Entrepreneurship and the Growth of Firms
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Entrepreneurship and the Growth of Firms

Per Davidsson, Frédéric Delmar and Johan Wiklund

In this book, three leading scholars have integrated some of their most important research in order to answer these questions on firm growth. The result is a volume that builds on studies of many thousands of firms in several different projects. It offers deep insights into the firm growth phenomenon and how it can be studied.
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Chapter 7: The Sustainability of the Entrepreneurial Orientation–Performance Relationship

Per Davidsson, Frédéric Delmar and Johan Wiklund

Extract

7. The sustainability of the entrepreneurial orientation– performance relationship Johan Wiklund INTRODUCTION Entrepreneurship is presently a very popular term and there is a tendency to regard entrepreneurship as something inherently good, something firms should always pursue. This may bias us to favor anecdotal evidence in favor of, rather than against, a positive relationship between entrepreneurial activities and firm performance. Dess, Lumpkin and Covin (1997) observe a strong normative bias toward the inherent value of entrepreneurship and suggest that the popular press encourages the belief that entrepreneurship is good. As a result, managers may experience considerable pressures to behave more entrepreneurially in order to improve or maintain the performance of their firms. Before encouraging wholesale adoption of an entrepreneurial strategic orientation (referred to as EO), more solid empirical evidence on the link between entrepreneurship and performance must be presented. One of the major issues in such an assessment is the sustainability of the EO-performance relationship. Currently, we do not know if EO affects performance over an extended period of time or if it is a ‘quick fix’ where performance is temporarily affected. This is an important gap in the literature because EO is claimed to be a resource-consuming strategic orientation requiring extensive investments by the firm (Covin and Slevin, 1991). Firms will benefit from knowing whether EO leads to sustained high performance or only has a short-term effect. Several authors point to the lack of systematic empirical evidence that EO actually leads to improved firm performance (Covin and Slevin, 1991; Sexton...

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