Firm-environment alignment of entrepreneurial opportunity exploitation in technology-based ventures: A configurational approach

ABSTRACT

This study explores configurations for firm-environment alignment of entrepreneurial opportunity exploitation in technology-based ventures to explain firm performance. Classifying entrepreneurial opportunities by their source and location as technology driven and market driven, we develop a framework to investigate a multitude of factors in the firm and in the environment that influence firm performance only when aligned with each other. The study examines technology-based ventures using fuzzy-set qualitative comparative analysis. Our results highlight the presence of complete firm-environment alignment of technological and market opportunity exploitation in cases with very high organizational growth rates. High-growth cases are driven by market opportunity exploitation. Firm-environment misalignment characterizes low-growth cases. Our results extend entrepreneurial opportunity exploitation literature to encompass a configurational setting from a quality perspective and provides entrepreneurs, managers, and policy-makers with informed choices of alternative growth strategies when focusing on organizational and policy priorities.

KEYWORDS:

• Entrepreneurship
• entrepreneurial opportunities
• qualitative comparative analysis

Acknowledgments

Funding received from the European Union’s Seventh Framework Programme (FP7/2007-2013/Project Nr. 290657) under grant agreement “Growth-Innovation-Competitiveness: Fostering Cohesion in Central and Eastern Europe” (GRINCOH) is gratefully acknowledged. We benefited from discussions with participants at the GLOBELICS and British Academy of Management 2017 conferences. The first author would also like to thank Tomasz Mickiewicz, Slavo Radosevic, Iciar Dominguez Lacasa, and Venkat Venkatraman for their helpful comments on earlier drafts of this article.

Notes

¹ A recent exception is Emami et al. (2020) proposing a nonlinear, circular, and recursive framework to explain the opportunity creation process.

² The asymmetry principle suggests attributes that are found to be causally related in one configuration may be unrelated in another configuration (Meyer et al., 1993).

³ The equifinality principle allows for more than one way of achieving the desired outcome and produces several configurations leading to the same desired outcome (Fiss, 2007; Gresov & Drazin, 1997).

⁴ Two related exceptions, albeit within the concept of entrepreneurial orientation, have been Naman and Slevin’s (1993) examination of the relationship of fit with performance employing first a factor analysis and then linear regressions, and Wiklund and Shepherd’s (2005) investigation of the three-way interaction of entrepreneurial orientation, environmental dynamism, and access to capital on firm performance tested by hierarchical linear regression analyses.

⁵ For an elaborate investigation on the definitions of “opportunity”, “opportunity related processes” and “entrepreneurial opportunity,” see Hansen et al. (2011) and Davidsson (2015).

⁶ We are grateful to an anonymous reviewer for calling our attention to clarification of differences between opportunity creation, identification, and exploitation.

⁷ There is an ongoing debate in the entrepreneurship literature about the source of opportunities (that is, whether they are discovered or created). These are represented by realist-positivist and constructivist-interpretivist philosophical stances, respectively. They represent two distinct streams of entrepreneurship research literature; that is, the creativity approach driven by the resource-based view (Alvarez & Barney, 2007) and the entrepreneurial opportunity identification, exploration, and exploitation approach (Shane, 2012). Going into details of this debate is beyond the scope of this article; however, we refer interested readers to Sarasvathy et al. (2003), Eckhardt and Shane (2003 or 2010), Alvarez et al. (2010), Suddaby et al. (2015), Jones and Barnir (2019), and Emami et al. (2020).

⁸ Appendix A elaborates on how we used the Amadeus database to select our cases.

⁹ Appendix B outlines what information we sought in the questionnaire and provides a table with survey questions.

¹⁰ Interested readers can find further information about the firms in Yoruk (2019).

¹¹ Bollen et al. (1993, p. 328) observe that in the field of comparative sociology only 13 percent of scholarly articles analyzed 6–20 cases, while 45 percent analyzed 1–5 cases (that is, very small-N) and 42 percent analyzed more than 20 cases. Ragin (2000, p. 25) stresses that this strongly U-shaped association between number of publications and number of observations is replicated in many research areas.

¹² We benchmark each manifest indicator against national values and then calibrate for set membership (see values in Table 2). These processes inherent to QCA systematically position the cases against an external benchmark to ensure better objectivity, which is not possible in comparative case analysis.

¹³ The consistency threshold distinguishes configurations that are subsets of the outcome from those that are not.

¹⁴ Both solutions have acceptable overall solution consistency values of ≥ 0.75. Consistency measures the degree to which configurations and the solution as a whole (overall solution consistency) are subsets of the outcome (Ragin, 2008b, p. 85). Overall solution consistency denotes the extent that cases correspond to the set-theoretic relationship expressed in a solution (Fiss, 2011, p. 402). For all configurations, raw consistency values are set as equal to or above the 0.75 acceptable threshold value.

¹⁵ Overall solution coverage informs that configurations 2a and 2b jointly explain 60 percent of membership in the present outcome. Coverage measures how much of the outcome is explained by each configuration (represented by raw coverage and unique coverage) and by the solution as a whole (overall solution coverage) (Ragin, 2008b, p. 85). Raw coverage measures the proportion of memberships by each condition in the outcome, whereas unique coverage measures the proportion of cases that follow the specific configuration leading to the outcome (Ragin, 2008b, p. 86). Unique coverage statistics suggest that configuration 2a is more significant than configuration 2b in terms of frequency of occurrence of the outcome, 0.17 against 0.06 respectively. According to raw coverage statistics, conditions explain the configurations at 54 percent and 43 percent for 2a and 2b, respectively.

¹⁶ As complexity of processes and products increase, market competition with advanced Western counterparts operating at the technology frontier may become fierce. Although currently ENTSB can deliver what the domestic market wants, its high-technology products’ performances – that are structural and functional properties of ceramic products – may not yet have achieved the technology frontier level, hampering ENTSB’s current access to foreign markets.

¹⁷ Both solutions have acceptable overall solution consistency values of ≥0.75. In terms of overall solution coverage, configurations 3 and 4 jointly explain 65 percent of membership in the not-high growth sales outcome and configurations 5 and 6 jointly explain 81 percent of membership in the not-very high growth sales outcome. For all configurations, raw consistency values are set as equal to or above the 0.75 acceptable threshold value. Unique coverage statistics suggest that configuration 3 is more significant than configuration 4 in terms of frequency of occurrence, 0.21 against 0.10 respectively. According to raw coverage statistics, conditions explain the configurations at 54 percent and 44 percent for configuration 3 and 4, respectively.

¹⁸ As a lab porcelain producer, CC1 does not need sophisticated production techniques, but relies on customer-guided designs, recipes for powder mixtures, and all the technical drawings for product shape and tolerances being supplied by client firms. This is due to the specialized supplier nature of CC1, which produces customized products. It regards each “customer-oriented” product as an innovation, although the majority of the changes in these new products are nothing more than design alteration. CC2 produces electrical and technical ceramic parts. These are intricate products that rely on specific formulas of metal/ceramic powders. Hence, CC2 needs to generate these specific formulas together with clients to yield very good structural properties.

Additional information

Funding

This work was supported by the Seventh Framework Programme [290657].