Entrepreneurial Orientation
Entrepreneurial orientation (EO) describes firm-level strategic processes that firms use to obtain a competitive advantage. The dimensions of EO include innovativeness, risk taking, and proactiveness. The following chapter describes the conceptualization
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Entrepreneurial Orientation
Andreas Rauch1 Michael Frese2
Abstract Entrepreneurial orientation (EO) describes firm-level strategic processes that firms use to obtain a competitive advantage. The dimensions of EO include innovativeness, risk taking, and proactiveness. The following chapter describes the conceptualization of EO and its underlying dimensions. Moreover, we summarize the empirical evidence relating to the relationship between EO and venture performance. We suggest a contingency approach and suggest moderator variables that affect the relationship between EO and venture performance. Keywords: entrepreneurial orientation, business strategy, business performance
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Prof. Dr. Andreas Rauch is Professor of Entrepreneurship and New Business Venturing at Rotterdam School of Management, Erasmus University, The Netherlands.
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Prof. Dr. Michael Frese is Professor of Work and Organizational Psychology at University of Giessen, Germany, and the London Business School, United Kingdom. A. Bausch and B. Schwenker (eds.), Handbook Utility Management, DOI: 10.1007/978-3-540-79349-6_6, © Springer-Verlag Berlin Heidelberg 2009
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6.1
A. Rauch & M. Frese
Introduction
Both the scientific literature and the popular press have widely recognized that entrepreneurial activities make a positive contribution to countries’ job creation, economic growth, and innovation (e.g., Birch, 1987; Minniti et al., 2006; OECD, 1996). While it is quite widely agreed that start-up dynamics produce positive economic effects, there is little agreement among scientists on any useful explanations of such effects. A wide range of theories, models, and typologies have been introduced, focusing on diverse scientific domains, such as theory of economic growth, ecological approaches, strategic management, and individual-level approaches. Moreover, different scientific domains frequently introduce new concepts to the domain of entrepreneurship without adequate examination of the evidence of previous ideas. As a result, there is little consensus about the status of concepts and evidence established in the field. However, without developing a consensus in the field it is difficult to suggest specific interventions and practice recommendations that are based on sound empirical evidence and to support entrepreneurship and wealth creation successfully. One more promising set of concepts that has received consensus in the field of entrepreneurship focuses on firms’ strategic posture: entrepreneurial orientation (EO). EO is concerned with the firm-level strategic processes that firms use to obtain a competitive advantage. This chapter focuses on the EO of business ventures and describes its conceptualization and its underlying dimensions. Moreover, we summarize the empirical evidence relating to the relationship between EO and venture performance, and also moderator variables affecting this relationship.
6.2
The Concept of Entrepreneurial Orientation
The concept of EO addresses strategic processes that help a firm to receive a competitive adva
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