Baru
Baru
Baru
David KOVACS
University of Kassel
1 Moenchebergstr St., Kassel, 34125, Germany
[email protected]
Katrin ZULAUF
University of Kassel
1 Moenchebergstr St., Kassel, 34125, Germany
[email protected]
Taylan ÜRKMEZ
University of Kassel
1 Moenchebergstr St., Kassel, 34125, Germany
[email protected]
Dominik BROCKHAUS
University of Kassel
1 Moenchebergstr St., Kassel, 34125, Germany
[email protected]
Ralf WAGNER
University of Kassel
1 Moenchebergstr St., Kassel, 34125, Germany
[email protected]
Introduction
Precedent literature has argued (e.g., Covin & Slevin, 1989, 1991) that if
competitive aggressiveness and proactiveness are distinct, independent
concepts suggesting that proactive organizations compete with competitors
on the market. 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). A Higher magnitude of autonomy inside the top-management
definitely foster innovativeness and risk-taking, but this measure may lead
to misunderstanding of the concept since autonomy on the firm level should
analyze all levels of the organization. Innovations, for example, can come
from the research and development (R&D) department or a new marketing
campaign might boost the selling volume from the marketing department.
Our research study places business organizations as entities under the
spotlight, thus we adopt Miller’s (1983) three-dimension, unidimensional
strategic posture. In addition, “more recently, the three initial dimensions
appeared to be the ones with the higher validity” (Kreiser, Marino &
Weaver, 2002, p.76). Therefore, autonomy and aggressiveness are excluded
from the unidimensional measure of EO.
These rankings have been notably used to monitor or predict the economic
performance of countries.” Analysts, policymakers and occasionally
researchers have the tendency and willingness to make entrepreneurial
intensity equal to economic growth, as for example the Commission of the
European Communities (2004).
Environmental
Factors
Entrepreneurial Financial
Orientation Performance
Organizational
Factor
The moderator variables are divided into two main groups: organizational
or internal factors, and environmental or external factors (Lumpkin & Dess,
1996). In this study we consider one organizational factor; firm age (FA),
and two environmental one; namely environmental hostility (EH) and
environmental dynamism (ED).
H1: Firms with higher EO have a better financial performance than the ones
with lower EO.
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. As Mintzberg (1979)
states, organizations grow “more or less continuously, but its structure is
changed only in discrete steps” (p.232). Litterer (1973) characterized the
transition from an informal organization to the one supervised and
coordinated by managers, followed by a more developed hierarchical
managerial structure. These create a strong theoretical ground, supporting
the idea that by the lapse of time the organization ages with the growth of
size and becomes more mature and formal in structure and working
processes.
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.
All research hypotheses are in line with prior research (Zahra & Covin,
1995; Wiklund & Shepherd, 2005; Ha-Brookshire, 2009; Rauch et al., 2009;
Miller, 2011; Anderson et al., 2015). In case the H 1 will be rejected, the
model would not fit the data. If H 1 is supported by the data, this model
provides us with the suited foundation for testing the contextual
hypotheses H2-H4 of moderating effects of EO in the Hungarian economy.
Table 1 gives an overview of the research hypotheses.
Results
Using Smart PLS 3 (Ringle, Wende & Becker, 2015) for analysis, the results
show that EO has a positive effect on the financial performance of an
organization. Please see the appendix for the structural model (Figure 3) as
well as the Heterotrait-Monotrait Ratio (Table 4). Distinct regression
analyses revealed that EO explains 23.5% of the variance of the financial
performance of organizations (β = .485, t-value = 4.56). With a p-value of
<.001 H1 is accepted.
Conclusion
The major contributions of this paper are first, testing the relationship of EO
to FP in a post-soviet economy. Behavior patterns in post-soviet transition
economies substantially depart from westernized strategic management.
EO has become one of the main topics in strategic entrepreneurship
research (Anderson et al., 2015).
However, this conceptual model might be too simple, and would be easily
obtainable by organizations, thus the argument of Lumpkin and Dess
(1996) is taken into account. They argue that the impact of EO on
performance is context specific and therefore the model should consider
different factors originating from the inside or outside. The dynamic nature
of external and internal factors forces an unpredictable change in a
turbulent environment, which most of the time undermines the
entrepreneurs’ ability to envision the future (Lumpkin & Dess, 2001;
Khandwalla, 1977). As a second assessment of the external environment,
hostility is the counterpart of munificence and measures the degree of
competition intensity and scarcity (Lumpkin & Dess, 2001; Zahra & Covin,
1995). Notably, all hypotheses connected with ED or EH – H2a, H2b, H3a
and H3b – are rejected. The denial is surprising considering the
development of the Hungarian economy in the past decades. Although,
Hungary has transformed from a centrally operated communist economy to
a free capitalist market, the development does not have a moderating effect
on the EO-FP relationship. Further research is necessary in order to
document further changes and the turning point of this development.
Fourth, to the best of the authors´ knowledge, firm age with its effect on the
EO-FP relationship has never been studied as an internal factor of
organizations before. However, the linear structure of firm age is arguable.
“An organization grows more or less continuously, but its structure is
changed only in discrete steps” as stated by Mintzberg (1979, p.232).
Therefore, the investigation of FA and its moderating effect fulfills an
unexplored gap inside strategic entrepreneurship research, and in addition
it opens up new discussions such as its inclusion with other moderators or
variables. Despite of the circumscribed theoretical background the fact of
rejection of H4a and H4b might derive from two distinct or parallel causes.
In Hungary, the general company structural change is differently related to
time development on an imagined chronological axis, or the prescribed
structure-firm age relationship is not significant enough. The two might
reinforce each other and output a strengthened negative influence.
586 | David KOVACS, Taylan ÜRKMEZ, Dominik BROCKHAUS, Ralf WAGNER, Katrin
ZULAUF
Linking Entrepreneurial Orientation to Firm Performance in a Post-Socialist Market Context:
the Case of Hungary
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Appendix