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Transcript of Understanding Entrepreneurship_Innovation and Performance_Research Paper_Final
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Understanding Entrepreneurship: The Relation between EntrepreneurialOrientation (Opportunity, Knowledge and Risk Taking), Innovation and
ir! "er#or!an$e
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%bstra$t
Entrepreneurship is regarded as a modern area of examination, study into which is gaining
the interest of an increasing amount of researchers. Moreover, entrepreneurship includes acts
of managerial formation, regeneration or innovation taking place inside or outside a firm. On
the other hand, entrepreneurship orientation is observed as an essential aspect of optimistic
results at organizational performance.
The purpose of this research paper is to understand the relation between entrepreneurial
orientation and firm performance. Moreover, this research paper considered innovation
performance as the most important elements, and examined the connection between EO,
innovation and firm performance.
This research paper reviewed various literatures theories and models proposed by different
authors in order to gain understanding on the importance of entrepreneurship and associated
aspects with regards to innovation. This research has utilized primary and secondary data
sources. The primary analysis of the data set was derived from structural euations
modelling. !tructural euations models were produced in various educational standards in
order to validate the theory. "t last, conclusion was made to support the findings.
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Table o# &ontents
#. $ntroduction.........................................................................................................................#
#.#. %roblem !tatement.......................................................................................................#
#.&. "ims and Ob'ectives....................................................................................................&
#.(. !ignificance of the !tudy.............................................................................................&
&. )iterature *eview...............................................................................................................(
&.#. Entrepreneurial Orientation +EO................................................................................(
&.&. Organizational )earning -apability............................................................................(
&.(. Opportunity *ecognition.............................................................................................
&.. $nnovation %erformance..............................................................................................
&./. 0nowledge Management............................................................................................./
(. *esearch 1ypotheses........................................................................................................../
. *esearch Methodology.......................................................................................................2
.#. 3ata -ollection............................................................................................................2
.&. Measurements..................................................................................................................4
.(. 3ata "nalysis...............................................................................................................5
/. *esults.................................................................................................................................5
/.#. !tructural Euations Model.............................................................................................5
/.&. -orrelations.....................................................................................................................6
2. -onclusion........................................................................................................................#7
*eferences................................................................................................................................##
"ppendix..................................................................................................................................#/
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' Introdu$tion
%romoting entrepreneurship is an efficient manner of producing employment, raising
efficiency and decreasing paucity +OE-3, &77/. Moreover, entrepreneurship is regarded as a
modern area of examination, study into which is gaining the interest of an increasing amount
of researchers +$reland, *eutzel and 8ebb, &77/. !harma and -hrisman +#666 purported
that entrepreneurship includes acts of managerial formation, regeneration or innovation
taking place inside or outside a firm. On the other hand, Entrepreneurial Orientation +EO is
regarded as the methods, activities and managerial functions that cause entrepreneurship
+)umpkin and 3ess, #6629 *ichard, :arnett, 3wyer and -hadwick, &77. This theory is
same as -ovin and !levin;s +#656 entrepreneurial strategic posture which is categorized by
numerous and broad innovation, insistent competitive orientation and a wellarver,
&777. This is for the reason that the performance of a form relies basically upon several
elements both internal and external to the firm +Thoumrungro'e and Tansuha', &77/, or that
the advantages of EO freuently take a longer time to come to completion +=ahra and -ovin,
#66/9 Madsen, &774. Therefore, in order to examine the EO
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'* %i!s and Ob+e$tives
The aim of this research paper is to understand the relation between entrepreneurial
orientation and firm performance.
More specifically, the ob'ectives are?
To analyze entrepreneurial orientation
To examine elements of entrepreneurial orientation
To examine the relation between entrepreneurial orientation and firm performance
To consider the impact of entrepreneurial orientation performance of an organization
To evaluate the relation between entrepreneurial orientation +opportunity, knowledge
and risk taking, innovation and firm performance
' igni#i$an$e o# the tudy
)umpkin and 3ess +#662, any relationship between EO and performance seems to be
context specific, i.e. internal or external factors influence how an EO will be configured to
achieve high performance. 1owever, despite previous research on these factors, these authors
call for further studies to clarify the role of contingency approaches in explaining the EO@
firm performance relationship. *esearch should focus on identifying the underlying processes
that determine the contribution of EO to performance +=ahra et al., #666. 3ess et al +&77(
highlight the importance of corporate entrepreneurship in promoting organizational learning.
They affirm that entrepreneurship creates new knowledge, and that organizational learning
mediates this relationship. Aurthermore, 8ang +&775 has recently introduced the mediating
role of learning orientation into the EO
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* -iterature Review
*' Entrepreneurial Orientation (EO)
Entrepreneurship is considered as an approach to management that aspires to emphasize
innovation, suppleness and openness determined by the observation of opportunity, while
offering more refined and competent management +Cuth and Cinsberg, #6679 >aman and
!levin, #66(9 Bogaratnam et al. #666. Entrepreneurial Orientation +EO is regarded as the
methods, actions, beliefs and managerial operations that guide firms to entrepreneurship
+)umpkin and 3ess, #662. -ovin and !levin +#656 purported that EO is considered as a
strategic attitude to symbolize regular and essential innovation, tough competitive course or
proactiveness and a tough risk
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# 3ialogue
& Experimentation
( $nteraction with the external environment
%articipative decision making.
/ *isk taking
3ialogue is described as a continued combined examination into the methods, suppositions,
and convictions that comprise daily understanding +$saacs, #66(.
Experimentation is described as the amount to which latest ideas and propositions are
handled considerately +Tannembaum, #664.
$nteraction with the external environment is described as the extent of associations with the
external situation +:apu'i and -rossan, &77.
%articipative decision making is described as the degree of control workforce has in the
decision
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$nnovation outcomes comprise product and process innovations9 these two types of
innovation outcomes are very much related with each other and form an extremely compound
method that usually contains all organizational operations +tterback and "bernathy, #64/.
" Fproduct; is considered as a good or service given to consumers, and a Fprocess; is the
manner the good or service is created and offered +:arras, #652. Thus, product innovation is
described as the product or service launched in order to fulfil the reuirements of the industry
or customer on the other hand, process innovation is described as a new aspect established
into production processes +3amanpour and Copalakrishnan, &77#.
*0 Knowledge 1anage!ent
"ccording to -orso et al +&77&, knowledge management is of rising attention to researchers
of firms and management due to its believed function in shaping innovation potential of an
organization.
0nowledge management has been examined by various regulations from diverse measures
+)opez et al, &77. :arney +#66# purported that an organization reuires maintaining and
controlling knowledge in the form of recognized measures, rights, training models or
organization schedules to continue its competitive advantage and to survive in the industry.
Resear$h 2ypotheses
"ccording to the theory of entrepreneurial orientation, organizational learning capabilities
and innovation performance, the following conceptual model is proposed +Aigure (.#. The
debate of the proposed model is that the influence of EO on innovation performance is
governed by O)-. Moreover, innovation performance has an optimistic impact on firm
performance. Therefore, hypotheses were developed about +# the association between EO
and firm performance9 +& the association between EO and O)- and +( the connection
between O)- and innovation performance of a firm
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Aigure (.#? -onceptual Model
Therefore, the research has following hypotheses?
1ypothesis #? EO is completely connected to innovation performance of a firm.
1ypothesis &? $nnovation performance is completely associated with the firm
performance.
1ypothesis (? $nnovation performance plays an important role in mediating the
relationship between EO and performance of a firm.
1ypothesis ? Entrepreneurial orientation is completely associated with organizational
learning capability.
1ypothesis /? There is an optimistic connection between organizational learning
capability and innovation performance of a firm.
/ Resear$h 1ethodology
/' 3ata &olle$tion
This research has utilized primary and secondary data. The primary data was collected with
the help of uantitative techniue through a uestionnaire. On the other hand, the secondary
data was collected from the previous literatures and researches.
" key informant techniue in relation to the previous researches was employed to collect data
for the research+0umar et al, #66(. The uestionnaire was distributed to managers of
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several global firms.Moreover, the categories of the managers of the firmswere classified
into three categories, for example, uestions regarding the firm performance were distributed
to the Ceneral Managers, uestions regarding innovation performance were distributed to
%roduct 3evelopment Managers, and on the other hand uestions regarding O)- were
distributed to 1uman *esource Managers. The firms were randomly selected from the online
global corporate database.
The uestionnaire was distributed to &77 firms globally through emails that were obtained
from the 1* list of the companies. Out of these, only #5& completed uestionnaires were
received, therefore making the total sample size of the study to #5&.
/* 1easure!ents
a) Entrepreneurial Orientation
Entrepreneurial Orientation was evaluated through the extensively used nine
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/ 3ata %nalysis
The primary analysis of the data set was derived from structural euations modelling.
!tructural euations models were produced in various educational standards in order to
validate the theory. Therefore, this method encompassed producing measurement models to
specific underlying elements and then forming associations or connections or structural
euations among these elements.
0 Results
0' tru$tural E4uations 1odel
The figure below +Aigure /.# represents the results derived from the structural euations
analysis. Moreover, the chi
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O)-, $%, and A% are aspects of second order. Moreover, EO and !ize are aspects of firstowadays, entrepreneurship has gained a significant amount of attention. Though EO is
freuently believed to have an optimistic effect on the performance of the firm, this express
association does not appear to be practically certain and absolute. $n the present research,
innovation performance was included in the EO
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Re#eren$es
:apu'i, 1., and -rossan, M., &77. Arom raising uestions to providing answers?
*eviewing organizational learning research. Management )earning, (/? (64
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$reland, *.3., *eutzel, -.*. and 8ebb, B.8. &77/. Entrepreneurship research in "MB?
what has been published, and what might the future hold "cademy of Management
Bournal, 5 +? //2
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!chumpeter, B.". #6(. The theory of Economic 3evelopment. -ambridge. M"?
1arvard niversity %ress.
!eibert, !.E., 0raimer, M.). and )iden, *.-. +&77#. P" social capital theory of career
success;. "cademy of Management Bournal, ,
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