the prescribed threshold of
respondents is higher than average due to the target group’s professional position. In-
depth, face-to-face interviews will be conducted in order to reach the desired data.
Sampling and control variables
Company size stands for the control variable of the study in order to filter the
sample. We use the most common measure for company size, which is in a statistical
context, is the number of persons employed (eurostat). SMEs are defined as follows:
• Micro enterprises: fewer than 10 persons employed
• Small enterprises: 10 to 49 persons employed
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 22
• Medium-sized enterprises: 50 to 249 persons employed.
“The number of persons employed should not be confused with employees or full-time
equivalents; 'persons employed' includes employees but also working proprietors,
partners working regularly in the enterprise and unpaid family workers” (eurostat).
The study will be carried out in Hungary, targeting SMEs (employee number under 250),
which is at the moment (22/09/2016) according to the Amadeus database are numerically
3511 firms (Amadeus database). The population size is 4338 (Amadeus database), and
based on the sample size calculation 384 respondents is the threshold to reach.
Applied statistical model
Main-effect or also called universal approach is applied to measure the
independent variable’s direct effect on the dependent variable (financial performance). In
this model the independent variable doesn’t interact with any other, the influence is direct
on the dependent variable, wherein it implies that the model or construct is valid under all
circumstances (Hermann, Alexander & Matthias, 2010).
Secondly, the applied contingency approach makes a step further, assuming “that the
extent and direction of an independent variable’s impact on a dependent variable will
vary under certain circumstances” (Hermann, Alexander & Matthias, 2010, p. 186;
Wiklund & Shepherd, 2005). It employs a moderator into bivariate relationship to
understand more the relationship between the direct two variables.
WORK PLAN
# Time Task Phases Completion
1 01/09/15 – 22/09/15 Exposé • Finding a thesis topic • Development of the topic and
finding the focus of study • Literature review
Completed
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 23
• Handing in first exposé
2 23/09/15 – 22/10/15 Research
design,
Final exposé
• Hand in the final exposé • Design of quantitative survey
and qualitative questionnaire • Acknowledge the usage of
Amadues database • Elaboration of statistical
methods
Partly done
3 23/10/15 – 25/10/15 Statistical
methodology
• Getting familiar with PLS software
To follow
26/10/15 – 31/10/15 BUFFER
4 01/11/15 – 14/11/15 Launch of
survey,
Field research
(qualitative)
• Launch of quantitative survey • Travel to Hungary to conduct
qualitative interviews • Transcript the interviews • Write abstract/introduction
To follow
5 15/11/15 – 28/11/15 Analysis 1 • Analyzing interviews • Writing theoretical
background • Write methodology
To follow
29/11/15 – 30/11/15 BUFFER
6 01/12/15 – 20/11/15 Analysis 2,
Final thesis
• Analyzing surveys • Conduct analysis • Final thesis
To follow
21/12/15 – 31/12/15 BUFFER
OVERVIEW OF CHAPTERS
Abstract
1. Introduction
A: Research context and objective
B: Structure of the study
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 24
2. Theoretical framework
A: Contingency theory applied
B: Entrepreneurship and entrepreneurial orientation: two distinct concepts
C: Entrepreneurial orientation
Innovativeness
Proactiveness
Risk-taking
Competitive aggressiveness
Autonomy
D: Business performance
E: Contextualizing business environment
Internal factors
External factors
F: Entrepreneurial orientation – performance relationship
G: Effect of environment on EO – performance relationship
3. Research question and hypotheses
A: Problem statement
Research gap
B: Research question
C: Hypotheses
D: Conceptual framework
4. Methodology and research design
A: Research design
Quantitative survey
Qualitative interviews
B: Survey and interview protocol
C: Data collection
Primary sources
Secondary, archival sources
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 25
D: Synthesis of data
E: Statistical method applied
5. Analysis of results
A: Description of the variables
Dependent variable
Independent variables
B: Analysis
6. Discussion and conclusion
A: Conclusion
Is the researched market different?
B: Limitations
C: Managerial implication
D: Suggestions for future researches
7. Bibliography
8. Appendix
LINKINGEOTOPERFORMANCEINAPOST-SOCIALISTCONTEXT 26
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