Entrepreneurial orientation (EO)

What is entrepreneurial orientation
 

There have been a wealth of literature on Entrepreneurship-oriented research at the company level, but there are still some vague and unclarified aspects in the analysis, connotation definition, and measurement dimensions. From the analysis perspective, only by clearly identifying the analysis unit can we prevent errors that cause the exported results of an analysis unit to another type of analysis unit, however, some entrepreneurial-oriented research does not clearly define the main objects and boundaries of research focus. From the perspective of entrepreneurial-oriented connotation, there are different research terms, and a large number of studies describing the phenomenon of established organizational entrepreneurship appear in other forms, obfuscation or even slowing down the process of entrepreneurship-oriented research; there are also different opinions on entrepreneurial-oriented dimensions.
In the past, scholars used different terms for entrepreneurial orientation at the company level, such as entrepreneurship, incluate entrepreneurship, entrepreneurial posture, entrepreneurial strategic posture, and entrepreneurial orientation. Domestic scholars use terms such as entrepreneurship orientation, entrepreneurship, and entrepreneurship orientation. Although the terms are different, the meaning of the expression is similar. The research focuses on the key characteristics of the entrepreneurial process of the company.
To clarify the confusion of terms, Lumpkin and Dess (1996) differentiate entrepreneurship from entrepreneurial orientation. The difference between the two is similar to the difference between content and process mentioned in the Strategic Management Document of bourgeois (1980. Entrepreneurship refers to the factors involved, such as the business we want to enter, the strategy we want to enter, the scope of the enterprise's business, the deployment of products, markets, and resources; entrepreneurship orientation emphasizes how to act, that is, the procedures, practices, and decision-making activities caused by new behaviors, including managers trying new technologies with potential, taking the initiative to seize new product market opportunities, and undertaking risky investments. In short, entrepreneurship focuses on Static components, and entrepreneurship orientation focuses on dynamic operations. Entrepreneurship orientation is a manifestation of entrepreneurship.
Miller (1983) believes that entrepreneurial-oriented enterprises participate in product market innovation, take on a certain level of risks, and carry out advanced innovation to combat competitors. Steven son and jarillo (1990) have explained from multiple perspectives that they are more accurate in expressing the specific characteristics of entrepreneurial orientation: entrepreneurial-oriented organizations are not subject to their current resource restrictions, give up the pursuit of market opportunities; the level of entrepreneurial orientation of the organization is related to the attitude of employees in the Organization; the intensity of entrepreneurship orientation is closely related to whether the Organization encourages employees to pursue market opportunities, whether to cultivate employees' actions to pursue market opportunities, and whether to reward employees based on the results of their pursuit of market opportunities, at the same time, it is also positively related to whether the organization tries to minimize the negative results of employees who fail to pursue market opportunities. Organizations that formally operate on informal networks, through resource re-allocation and sharing during network operation, it shows a high degree of organization entrepreneurship orientation.
This article holds that entrepreneurship orientation represents the management practices of a series of related activities of entrepreneurial organizations to solve problems and respond to environmental changes. Entrepreneurship-oriented enterprises can act independently, have an attitude of innovation and risk tolerance, actively compete with competitors, and take advanced actions when facing market opportunities. The entrepreneurial orientation shown by the enterprise's pursuit of opportunities drives the enterprise's career to expand, technology to progress, and wealth to be created.

Entrepreneurial orientation
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The entrepreneurial orientation has a wide range of opinions, and it is still inconclusive. According to Miller (1983)'s definition of entrepreneurial orientation, researchers have extracted three dimensions: innovation, risk tolerance, and drive to measure entrepreneurial orientation. The dimensions and scales used by covin and Slevin (1989) have been widely recognized and used by scholars. Some scholars have also added some different dimensions based on Miller, Friese (1978), Miller (1983), and Miller ()'s measurement structure or modified version, such as pioneering, active competition, and autonomy.
In 1996, based on previous research, Lumpkin and Dess expanded the entrepreneurial orientation and joined the autonomy and competition enthusiasm dimensions, making entrepreneurship orientation a five-dimensional concept. Zahra, Jennings, and kuratko (1999) believe that lumpkinh and Dess views will be of great help for future studies.
Compared with foreign research progress, domestic research is still in the initial stage, there are few relevant studies, there are inconsistent conclusions on the entrepreneurial orientation dimension. For example, Zhang Yuli (2006) uses the entrepreneurial orientation scale in three dimensions and nine projects based on the empirical research in the Bohai region. The results show that the entrepreneurial orientation can be combined into two dimensions: innovation, foresight, and risk tolerance. Zhang Yinghong (2005) used Factor Analysis to extract four dimensions: innovation, adventure, preanimation, and competition aggressiveness, in the Chinese context, Lumpkin and Dess verify that the entrepreneurial orientation dimension is independent of each other.

1. Innovation

As one of the important dimensions of the company's entrepreneurial orientation, innovation refers to the company's pursuit of innovative solutions to cope with the challenges it faces, including the development or enhancement of products and services and the use of new technologies or new management skills [8]. Innovation is manifested in the emergence of new ideas, the activity of R & D activities, and the launch of new products. It reflects the enterprise's tendency to pursue new opportunities and is a special tool to show the entrepreneurial orientation. Enterprises give resources new capabilities through systematic and purposeful innovation, change the value of resource output, create new consumption demands or distinctive products, and create profits for enterprises.
Most research divides innovation into two categories: product market innovation and technological innovation ). Product Market Innovation focuses on product design, market research, advertising and promotion [9]. Valuable product, market, or service innovations make enterprises stand out in the industry and differentiate with competitors to obtain favorable product prices. If the product premium is higher than the cost required for differentiation, it can create profits higher than the industry average level. Technical Innovation mainly includes product or process development, product R & D, and focuses on industry-related professional knowledge and technology innovation 4. Innovations in technology, production procedures, or operation modes can improve enterprise efficiency, reduce costs, and help to form differentiation, so as to enhance enterprise profitability.

2. Risk Tolerance

Risk tolerance is the willingness of enterprise managers to invest a large amount of resources into uncertain careers [11]. Baird and Thomas (1985) classify enterprise risks into three types: first, unknown risks. For example, the launch of new products in the new market is facing an uncertain risk; the second is the risk of investing a lot of money, such as investing a lot of money in high-risk and high-reward businesses; and the third is using high financial leverage, for example, in order to pursue high-paying market opportunities, we will not hesitate to borrow a lot. When deciding to take risks, enterprises must tolerate two possible situations: failure of existing behaviors and loss of other opportunities.
Risk-bearing organizations are willing to get rid of the tried-and-true pattern, and invest in unknown risk undertakings. The tendency to take risks depends on the courage of the entrepreneurs, which promotes senior managers to take the attitude of taking risks to develop action strategies and investment decisions in the face of uncertainty. The more risky enterprises are, the more willing they are to put a large amount of money into high-risk and high-reward investments. Risk-bearing characteristics are usually related to the speed of strategic decision-making. Both of them can improve the performance of enterprises [12]. Without a certain degree of risk tolerance, enterprises will not innovate and take Pioneering actions. The response to the changed market environment is slow, and customers and market opportunities are rarely captured, this will reduce the performance [13].

3. Proactive

The proactive orientation of the company's entrepreneurship refers to the opportunity that the company expects to bring about future demand changes, and the tendency to take the lead in taking action, for example, if you are ahead of your peers in introducing new products or services, introducing new technologies, or strategically exiting a business in maturity or recession [14]. Enterprises with initial characteristics seek new opportunities within or outside the original business scope, and replace existing enterprises by predicting new market demands or new products and services. First-mover advantage capitalization market opportunities, use market asymmetry to obtain excess profits, and build consumer awareness of the brand [15].
Companies that have the characteristics of being proactive show the forward-looking and will of leaders rather than followers in new opportunities. But the leader is not necessarily the first entrant to new products, services, and markets. Miller and camp (1985) found in a survey of 84 strategic institutions that the first runner did not lose the first runner, they may have achieved remarkable results just like the leader because they have advanced foresight and fast actions.

4. Competitive enthusiasm

The competitive enthusiasm dimension indicates that an enterprise directly and strongly challenges competitors to successfully enter the market or change the current competitive position. The result is that the winner survive in the market [1]. An important feature of competitive enthusiasm is response, that is, responding directly to competitors in a face-to-face manner, demonstrating the Undo-the-Competitors proposed by covin) rather than the trend of live-and-let-live. Competitive enthusiasm on the other hand can be seen as a tendency to use non-traditional means of competition to strengthen the market position, such as using non-traditional tactics to challenge market leaders, analyzing and locking the weakness of target competitors, and developing high value-added products.
The two dimensions of competition enthusiasm and preactiveness are somewhat similar [1]. But first, it focuses on predicting market opportunities, taking actions in advance, and even taking the initiative to shape the external environment it may face, or creating demands to enhance its competitive advantage; competition enthusiasm is a response to threats, focusing on the interaction and response to existing competitors in the market. It is manifested in resolute and decisive efforts to effectively participate in competition. Competition enthusiasm and preferences are independent dimensions of entrepreneurial orientation, which have different relationships with performance.

5. Autonomy

Autonomy refers to the independent behavior of an individual or a team for a certain idea or vision from conception to implementation [1]. Autonomy represents self-directed ability and willingness to pursue opportunities. Even restricted by environmental factors, such as resource availability, competitors, or internal factors in the Organization, they can act and make decisions independently and without restrictions. To measure the degree of autonomy of an enterprise, you can usually determine whether an organization allows individuals or teams to freely execute their ideas and useful ideas for the company.
The degree of autonomy may vary depending on the organization's size, management style, or ownership. In the decision-making model, the top-down model (command mode) entrepreneurial orientation behavior comes from high-level leadership, and is promoted by strong and centralized leadership. Small and medium enterprises usually adopt this decision-making model. Miller (1983) found that the more entrepreneurial-oriented the company, the more autonomy its leader tends. Shrivastava and grant (1985) surveyed 32 vendors and found that 10 of them are relatively centralized, and 8 of them are entrepreneurial-oriented. On the contrary, the bottom-up mode (generative mode) claims that the direction of the Organization's policy is produced by the conception or action of the Organization's Members. Factors that stimulate the rise of new business usually occur at the lower layers of the organization. Therefore, many managers spare no effort to make the company more autonomous through organizational restructuring and other management actions. To encourage internal entrepreneurship, many large enterprises not only flat their organizations, but also put their power down to various business departments. No matter whether organizations adopt a top-down or bottom-up model, unrestricted and independent behavior is one of the important dimensions of entrepreneurial orientation.

The importance of entrepreneurship orientation to Enterprises
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Entrepreneurial orientation has long been valued by researchers in the strategic management field for the strategic importance of Enterprises (Andrews, 1972; Chandler, 1962; Chandler, 1862; schendel & Hofer, l972 ). Miles and snow (1978) believe that entrepreneurship orientation is a problem facing all enterprises. It involves the industry positioning, product-market relationship, and resource allocation of enterprises, all of these will affect the enterprise's performance. Previous studies show that highly entrepreneurial enterprises are more willing to constantly update the products or services they provide in the market, and experiment with new management or manufacturing methods, and always take the lead competitors to grasp the market or industry trends, and all of this is an important factor for the success of the enterprise (Frey G. covin & Slevin, 1989; J. g covin & Slevin, 1990; g.g Dess, Lumpkin, & mcgee.1999 ).