Entrepreneurial orientation in dynamic environments

Abstract

Purpose – Research on entrepreneurial orientation (EO) has concluded a positive link between EO and firm performance and that relationship depends on several contingencies. The purpose of this paper is to derive insights from the absorptive capacity and contingency perspectives to introduce extra-organizational advice as a moderator of the relationship between EO and firm performance in a dynamic environment. Design/methodology/approach – Using survey data from 340 small- and medium-sized enterprises (SMEs) in Ghana, the study examines the moderating influence of extra-organizational advice on the EO-firm performance relationship in dynamic environments. Findings – The study’s empirical findings suggest that extra-organizational advice amplifies the EO-performance relationship in dynamic environments. Research limitations/implications – The cross-sectional design of the study does not permit causal inferences to be made regarding the variables examined. Future studies may use longitudinal design to examine the causal links of the variables. Limitations aside, the study helps to answer how extra-organizational advice translates EO into improved performance in an environment characterized by constant flux. Practical implications – The results of this paper can assist entrepreneurs and policy makers in understanding the dynamics and processes involved in implementing a strategic orientation to achieve higher performance. For SME managers, firm performance is determined by high levels of EO and extra-organizational advice in dynamic environments. The understanding of this issue can promote the development and maintenance of entrepreneurial ventures. Originality/value – The paper examines an important, but under-researched issue – the moderating effect of extra-organizational advice on the EO-performance relationship in dynamic environments. To the best of the authors’ knowledge, the present study pioneers research in this area.