Department of Business Economics International Doctorate in Entrepreneurship and Management DOCTORAL DISSERTATION Degree of Doctor of philosophy †Ph d
ENTREPRENEURIAL AND INNOVATIVE BEHAVIOR IN SPANISH SMES: ESSAYS ON PROFITABILITY, GROWTH AND EXPORT INTENSITY by
Submitted to the Department of Business Economics in partial fulfillment of the requirements for the degree of Doctor of philosophy †Ph d. by the
1. Entrepreneurship as Entrepreneurial Behavior 9 2. Problem Statement 11 2. 1. Entrepreneurial and Innovative Behavior in SMES and their Contribution to
2. 1. Contingency relationships between corporate entrepreneurship and performance 23 2. 2. The role of environmental hostility 25
Table 3. Environment †main definitions 27 Table 4. Absorptive capability (ACAP) and organizational learning
their classes of Public Enterprise and Doctoral Seminar, respectively In addition, I would like to thank all administrative staff of the Universitat Autã noma de
1. Entrepreneurship as Entrepreneurial Behavior This dissertation is the result of a research effort that focuses on subjects related to a
major driver of economic growth: entrepreneurship. It is acknowledged widely that entrepreneurship is one of the most important forces that shape the changes in the
economic landscape (Reynolds et al. 2005), moreover, entrepreneurship contributes to economic performance by introducing innovation, enhancing rivalry and creating
competition (Wong et al. 2005). ) Hence, the important contribution of entrepreneurship to national growth has been documented by several authors in the literature (Levenburg
and Schwartz, 2008; Tang et al. 2008; Uhlaner and Thurik, 2007; Urban, 2008. But what is entrepreneurship?
There is no single definition of entrepreneurship. According to Chow (2006), most often entrepreneurship is interpreted as business ownership or
self employment, but that is not an accurate definition. Furthermore, entrepreneurship often appears under different denominations, which explains why it is defined in
different ways (Cuervo et al. 2007). ) However, there seems to be a consensus that the essence of entrepreneurship is the willingness to pursue opportunity.
Thus â€oeentrepreneurship is a process by which individuals-either on their own or inside organizations-pursue opportunities†(Stevenson and Jarillo, 1990 p. 23.
Opportunity is defined as a future situation according to desires and goals of individuals or organizations.
In turn, entrepreneurial opportunities differ from the larger set of all opportunities for â€oeprofit, particularly opportunities to enhance the efficiency of existing
goods, services, raw materials, and organizing methods†(Shane and Venkataraman 2000 p. 220 10 Entrepreneurship can be seen as â€oeentrepreneurial functionâ€,
which involves more than the creation of a new business. Entrepreneurship implies the pursuit of opportunity
evaluation, and exploitation of opportunities and the set of individuals who discover evaluate, and exploit them (Shane and Venkataraman, 2000 p. 218.
In brief, in a firm -level perspective these opportunities are not specifically related to business creation but
rather through new products, services and process, new strategic behaviors and new market opportunities. Thus, entrepreneurial opportunities come in a variety of forms
opportunities in a product markets (Venkataraman, 1997), opportunities in factor markets, as in the case of the discovery of new things †innovation (Schumpeter, 1934
But, what about our research? Where is located it? As noted above, we can identify that
two streams of research have denominated the entrepreneurship literature. The first has largely focused on the individual entrepreneur as the unit of analysis, especially on
identifying the traits which distinguished successful entrepreneurs from less successful ones (Gartner, 1989. In contrast, the second stream of research tends to view
entrepreneurial activities as a firm-level phenomenon (Covin and Slevin, 1991), labeled Corporate Entrepreneurship †CE (Zahra and Covin, 1995.
â€oean individual†s psychological profile does not make a person an entrepreneur. Rather, we know
entrepreneurs through their actions or behavior†(Covin and Slevin, 1991 p. 8 Therefore, as stressed by Yeoh and Jeong (1995),
the fact that organizational level is a better predictor of entrepreneurial effectiveness suggests that organizations can and
should be viewed as entrepreneurial entities Our research is inserted in a CE context, precisely. The entrepreneurial behavior of
small and medium-sized enterprises (SMES) and its influence on the performance of them is the main topic in this dissertation.
By entrepreneurial behavior we must understand the behavior that combines innovation in product or process
domain of corporate entrepreneurship, which receives a substantial amount of theoretical and empirical attention, Entrepreneurial Orientation (EO.
Drawing on prior strategy-making process and entrepreneurship research, measurement scales of EO have been developed and widely used,
-level construct in strategic management and entrepreneurship studies (p. 1078 Although the theoretical foundation of the relationship between EO and performance
not equally suitable in all environments (e g.,, Covin and Slevin, 1989; Robertson and Chetty, 2000;
That is, in an uncertain environment where an atmosphere of high risk predominates, fewer opportunities, and with
tremendous competitiveness, an entrepreneurial behavior is recommended specially Over the last few years, the business environment, in Spain and elsewhere, has grown
increasingly hostile and it can certainly be argued that the external environment may have a strong impact on SME viability and growth.
In this sense, an entrepreneurial behavior has become an increasingly important survival condition (Bouchard and Basso, 2011.
environment means that both entrepreneurial and conservative companies must develop characteristics that enable them to cope with their environments (Yamada and Eshima
2009; Yeoh and Jeong, 1995 2. 2. The importance and relevance of entrepreneurial SMES for contemporary societies
As already stressed, there are many evidences that entrepreneurship is of great value for economic growth, productivity, innovation and employment.
In this sense, many countries members and partners of the Organization for Economic Co-operation and
entrepreneurship has gained additional attention in the current economic crisis, as it is widely viewed as a key aspect of economic
dynamism. It is acknowledged that economic crises are historically times of industrial renew, or creative destruction. It is also during crisis
within the economy of a country, sometimes facing particular difficulties. Precisely, in Spain about 99%of the companies could be classified as SMES1.
Precisely, over the last three years the SMES environment, in Spain and elsewhere, has grown increasingly turbulent
operate in a benign environment. Nonetheless, is especially important to highlight that SMES are closely related to the creation of new products and process techniques. â€oein
change creates greater uncertainty in the world economy, entrepreneurship is believed to offer ways to help to meet new economic, social and environmental challenges
In this sense, successful entrepreneurship both in SMES and in large firms depends heavily on innovation and R&d.
According to OECD report †Science, Technology and Industry Scoreboard (2009), R&d intensity has increased in all OECD countries with
the gradual shift to a knowledge-based economy. Knowledge creation and diffusion are broader than R&d since a large and growing share of innovations is not necessarily
organizational forms, firms seize entrepreneurial opportunities. Entrepreneurial opportunities are likely to be larger when firms develop innovations that are new to the
market or new to the world Regarding to innovativeness, it is acknowledged that of the three dimensions that
products/services, differentiate themselves and/or substitute incumbents with better quality, cheaper price or other means that customers value (Richard et al.
2009 Wiklund and Shepherd, 2005. Furthermore, innovativeness increases the likelihood that a firm will realize first-mover advantages
opportunities (Wiklund, 1999. Unsurprisingly, it has received special attention, and remains as a topic with substantial conceptual and empirical attention (e g.,
In circumstance of uncertainty and constantly competition both locally and internationally it seems essential to identify the strategic posture which may reflect
2 For the purpose of this study, it was decided to operationalize the external environment according to its
) This environment-framing method has regularly been used in the past, with researchers making the distinction between hostile and benign environments (e g.,
, Covin and Slevin, 1989; Miller and Friesen, 1983; Robertson and Chetty, 2000 16 empirical evidence on the relationship between network usage, EO and SME growth.
the environment 9 Does network usage contribute to EO development 9 Is there a positive relationship between EO
environment 9 There is a positive effect of network usage on EO development 9 EO and firm networks exert a positive
human resource management, economics and finance marketing, international business and corporate entrepreneurship In the field of entrepreneurship, Alvarez and Busenitz (2001) present RBV through the
entrepreneurial process of cognition, discovery, understanding market opportunities and coordinated knowledge. Namely, they examined the role of entrepreneurial
resources within RBV, suggesting how these resources might be unique to entrepreneurship. Entrepreneurial opportunities exist primarily because different agents
have different beliefs about the relative value of resources when they are converted from inputs into outputs (Schumpeter, 1934;
Shane and Venkataraman, 2000 The approach adopted by Alvarez and Busenitz (2001) emphasizes that entrepreneurs
are heterogeneous and integrates the role of the entrepreneurs with other important resources. The importance of the nature of cognitive factors for human capital
recognizing that not all managers possess the requisite combination or level of skills to generate profits.
In summary, â€oeentrepreneurial opportunities emerge when certain individuals have insights into the value of resources that others do not†(Barney et al
2001 p. 628 1. 1. SME and the knowledge-based view of the firm As stated by Grant†s (1991) resource categories,
dynamic (sometimes hostile) environments in which many SMES operate, it can be used to identify entrepreneurial opportunities,
to develop creative or novel internal solutions or external offerings. The analysis of organizational knowledge offers insight into the
which conforms to the changing environment through the identification of variables that produce the greatest impact, where the structure and
environment. Namely, this approach is based upon the idea that organizations must adapt their structures, internal processes and behaviors to the contingencies they face
within a given environment, which can be more or less hostile and uncertain Khandwalla, 1972 In summary, the central idea in the contingency perspective suggests that there is no
2. 1. Contingency relationships between corporate entrepreneurship and performance It is not difficult to find the relationship between CE and contingent perspective models
Entrepreneurship scholars have developed numerous typologies to describe alternate perspective of entrepreneurship. These classification systems typically depict
differences in entrepreneurship as the result of various combinations of individuals organizational or environmental factors that influence how and why entrepreneurship
occurs as it does (Lumpkin and Dess, 1996 p. 135. Moreover, there is a consensus that
the discovery and exploitation of entrepreneurial opportunities results from prior knowledge about markets and customers combined with the prior information on
external problems (Shane and Venkataraman, 2000; Venkataraman, 1997 At the firm-level, numerous entrepreneurship researchers have emphasized the
importance of viewing the entrepreneurial behavior-performance relationship in a contingency framework (Covin and Slevin, 1991;
Lumpkin and Dess, 2001; Wiklund and Shepherd, 2005. Factors such as environmental variables (Khandwalla, 1977 Miller and Friesen, 1983) or the structural and managerial characteristics (Mintzberg
entrepreneurship literature, in referring to the causes of entrepreneurship, often mentions factors such as managerial styles, social or motivational factors, and
entrepreneurship as firm behavior, Covin and Slevin (1991) discussed the relationship of strategy, structure, and environment to the EO dimensions of innovativeness
proactiveness and risk-taking propensity Especially the environment has long been considered one of the critical contingencies in
organizations theory and strategic management. Consequently, it is highlighted always as a critical contingency or contextual factor in the EO-performance relationship.
entrepreneurship and performance Table 2. Key variables exploring the CE-performance relationship in a contingent
2006) Environment dynamism environment hostility Strategic decision-making strategic formation mode strategic learning from failure firm size, and firm age
Lumpkin and Dess 1996 Dynamism, munificence complexity, industry characteristics Size, structure, strategy, firm resources, culture, top CEOS
External environment benign versus hostile export channel structure organic versus mechanistic Strategic orientation Source: Self-elaborated
recognition of the importance of external forces in unpredictable environments (See Table 3). Currently, it is acknowledged that external environmental factors may have a
or, even, other environment dimensions such as dynamism, often called uncertainty (Miller and Friesen, 1983), level of industry
multifacetedness, vigor and intensity of the competition. According to Miller and Friesen (1983), hostile environments, like dynamic ones, intensify challenges to the
firm, and often complicate these challenges. However, Miller and Friesen†s study also pointed out that, in contrast to dynamism,
within a specific environment characterized by some degree of hostility and uncertainty Thus, the classification that would be used frequently in the literature stresses two
different scenarios, hostile and benign environments. Hostile environments are described by Khandwalla (1976/77; 1977) as stressful, very risky, with few
opportunities. In this sense, Covin and Slevin (1989) added that a hostile environment is characterized by intense competition, overwhelming business climate and relative lack
of opportunity for exploitation. Conversely, a non-hostile or benign environment is one that has none of the characteristics above,
but, instead, provides investment opportunities and has a favorable climate for business (Covin and Slevin, 1989
Khandwalla, 1977 27 Table 3. Environment †main definitions Study Label Characteristics Lawrence and Lorsh
1967 Uncertainty Which is characterized by the rate of changes and innovation in the industry as well as the uncertainty
and unpredictability of the actions of competitors and customers Chandler (1962 Khandwalla (1972 Environmental heterogeneity
Which encompasses variations among the firm†s market that require diversity in production and marketing orientations
Khandwalla (1976/77 1977 Environmental hostility Like dynamic ones intensify challenges to the firm, and often complicate
these challenges. In contrast to dynamism however, hostility makes for scarce resources slimmer profit margin, and
in general, less maneuverability Miller and Friesen (1982 1983 dynamic and hostile environment When competitors†product
change rapidly or when customer needs fluctuate Source: Self-elaborated 3. Absorptive Capability and Organizational Learning Theory
1991), organizational economics (Rogers, 2004), international business (Eriksson et al 1997; Lane et al. 2001; Zahra et al.
It is acknowledged that competition is based increasingly knowledge, as firms strive to learn and to develop capabilities faster than does the competition (Prahalad and Hamel
1990; Teece et al. 1997 Based on Cohen and Levinthal†s (1990) definition, â€oeabsorptive capacity is the ability to
In the international entrepreneurship context, the firm†s effort to learn from its foreign presence, â€oeinternational learning effort†(Sapienza et al.
ACAP Model of firm investment in R&d predicting how absorptive capacity affects the determination of R&d
gaining access to opportunities, collecting the resources needed to build a new firm and obtain legitimacy (Birley, 1985;
and networking is recognized increasingly as a major theme in entrepreneurship (Jack et al.,, 2010. â€oethe boom in network research is part of a general shift, beginning in the
The trend towards network represents a major opportunity for the corporate entrepreneurship movement (Ripollã s and Blesa, 2006.
Network organizations provide many of the preconditions that are necessary for corporate entrepreneurs to thrive:
social network from the corporate entrepreneurship perspective Table 5. Social network in CE: key reasons Main idea Study
knowledge utilization, innovation, profit maximization entrepreneurship, and so on. †Borgatti and Foster (2003 p 1005 5 â€oean important source of new ideas and lucrative
opportunities may be the networks, in which the entrepreneur is actively participating. †Elfring and Hulsink (2003 p
412 6 â€oea key benefit of networks for the entrepreneurial process is the access they provide to information and advice. â€
Drawing on prior strategy-making processes and entrepreneurship research, measurement scales of EO have been developed and widely used, and their
pursuing new business opportunities. Proactive firms act on future needs actively seeking new opportunities and furthermore they are often pioneer firms that first to
enter the new markets (Nazdrol et al. 2009). ) Risk-taking reflects a firm†s willingness to
attention and represents one of the areas of entrepreneurship research, where a cumulative body of knowledge is developing (Basso et al.
Entrepreneurship: Theory and Practice, Strategic Management Journal, Academy of Management Journal, Journal of Management Studies, etc
Miller (1983) The paper Strategy making and environment: the third link, proposes three hypotheses related to the
environment. In this paper the author proposes his definition of what will become the foundation of the
benign environments, the authors discuss the concepts of â€oeentrepreneurial†and â€oeconservative†strategic postures based on two major imports:
entrepreneurship phenomenon (Miller and Friesen, 1982; Miller 1983) and the partial reuse of a questionnaire developed by
used in entrepreneurship and strategy Covin 1991 Covin and Slevin 1991 Covin et al 2006 In subsequent articles, Covin and Slevin use the term â€oeeo†with
adopt in a given environment (highlighted in the research of 1989). ) Their seminal article, A conceptual model of
entrepreneurship as firm behaviour (1991), recaps the previous elements and introduces a detailed description of entrepreneurial
concept of EO and entrepreneurship, comparably with the distinction established between content and process in the
the difference between proactive and aggressive competition thus far considered as a single dimension Assessment of
introduction of new products or services, processes, or ideas in the firm†s context. There
highlighted as an important factor for aggregate economic growth and performance over time. In fact, Schumpeter (1934) was among the first to emphasize the role of
services that shifted resources away from existing firms and caused new firms to grow Furthermore, in one of his most-cited texts, Drucker (1954) links innovativeness and
the introduction of new products or services as well as technological leadership via R&d in new processes (Rauch et al.
customers to consider their products or services new and unfamiliar and the technologies or procedures required by these products
or services becoming generally available recently, as well as strategic innovation and market relationship In summary, innovativeness in both set of measures is the predisposition to engage in
creativity through the introduction of new products or services as well as technological leadership via R&d in new processes
external environment 1. Introduction It is well-known that there is a large body of literature regarding aspects of firm
the strategic management and entrepreneurship literature over the years (Basso et al 2009; Rauch et al. 2009).
is not equally suitable in all environments (Covin and Slevin, 1989; Robertson and Chetty, 2000;
between EO and firm performance is contingent upon the external environment as well as upon internal organizational processes (Tang et al.
Equally important, the EO-environment fit may play an essential role in the firm†s ability to improve its profitability
Entrepreneurs seek to identify new opportunities, respond to environmental changes and take appropriate actions to achieve success. At the firm level,
entrepreneurship is defined as entrepreneurial philosophy that permeates an entire organization†s outlook and operations,
intangible asset in corporate entrepreneurship. Entrepreneurial values enhance the creation of new businesses within the existing businesses and the renewal or revival of
processes, responding to changes that occur in its environment, assuming a proactive strategic posture, and so on.
new products or services, proactiveness and risk-taking propensity (Miller, 1983; Miller and Friesen, 1982),
services as well as technological leadership via R&d in new processes (Rauch et al 2009). ) Proactiveness refers to a posture of anticipating
introduction of new products and services ahead of the competition and acting in anticipation of future demand.
By considering that proactiveness involves the capacity of a firm to anticipate changes in its environments,
we can state that firm generates a competitive advantage from this posture. Finally, entrepreneurial firms are defined as
exploit entrepreneurial opportunities (Lumpkin and Dess, 1996. Essentially, it refers to a firm†s strategy orientation, capturing the specific entrepreneurial aspect of decision
means that customers value (Wiklund and Shepherd, 2005), increasing the likelihood that a firm will realize first-mover advantages
opportunities. Risk-taking involves taking bold actions by venturing into the unknown Rauch et al. 2009), it reflects the tendency to assume relatively high levels of risk
-seeking profitable opportunities in the face of uncertainty and the achievement of long -term profitability
It is acknowledged that the discovery and exploitation of entrepreneurial opportunities results from prior knowledge about markets and customers (Venkataraman, 1997
Moreover, new information about technology, combined with the prior information on market needs and external problems, leads to the discovery of entrepreneurial
opportunities (Shane and Venkataraman, 2000. Thus, the external environment is always highlighted as a critical contingency or contextual factor in the EO-performance
relationship As stated by Galbraith (1973), there is no single way to organize, and there is no
environment. The importance of proper alignment of the strategy with the environment means that both entrepreneurial and conservative companies must develop
characteristics that enable them to cope with their environments (Yeoh and Jeong 1995). ) In this vein, Yamada and Eshima (2009) argued that the external environment
may have a strong impact on small firms†viability and growth 50 This stream of research draws on Khandwallas†s contingency perspective (1972), who
pointed out that the performance of a company should not be measured only in terms of organizational attribute (structure, management style, etc.
the fit of these dimensions within a specific environment characterized by some degree of hostility and uncertainty.
stresses two different scenarios, hostile and benign environments. As mentioned earlier Chapter II, Section 6), hostile environments are described by Khandwalla (1976/77
1977) as stressful, very risky, with few opportunities. In the same way, Covin and Slevin (1989) added that the hostile environment is characterized by intense
competition, overwhelming business climate and relative lack of opportunity for exploitation. Conversely, the non-hostile or benign environment is one that has none of
the characteristics above, but rather provides investment opportunities and has a favorable climate for business (Covin and Slevin, 1989;
Khandwalla, 1977 In fact, the classical study of contingent or contextual analysis of the EO-performance
relationship is the research by Covin and Slevin (1989), who pointed out that the entrepreneurial strategy changes according to the external environment being hostile or
benign. Entrepreneurial firms benefit especially in hostile environments (Covin and Slevin 1989. It is expected because the success of these firms is generated by their
competitive efforts that seek to gain or maintain competitive advantage. In this way Robertson and Chetty (2000) say that environments characterized by high levels of
uncertainty are used to encourage greater levels of innovation and risk-taking, which would imply the adoption of an entrepreneurial posture.
On the other hand, in benign environments the relationship between EO and performance may be less significant Entrepreneurial behavior involves more risk than does a conservative behavior.
Covin and Slevin (1989) argued that in a benign environment it is not necessary to take
51 decisions that create uncertainty or consuming effort or resources to maintain a firm†s
between EO, environment and profitability. Thus, the core focus of H2 is illustrated in Figure 1. So,
Entrepreneurial SMES (high EO), operating in a hostile environment, will have better profitability than will entrepreneurial SMES operating in benign environments
H2b. Conservative SMES (low EO), operating in a benign environment, will have better profitability than will conservative SMES in hostile environments
Figure 1. EO and environmental hostility: impact on firm profitability 3. Research Design 3. 1. Sample and data collection
The companies included in this study were selected based upon three criteria: First, all firms develop manufacturing activities.
role in the economy of a country by generating employment and contributing to the GDP.
to the independent variables entrepreneurial orientation and hostile environment. The questionnaire is presented using a 7-point Likert scale,
environment in which the company operates is. The scale obtained an average of 4. 419
which is required especially for new investments In this study, we assume a model proposed in previous studies (e g.,
decisions on investments in fixed assets. The FCF measure is described in Table 10 To calculate the FCF,
Investment in fixed assets =Free cash flow Model by Prior (2003 Control variables To explain firm performance,
The environment was classified as benign or hostile, depending on the degree of hostility perceived The EO index is located between one and seven, with the highest score indicating more
environment. Thus, the environment is considered to be hostile when the index is greater than or equal to four,
and is considered benign when the index is less than four At the moment the survey was done, a third part of the SMES considered their
environment as benign, especially companies in the food and beverage industry Conversely, two-thirds of the SMES saw their environment as hostile.
For example, in 60 the pharmaceutical manufacturing industry, all companies considered their environment as stressful and very risky
Table 11 summarizes the main statistics (i e.,, mean scores and SDS) and the correlation matrix of key variables considered in the study.
a hostile environment, and 0 in other cases) from the function; nonetheless, the regression results are interpreted considering the category removed.
not surprisingly, these conservative SMES operating in hostile environments presented the worst performance among all firms in the sample
business in a hostile environment, and 0 in other cases dco be dummy variable coded 1 for firms with a conservative orientation doing business
in a benign environment, and 0 in other cases deo be dummy variable coded 1 for firms with a entrepreneurial orientation doing
business in a benign environment, and 0 in other cases By using this model we can consider the full sample in the regression analysis,
with EO, operating in a hostile environment, will have better profitability than SMES with EO in benign environments †Confirmed.
Further, entrepreneurial SMES doing business in a hostile environment present higher performance in all ratios than do
entrepreneurial SMES doing business in a benign environment (e g.,, ROA: EO HE =526 and EO BE=.=188;
ROS: EO HE=.=463 and EO BE=.=145; FCF: EO HE=.=770 and EO BE=.=297 By observing the performance of conservative firms,
operating in a benign environment, will have better profitability than will SMES with a low EO in hostile environments †Confirmed.
Conservative SMES have higher financial performance in a benign environment than in a hostile one (CO BE>CO HE.
For example, conservative firms operating in a benign environment present a ROA of 0. 252
p<.05) and a FCF index of 0. 324 (p<.01), higher than do conservative firms in a
hostile environment 63 Table 12. Results of regression analyses ROA ROS FCF Step 1 Step 2 Step 3 Step 1 Step 2 Step 3 Step 1 Step 2 Step 3
environment in a contingency model. We thereby fill a significant gap, namely, this study contains two important novelties with regard to previous research.
shareholders or expand its business. Otherwise, a negative FCF means that the company will sell part of its investment or increase its debt.
Our findings confirm the existence of a positive and significant relationship between EO and FCF, as well as the importance
operating environment. A similar conceptual model has been applied in previous literature (Covin and Slevin; 1989; Robertson and Chetty, 2000;
environment, as stressed in other studies but, nonetheless, contrary to that presented by Chow (2006), who confirms the link between EO
ability to operate in both hostile and benign external environments (overall results highlighted that entrepreneurial SMES are more profitable in general than conservative
operating in a benign environment presented results as equally well as entrepreneurial SMES in the same operating environment.
Namely, these results lead us to conclude that the crucial need for product innovation, proactive behavior and risk-taking propensity is
more clearly in firms which operate in hostile environments In conclusion, our findings emphasize that the strategic orientation of the firm should
Thus, in an uncertain environment where an atmosphere of high risk predominates, few opportunities, and with tremendous competitiveness, an
entrepreneurial posture of the firm is recommended specially. This result could be explained by the characteristics required by the hostile environment (i e.,
, companies with an entrepreneurial profile, which often are the first to introduce new products 66
services or administrative techniques, and typically assume a very competitive posture Hence, the task for CEOS is to design
entrepreneurship. The EO concept, already investigated in the previous essay, receives substantial attention where cumulative knowledge is developing (Basso et al.
can be a way for the firm to exploit opportunities and improve its growth, on the other
network as a knowledge-based resource with the ability to influence the environment As noted by Hansen (1995),
venture context In turn, entrepreneurial strategic orientation (Covin and Slevin, 1989) is a well-defined concept (Miller, 1983) and is studied widely (Rauch et al.
) EO still makes a contribution to the strategy and entrepreneurship field; one example is the recent number of publications involving this topic (e g.,
limitations or suggestions represent opportunities to advance in the research. In this way, Rauch et al. 2009) highlighted that new proposals in methodology analysis and
of entrepreneurship emerged, and the role of networks in the entrepreneurial process has 71 been studied widely in recent decades (Jack, 2010;
services. Furthermore, networks are vital when topics are: discovery of opportunities securing resources and gaining legitimacy (Elfring and Hulsink, 2003.
Likewise â€oenetworks act as a buffer against shocks or surprises from the global market†(Madsen 2007 p. 191.
opportunities, as well as, the resources and competences needed to exploit these opportunities economically ahead of competitors,
thus facilitating innovative and proactive performance, and a moderate risk-taking approach†(Ripollã s and Blesa, 2005
and exploit entrepreneurial opportunities (Lumpkin and Dess, 1996. Empirically, Miller and Friesen (1982), then Miller (1983) have used
services as well as technological leadership via R&d in new processes (Rauch et al 73 2009). ) Proactiveness refers to a posture of anticipating
introduction of new products and services ahead of the competition and acting in anticipation of future demand.
If proactiveness involves the capacity of a firm to anticipate changes in its environments and generate competitive advantage from these
postures, the opposite of proactive behavior is passive and reactive behavior (Covin and Slevin, 1989.
and exploit new opportunities, on the other hand, the long-term or lagged effects of EO on firm performance are still unclear.
between sets of antecedents, entrepreneurship and performance In an attempt to improve the knowledge regarding the long-term effect of corporate
entrepreneurship, Zahra and Covin (1995) collected data from three different samples over a seven-year period to assess the longitudinal impact of EO on growth revenue
advantages in a firm†s environment (Gulati et al. 2000; Hite and Histerly, 2001 76 Johannisson et al.
instance, entrepreneurs who use their customers and suppliers as sources of support in the gestation period are more likely to grow faster (Capelleras and Greene, 2008
) Sometimes, close ties with customers can cause performance disadvantages, as pointed out by Burt (1992),
between growing and non-growing firms in a sample of new ventures. In the same way
Ostgaard and Birley (1996) tried to associate new venture growth and networking characteristics of the entrepreneur,
relationship between the size of network and sales or profit growth. Nonetheless, when the absolute values of sales and profits were measured,
they found some support for this relationship. The authors found more support for the relationship
opportunities and gaining legitimacy. More importantly, these entrepreneurial processes, in turn, have an impact on a firm†s performance.
companies particularly due to the fact that the economic environment is becoming increasingly competitive (Madsen, 2007), it is interesting to note that previous research
networks to influence the environment and the use of employees†networks as an information source, respectively.
environment of the economic crisis in which our research is inserted. It would be explained by a stochastic factor, namely,
that Spanish economy was affected more by the economic crisis from 2008 on, and it would be reflected in the growth rates
presented by SMES. In this way, Hart and Oulton (1996) highlighted that, superimposed 90 upon all of the systematic forces, is a large stochastic factor such as wars, terrorism
economic crisis and so on Returning to our research questions and aims stated in Section 1, the first objective
knowledge-resource, the use of networks to influence the environment and employees†networks as an information source.
this relationship when considering small and medium enterprises separately. A multi -group analysis has enabled us to illustrate that networks play a stronger role in EO
influence the environment, improve the proclivity of higher levels of EO and thus achieve high levels of growth.
as well as entrepreneurial spirit in companies†environments can be valuable to society as a whole because they represent more than just
entrepreneurship topics and have a direct influence on potentially successful firms Particularly in the Spanish context, they make it easier for public-support agencies to
could be a key to access the export market in a global economy. In turn, innovativeness reflects the tendency to new-idea generation, novelty,
most popular topics in business management and international entrepreneurship (IE literatures (e g.,, Cassiman and Golovko, 2011;
that one of the keys to generate a competitive advantage in a global economy is through innovativeness (Flor and Oltra, 2005;
with the situational uncertainty and the current economic crisis, large economies are facing difficulties due to recessions in their domestic markets.
investment, among others. In this study, we concentrate our analysis only on export activities (i e.,, when we talk about international activities,
advantages and capitalize on emerging market opportunities (Wiklund, 1999 Innovative firms, through the creation and introduction of new products and
technologies, develop a market niche with new products/services, differentiate themselves and/or substitute incumbents with better quality, cheaper prices or other
means that customers value (Richard et al. 2009; Wiklund and Shepherd, 2005 Innovation could be recognized as a key success factor in an increasingly competitive
global economy (Akman and Yilmaz, 2008. In this way, there is a large volume of empirical literature testing the effect of innovative activity on international business
impact of innovation activities, competition and new products development on the internationalization, as well as on export intensity of companies in Russia.
The sample used in this essay was taken from the Spanish Global Entrepreneurship Monitor (GEM) by considering the adult population survey for the years 2007 and
services new to all or some not new 398 579 40.74 59.26 580 869 40.03 59.97
customers in other countries. The purpose is to generate an ordinal classification attempting to identify firms that do not export,
through the introduction of new products or services as well as technological leadership via R&d in new processes.
degrees of effort by the firm in an attempt for potential customers to consider their
products or services new and unfamiliar and the technologies or procedures required by these products or services becoming generally available recently.
Another factor that may help explain firm innovativeness, especially in a strategic vision, is precisely the
and services that are either â€oetotally new†or â€oeradically different†from existing products (Sharma and Blomstermo
Regarding the uniqueness of products or services, we used a dichotomous variable. It assumes a value of one (1)
or some in an attempt for potential customers to consider their products or services new and unfamiliar;
otherwise, they assume the value of zero (0 Likewise, technological innovation assumes the value of one (1) for firms with
or none of your potential customers consider this product or service new and unfamiliar Technology
and how the propensity to innovate in products or services as well as technological innovation affects the proportion of foreign sales (export intensity.
or services, as well as their technology or procedures necessary to their activities having been recently available.
In fact, the correlation between innovation in products or services and technological innovation was expected, but the correlation value is not higher
innovation, our findings show that firms which apply their efforts to convince customers to recognize the company†s output as new and unfamiliar raise the probability of
or services is present if the firm has no (or has few) competitors offering the same product or service to their potential customers
The results are in accordance with those expected, that is, a small firm without competitors offering the same product
innovation, uniqueness of products or services and foreign sales. Overall, our results seem to suggest that there are simultaneous effects between innovativeness and export
of SMES sell products and services that are either totally new or different from existing
and services is another basis for internationalization Moreover, our empirical results provide support for the direction of a number of recent
offering the same product or service to customers, the more innovative the firm†s outputs are.
in the field of entrepreneurship. Moreover, it has important implications for the literature, management and public policy.
adjust their strategy to the environment and use their networks to develop entrepreneurial orientation and grow
aspects in entrepreneurship: entrepreneurial, and innovative behavior. Moreover, we noted that our research is inserted in a corporate entrepreneurship context.
The entrepreneurial orientation, as well as the innovativeness of small and medium-sized firms and their influence on the performance of them, is the main topic in this
importance of the proper alignment of the EO with the environment. Thus, in the first
Entrepreneurial SMES (high EO), operating in a hostile environment, will have better profitability than will entrepreneurial
SMES operating in benign environments H2b. Conservative SMES (low EO), operating in a benign environment, will have better profitability than will conservative SMES in
hostile environments 2 H3. A firm†s emphasis on using networks will affect EO development positively.
Confirmed H4. SMES growth in the long-term is more likely when the firm has a higher EO.
By bringing together and integrating different elements of entrepreneurship, strategic management and business performance, this dissertation has important implications for
This doctoral dissertation contributes to the literature on entrepreneurship and strategy management by investigating the impact of a firm†s resources and capabilities such as
innovation, investments in R&d, etc), our findings give a more complete reflection of the number of innovations adopted in a given time-period
capability to operate in both a hostile and benign environment without compromising their outcomes. Hence, the task for CEOS is to design
necessity of firms to develop superior EO, especially in hostile environments, because it is where a greater degree of creativity,
influence the environment, and improve the proclivity of higher levels of EO and growth. That is, business managers should
they represent more than just entrepreneurship topics and have direct influence on potentially successful firms. Particularly in the Spanish context, they make it easier for
despite large investments made by governmental agencies in export promotions since the 1990s, the growth of productivity
environments -by recommending the continued and consistent use of networks to secure crucial resources -by recommending
innovation, investment in new technologies and continuous improvement -by recommending the commercialization of products and services
radically different from existing ones, betting thus, for the innovatory uniqueness -by recommending the use of the international
In general, the present results are encouraging to entrepreneurship scholars. Thus another observation to future research is that examining the EO-performance
entrepreneurial posture and operating environment. Thus, we also suggest that an interesting extension of this study would be a cross-time analysis based on strategic
investments made by entrepreneurial companies, which present a high FCF rate, in order to assess whether these companies correctly invest their cash flow in excess
connecting the literature on entrepreneurship and the concept of agency problem by Jensen (1986 Future research will hopefully test this EO-EH-performance relationship using novel
entrepreneurship research, and future studies should continue testing the longitudinal EO approach that provides dynamism to the analysis. Future research should also
Entrepreneurship and competitiveness dynamics in Latin america. Small Business Economics, 31,305-322 Akman, G. and Yilmaz, C. 2008.
Innovative capability, innovation strategy and market orientation: an empirical analysis in Turkish software industry International Journal of Innovation Management, 12,69-111
Entrepreneurship through social network. In The Art and Science of Entrepreneurship, Sexton, D. L. and Smilor, R. Eds
Cambridge, MA, 3-23 Alegre, J.,Chiva, R. and Lapiedra, R. 2009. Measuring innovation in long product
The entrepreneurship of resource-based theory. Journal of Management, 27,755-775 Amorã s, J. E.,Etchebarne, S. and Felzensztein, C. 2011.
a Latin-american perspective. 5th Global Entrepreneurship Research Conference Proceedings, Cartagena de Indias (Colombia), 6-8 october
Entrepreneurship and Innovation, 10,313-321 Birkinshaw, J. 1998. Corporate entrepreneurship in network organizations: how subsidiary initiative drives internal market efficiency.
European Management Journal, 16,355-364 135 Birley, S. 1985. The role of networks in the entrepreneurial process.
strategies and corporate entrepreneurship: an empirical examination of small firms. Entrepreneurship Theory and Practice, 24,49-70
Borgatti, S. P. and Foster, P. C. 2003. The network paradigm in organizational research: A review and typology.
The fiscal environment for entrepreneurship. In. The Environment for Entrepreneurship, Kent, C a. Ed.),Lexington Books, Lexington, MA, 59-68
Bouchard, V. and Basso, O. 2011. Exploring the links between entrepreneurial orientation and intrapreneurship in SMES.
Journal of Small Business and Enterprise Development, 18,219-231 Brass, D. J. 1992. Power in organizations:
a social network perspective. In Research in Politics and Society, Moore, G. and Whitt, J. A. Eds.
establishing the science of enterprise networks. Production and Operations Management, 14, 493†513 136 Brown, T. E.,Davidsson, P. and Wiklund, J. 2001.
Stevenson†s conceptualization of entrepreneurship as opportunity-based firm behavior. Strategic Management Journal, 22,953-968
establishing the science of enterprise networks. Production and Operations Management, 14, 493†513 Burt, R. S. 1992.
the social structure of competition. Harvard University Press, Cambridge, MA Caldera, A. 2010. Innovation and exporting:
Review of World Economics, 146,657-689 Capelleras, J. L. and Greene, F. J. 2008. The determinants and growth implications of
venture creation speed. Entrepreneurship and Regional Development: An International Journal, 2008,20, 317-343 Capelleras, J. L. and Rabetino, R. 2008.
Individual, organizational and environmental determinants of new firm employment growth: evidence from Latin america International Entrepreneurship and Management Journal, 4, 79-99
Carpenter, M. A.,Li, M. and Jiang, H. 2012. Social network research in organizational contexts: a systematic review of methodological issues and choices.
Entrepreneurship & Regional Development, 22,265-291 Cassiman, B. and Golovko, E. 2011. Innovation and internationalization through
new ventures and small business. In Strategic Management: a new view of business policy and planning, Schendel, D
Entrepreneurship: Theory and Practice 14,35-50 Covin, J. G. and Miles, M. P. 1999. Corporate entrepreneurship and the pursuit of
competitive advantage. Entrepreneurship Theory and Practice, 23,47-63 Covin, J. G. and Slevin, D. P. 1989.
Strategic management of small firms in hostile and benign environments. Strategic Management journal, 10,75-87
Covin, J. G. and Slevin, D. P. 1991. A conceptual model of entrepreneurship as firm
behavior. Entrepreneurship Theory and Practice, 16,7-25 Covin, J. G.,Green, K. M. and Slevin, D. P. 2006.
Strategic process effects on the entrepreneurial orientation-sales growth rate relationship. Entrepreneurship Theory and Practice, 30,57-81
Cuervo, A.,Ribeiro, D. and Roig, S. 2007. Entrepreneurship: conceptos, teoria y perspectiva. Introducciã n. In Cuervo, A.,Ribeiro, D. and Roig, S. Eds
Entrepreneurship: conceptos, teoria y perspectiva, 9-25 Damanpour, F. 1991. Organizational Innovation: a meta-analysis of effects of
determinants and moderators. Academy of Management Journal, 34,555-590 Damijan, J. P.,Kostevc, C. and Polanec, S. 2010.
The World Economy, 33,374-398 Da Rocha, A.,Kury, B. and Monteiro, J. 2009. The difusion of exporting in Brazilian
Entrepreneurship and Regional Development, 21,529-552 Dejo-Oricain, N. and Ramã rez-Alesã N m. 2009.
entrepreneurship and International performance: The importance of domestic environment. International Business Review, 13,19-41 Donaldson, L. 2001.
The contingency theory of organizations. Sage Publications United kingdom Downs, R. D. and Mohr, L. B. 1976.
Networks in entrepreneurship: the case of high -technology firms. Small Business Economics, 21,409-422 Emsley, D. 2005.
Restructuring the management accounting function: a note on the effect of role involvement on innovativeness.
definition of small and medium-sized enterprises. Official Journal of the European Union-EUR LEX. http://eur-lex. europa. eu. Consultation days in January, 2010
The Journal of Industrial Economics, 35,567-81 Fariã as, J. C. and Martã n-Marcos, A. 2007.
The World Economy, 30,618-646 Fernã¡ndez, Z. 1999. El estudio de las organizaciones (la jungla dominada.
Entrepreneurship Theory and Practice, 13,47-68 Gassmann, O. and Keupp, M m. (2007. The competitive advantage of early and
Entrepreneurship Research Conference Proceedings, Cartagena de Indias Colombia), 6-8 october Granovetter, M. 1985. Economic action and social structure:
Prospering in dynamically-competitive environments organizational capability as knowledge integration. Organization Science, 7 375-387
Social networks and entrepreneurship Entrepreneurship Theory and Practice, 28,1-22 Griffin, P. A.,Lont, D. H. and Sun, Y. 2010.
Agency problem and audit fees: further tests of the free cash flow hypothesis. Accounting and Finance, 50,321-350
Entrepreneurship Theory and Practice, 19,7-19 Hardgrave, B c.,Wilson, R. L. and Eastman, K. 1999.
Network-based research in entrepreneurship: a critical review. Journal of Business Venturing, 18,165-187 Hoelter, J. W. 1983.
Entrepreneurship & Regional Development, 6, 329-356 Johanson, J. and Vahlne, J. E. 1991. The mechanism of internationalization
entrepreneurial individuals and teams. 11th Babson Entrepreneurship Research Conference, April 17-20, Pittsburgh, PA Katsikeas, C. S.,Leonidou, L. C. and Morgan, N. A. 2000.
Environment, strategy, structure, and performance in the context of export activity: an empirical study of Taiwanese manufacturing
Environment and its impact on the organization International Studies of Management & Organization, 2, 297-313
Entrepreneurship Theory and Practice, 35 1025-1050 Lachenmaier, S and Wobmann, L. 2006. Does innovation cause exports?
Organization and environment. Harvard Business School, Cambridge Lee, C. Y. 2010. A theory of firm growth:
Entrepreneurship and Regional Development, 15,1-26 Lechner, C.,Dowling, M. and Welpe, I. 2006. Firm networks and firm development
the impact of culture, education and environment. The Journal of Entrepreneurship, 17,15-35 147 LÃ pez Rodrã guez, J. and Garcã a Rodrã guez, R. 2005.
Technology and export behaviour: a resource-based view approach. International Business Review, 14 539-557
the moderating role of environment and industry life cycle. Journal of Business Venturing, 16,429-451 Lumpkin, G. T.,Wales, W. J. and Ensley, M d. 2006.
effects on new venture performance: the moderating role of venture age. Academy of Management Best Conference Paper 2006, ENT:
N1-N7 Madsen, E. L. 2007. The significance of sustained entrepreneurial orientation on performance of firms †A longitudinal analysis. Entrepreneurship & Regional
Development, 19,185-204 Macdougall, P. P. and Oviatt, B. M. 2000. International entrepreneurship: the intersection of two research paths.
Academy of Management Journal, 43,902-908 March, J. G. 1994. Exploration and exploitation in organization learning
The correlates of entrepreneurship in three types of firms Management Science, 29,770-791 148 Miller, D. and Friesen, P. H. 1982.
Strategy-making and environment: the third link Strategic Management Journal, 4, 221-235 Miller, D. and Tolouse, J. M. 1986.
Entrepreneurship Theory and Practice, 32,507-528 Morgan, R. E. and Strong, C a. 1998. Market orientation and dimensions of strategic
AGSE International Entrepreneurship Research Exchange Proceedings Melbourne, 1-4 february, 713-724 149 Nasrallah, W. F. and Qawasmeh, S. J. 2009.
Indicators 2009 Edition, concerning entrepreneurship. OECD †Eurostat Entrepreneurship Indicators Programme Ostgaard, T. A. and Birley, S. 1996.
New venture growth and personal networks Journal of Business Research, 36,37-50 Pan, Y. and Chi, P. S. K. 1999.
Financial performance and survival of multinational corporations in China. Strategic Management Journal, 20,359-374 Penrose, E. 1959.
Journal of International Entrepreneurship, 3, 37-53 Prior, D. 2003. Rendibilitat i generaciã de tresoreria a l†empresa industrial catalana
Entrepreneurship: Theory and Practice, 16,27-41 Rauch, A.,Wiklund, J.,Lumpkin, G. T. and Frese, M. 2009.
Entrepreneurship Theory and Practice, 33,761-787 Reynolds, P.,Bosma, N.,Autio, E.,Hunt, S.,De Bono, N.,Servais,
Global entrepreneurship monitor: data collection design and implementation 1998-2003. Small Business Economics, 24,205-231
Rhee, J.,Park, T. and Lee, D. H. 2010. Drivers of innovativeness and performance for
orientation in new ventures. The International Journal of Entrepreneurship and Innovation, 6, 239-248 Ripollã S m. and Blesa, A. 2006.
Redes personales del empresario y orientaciã n emprendedora en las nuevas empresas. Cuadernos de Economã a y Direcciã n de la
International Entrepreneurship, 5, 65-83 Robertson, C. and Chetty, S. K. 2000. A contingency-based approach to understanding
Absorptive capability and economic growth: how do countries catch up? Cambridge Journal of Economics, 28,577-596 152
Roper, S. and Love, J. H. 2002. Innovation and export performance: evidence from the UK and German manufacturing plants.
Journal of Economics and Management Strategy, 14 431-461 Schreider, J. B.,Stage, F. K.,King, J.,Nora, A. and Barlow, E. A. 2006.
The promise of entrepreneurship as a field of research. Academy of Management Review, 25,217-226
A paradigm of entrepreneurship entrepreneurial management. Strategic Management Journal, 11,17-27 Tajeddini, K.,Trueman, M. and Larsen, G. 2006.
Chinese ventures. Entrepreneurship Theory and Practice, 32,219-239 Tang, J.,Tang, Z.,Zhang, Y. and Li, Q. 2007.
The impact of entrepreneurial orientation and ownership type on firm performance in the emerging region of
Journal of developmental Entrepreneurship, 12,383-397 Teece, D. J. 2007. Explicating dynamic capabilities: the nature and microfoundations
of (suatainable) enterprise performance. Strategic Management Journal, 28,1319 -1350 Teece, D. J.,Pisano, G. and Shuen, A. 1997.
Journal of International Entrepreneurship, 10,25-49 154 Uhlaner, L. and Thurik, R. 2007. Postmaterialism influencing total entrepreneurial
Journal of Evolutionary Economics, 17,161-85 Urban, B. 2008. The prevalence of entrepreneurial orientation in a developing country
Developmental Entrepreneurship, 13,425-443 Venkataraman, S. 1997. The distinctive domain of entrepreneurship research: an editor†s perspective.
In advances in Entrepreneurship, Firm Emergence, and Growth, Katz, J. and Brockhaus, R. Eds. Greenwich, CT, 119-138
Venkataraman, S. and Van de ven, A. 1998. Hostile environmental jolts, transaction set, and new business. Journal of Business Venturing, 13,231-255
Entrepreneurship Theory and Practice, 35,895-923 Wernerfelt, B. 1984. The resource-based view of the firm.
Entrepreneurship Theory and Practice, 24,37-48 Wiklund, J. and Shepherd, D. 2005. Entrepreneurial orientation, and small business
Entrepreneurship: Theory and Practice, 35 925-946 Wong, P. K.,Ho, Y. P. and Autio, E. 2005.
Entrepreneurship, innovation and economic growth: evidence from GEM data. Small Business Economics, 24,335 -350 Yamada, K. and Eshima, Y. 2009.
Impact of entrepreneurial orientation: Longitudinal analysis of small technology firms in Japan. The Academy of Management, Annual
Meeting Proceedings (Conference Theme: Green Management Matters), Chicago 7-11 august Yeoh, P. and Jeong, I. 1995.
Contingency relationship between entrepreneurship export channel structure and environment: a proposed conceptual model of export
performance. European Journal of Marketing, 29,95-115 Zahra, S. A. and Covin, J. G. 1995.
entrepreneurship-performance relationship: a longitudinal analysis. Journal of Business Venturing, 10,43-58 Zahra, S. A. and George, G. 2002.
venture firms: international diversity, mode of market entry, technological learning, and performance. Academy of Management Journal, 43,925-950
Entrepreneurship Theory and Practice, 35,293-317 156 157 APPENDIX Appendix 1. Confirmatory factor analysis †EO
Strong emphasis on marketing products and services that have recently been developed through R&d 3 Likert 1-7
New lines of products or services. Likert 1-7 Changes in product or service lines. Likert 1-7
Often is the first to introduce new products, services administrative techniques, operating technologies, etc Likert 1-7
maximize the probability of exploiting potential opportunities Likert 1-7 863 932 873 866 876
environment (both domestic and international within which your firm operates 3 Very safe/risky Likert 1-7
opportunities and investment Likert 1-7 An environment that my firm can control and manipulate/dominating environment which my
firm†s initiatives count for very little against tremendous competitive Likert 1-7 Appendix 4. Firm network scale measurement
No. of items Type of measure Network resources Use of manager†s own networks 4
Use of networks to influence the environment. Likert 1-7 Use of employees†networks as an information source.
Overtext Web Module V3.0 Alpha
Copyright Semantic-Knowledge, 1994-2011