The significance of sustained entrepreneurial orientation on performance of firms – A longitudinal analysis

Abstract

This study focuses on the importance of changes in entrepreneurial orientation (EO) over time for subsequent firm performance, and the significance which inimitable resources (networks, governance system and unique competence) might have in this connection. Hypotheses are developed to test the effects that changes in EO level over a time period and resources have on subsequent firm performance. The study is based on data from 168 Norwegian SMEs, interviewed both in 2000 and 2003. The primary contribution of this study is that a change in EO over time (increased or decreased), may be of importance for a firm's performance represented by performance compared to competitors, and employment growth. A focus on entrepreneurial activities seems to be beneficial in the long run (increasing EO), while the opposite is the case if the EO level decreases. It is especially encouraging to see that firms focusing on EO (increased or the same) are positively associated with employment growth, one of the primary policy goals world-wide. Another contribution from this study is that resources that may be inimitable for firms have some influence on performance compared to competitors. Implications for policy-makers, practitioners and further research are discussed.

Keywords:

• entrepreneurial orientation
• resources
• firm performance
• longitudinal study
• Norway

Acknowledgements

The author wishes to express his gratitude to Gry Agnete Alsos, Daniel Hjorth, Sten Jönsson, Inger-Johanne Pettersen, Paul Westhead and two anonymous reviewers for their helpful comments on earlier versions of this paper.

Notes

Notes

1.  Entrepreneurship refers to the discovery and exploitation of opportunities to bring into existence future goods and services (Shane and Venkataraman 2000).

2.  Before 2004 the title of the organization was The Norwegian Industrial and Regional Development Fund.