Why does entrepreneurial orientation affect company performance?

Putnins, T; Sauka, A

Why does entrepreneurial orientation affect company performance?

Putnins, T

Sauka, A

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Publisher:: Wiley
Publication Type:: Journal Article
Citation:: Strategic Entrepreneurship Journal, 2020
Issue Date:: 2020

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Field	Value	Language
dc.contributor.author	Putnins, T https://orcid.org/0000-0001-5731-499X
dc.contributor.author	Sauka, A
dc.date.accessioned	2021-01-04T05:28:28Z
dc.date.available	2021-08-12T19:00:52Z
dc.date.issued	2020
dc.identifier.citation	Strategic Entrepreneurship Journal, 2020
dc.identifier.issn	1932-443X
dc.identifier.issn	1932-443X
dc.identifier.uri	http://hdl.handle.net/10453/145065
dc.description.abstract	© 2019 Strategic Management Society Research summary: To better understand why entrepreneurial orientation (EO) is positively associated with company performance, we propose and test a reconceptualization of how the components of EO (risk-taking, innovativeness, proactiveness) combine in driving performance. Drawing on financial economics theory, our conceptualization highlights that all three components positively contribute to performance, but in different ways. Risk-taking has a direct positive relationship with performance, which can be understood through the risk–return tradeoff that is central in financial economics theory. The relationship between risk-taking and performance is conditional on the level of innovativeness and thus innovativeness contributes to performance through its effect on the type of risk-taking. Proactiveness contributes to performance through its positive effect on the level of risk-taking. Managerial summary: This study analyzes three key drivers of company performance: risk-taking, innovativeness, and proactiveness. We show that constructive risk-taking is the central driver of company performance, mirroring the principle of risk and return in financial investment settings. Risk- taking that is associated with innovation has a particularly strong positive relationship with performance, consistent with innovation being a driver of growth and profitability. More proactive firms tend to take on more risk and thus also perform better than less proactive firms.
dc.language	en
dc.publisher	Wiley
dc.relation.ispartof	Strategic Entrepreneurship Journal
dc.relation.hasversion	Accepted Manuscript version	en
dc.relation.isbasedon	10.1002/sej.1325
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject	1503 Business and Management
dc.title	Why does entrepreneurial orientation affect company performance?
dc.type	Journal Article
utslib.for	1503 Business and Management
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
pubs.organisational-group	/University of Technology Sydney
utslib.copyright.status	open_access	*
pubs.consider-herdc	false
dc.date.updated	2021-01-04T05:28:18Z
pubs.publication-status	Accepted

Abstract:

© 2019 Strategic Management Society Research summary: To better understand why entrepreneurial orientation (EO) is positively associated with company performance, we propose and test a reconceptualization of how the components of EO (risk-taking, innovativeness, proactiveness) combine in driving performance. Drawing on financial economics theory, our conceptualization highlights that all three components positively contribute to performance, but in different ways. Risk-taking has a direct positive relationship with performance, which can be understood through the risk–return tradeoff that is central in financial economics theory. The relationship between risk-taking and performance is conditional on the level of innovativeness and thus innovativeness contributes to performance through its effect on the type of risk-taking. Proactiveness contributes to performance through its positive effect on the level of risk-taking. Managerial summary: This study analyzes three key drivers of company performance: risk-taking, innovativeness, and proactiveness. We show that constructive risk-taking is the central driver of company performance, mirroring the principle of risk and return in financial investment settings. Risk- taking that is associated with innovation has a particularly strong positive relationship with performance, consistent with innovation being a driver of growth and profitability. More proactive firms tend to take on more risk and thus also perform better than less proactive firms.

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http://hdl.handle.net/10453/145065