Impacts of environmental turbulence on entrepreneurial orientation and new product success

Abstract

Purpose – What leads to new product success (NPS) is a very complex issue. Although prior research widely demonstrates that entrepreneurial orientation (EO) is a determinant for NPS and environmental turbulence is a form of unpredictability which impacts on the success of a product, little research has been conducted to examine if and to what extent environmental turbulence induces the EO behaviors of a firm and how these behaviors contribute to NPS. The paper aims to discuss these issues. Design/methodology/approach – This study, which used data collected from 244 China-based electronics manufacturers, proposed and tested the theoretical relationships among the three constructs in the context of the electronics industry in China. Findings – Results revealed that the three dimensions of EO (innovativeness, proactiveness and risk-taking) drive NPS. Environmental turbulence strongly influenced all three dimensions of EO, though its influence on NPS was mixed as there existed a strong negative but insignificant direct association between the two constructs. Innovativeness, which was found to be most effective in driving NPS in the EO and NPS relationship, was relatively less responsive to environmental turbulence than proactiveness. The study confirmed the postulated role of environmental turbulence in inducing the EO behaviors of a firm, signaling environmental turbulence, if tactfully leveraged, can play a positive role in new product development (NPD). Research limitations/implications – The study is quantitative using data emanating from the electronics manufacturing industry in China, further empirical study would be useful to verify and complement the results in other industries and other countries. Originality/value – This study contributes to the scholarly inquiry of EO and NPD by exploring the influences of environmental turbulence and EO on NPS. As environmental turbulence induces EO and EO mediates the relationship between environmental turbulence and NPS, simultaneous consideration of these two constructs can lend useful insight into their joint impacts on NPD. Theoretical and managerial implications were examined and policy implications, especially the practicality of the findings to policymakers in China, were discussed.