Entrepreneurial orientation in large firms: strategic, organizational design, and institutional considerations.

In today’s intense global competition, and a rapidly shifting technological landscape, firms need to nurture their entrepreneurial activities in order to survive and grow.

In the revealing meta-analysis Rauch et al., (2009) showed that entrepreneurship, as captured by the popular concept of entrepreneurial orientation (EO), has a substantial positive impact on a number of aspects of firm performance. The researchers concluded that, on average, EO displays similar positive relationships with subjective financial and nonfinancial performance indicators, as well as archival ones, such as growth, profitability, frim value, etc. However, they also indicated that this relationship has moderators, which influence its strength. Therefore, although EO has been considered necessary, it is not a sufficient ingredient for success. Studies of firm-level entrepreneurship and strategic management have indicated that an organizations’ ability to act entrepreneurially and achieve desired outcomes depend on several factors, both internal and external.

Large firm presents a distinct context to study both EO and strategic planning activities. As firms grow large, more complex managerial structures develop along with inertial forces and core rigidities. In effect, it becomes increasingly difficult and time-consuming to change some contextual factors to make them more enabling for EO.

The aim of this dissertation is to add to the ongoing conversations by joining the EO scholarly debates concerning strategic, organizational design and institutional factors as contextual variables facilitating development of EO in large firms or its translation to performance.

In the first project we develop a configurational model to explain when large entrepreneurial firms may need to consider formulating their strategy explicitly in order to achieve higher sales growth. This study fills in an important gap in the EO literature by shifting attention away from the frequently researched question of whether EO pays, to the enquiry of when and under which conditions it pays.

Second study investigates the role of acquisitions in supporting entrepreneurial orientation (EO) in large established companies. Specifically, we propose that translating acquisitions into EO might be contingent upon organizational design parameters: internal control and centralization. Success of acquisitions depends on the effective selection of assets to be acquired (e.g. technological competencies, knowledge and skills structures, technological artifacts) and their use in the post-acquisition period. We explore if internal control, which is supposed to convey order, accountability, coordination and efficiency to an otherwise chaotic situation, aids in maintaining higher EO when pursuing acquisitions, also in more centralized firms.

Third study contributes to the institutional theory of emerging markets by examining the influence of information voids on the development of entrepreneurial orientation (EO). We first establish measurement equivalence including the configural, metric and scalar invariance of EO in Brazil and in Belgium. These two countries represent an emerging and developed economy with opposite scores on institutional quality. We theorize how these differences impact the development of the quality of information available for entrepreneurial decision-making, and how strategic planning routines may impact EO in a low information availability environment.

The three studies jointly highlight the importance of well-functioning strategic planning-EO interplay, interacting with organizational design elements as well as business environments characterized by uncertainty. The findings suggest that not only EO, but also strategic planning, explicit strategy communication and internal control mechanisms need more scholarly and managerial attention, particularly in business environments characterized by uncertainty. Executives should pay greater attention to the internal and external contingencies their firms face when stimulating entrepreneurial behaviors to achieve higher performance.