Academy of Management Executive, 2005, Vol. 19, No.

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RESEARCH BRIEFS
Research Edge
This feature is designed to summarize current research in exciting new areas with an eye toward highlighting key implications for managerial practice.
Dean McFarlin, Research Briefs Editor

The Role of Entrepreneurial Orientation in Stimulating Effective Corporate Entrepreneurship

Gregory G. Dess, University of Texas at Dallas and G. T. Lumpkin, University of Illinois at Chicago

Corporate entrepreneurship (CE) has two primary aims: the creation and pursuit of new venture opportunities and strategic renewal.1 Although firms may grow via mergers and acquisitions as well as through joint ventures and strategic alliances, corporate entrepreneurship is typically focused on internal venture development.2 Corporate new venture creation was labeled intrapreneuring by Gifford Pinchot because it refers to building entrepreneurial businesses within existing firms.3 However, to engage in corporate entrepreneurship that yields above-average returns and contributes to sustainable advantages, it must be done effectively. Whatever form CE efforts take, the key to successfully creating value is viewing every value chain activity as a source of competitive advantage.4 In the same way, the effect of corporate entrepreneurship on a firms strategic success is strongest when it animates all parts of an organization. It is found in companies where the strategic leaders and the culture together generate a strong impetus to innovate, take risks, and aggressively pursue new venture opportunities. These ideas are captured by the concept known as entrepreneurial orientation. Entrepreneurial Orientation: The Concept and Prior Research Firms that want to engage in successful corporate entrepreneurship need to have an entrepreneurial orientation (EO). EO refers to the strategy-making practices that businesses use to identify and launch corporate ventures. It represents a frame of
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mind and a perspective about entrepreneurship that are reflected in a firms ongoing processes and corporate culture.5 The entrepreneurial orientation concept draws upon prior research that viewed strategy making in terms of patterns of action or decision making styles that are generalizable across organizations.6 In perhaps the earliest work, Mintzberg7 suggested adaptive, entrepreneurial, and planning modes of strategy making. The entrepreneurial mode, according to Mintzberg, was characterized by the active search for new opportunities and dramatic leaps forward in the face of uncertainty. Miller and Friesen8 identified 11 strategymaking process dimensions such as adaptiveness, integration, expertise, and innovation while Fredrickson9 proposed the dimensions of comprehensiveness, proactiveness, rationality, assertiveness, and risk-taking. The most frequently used dimensions have been derived from both the strategy-making process and the entrepreneurship literatures.10 In a seminal work, Miller11 argued that an entrepreneurial firm engages in product-market innovation, undertakes somewhat risky ventures and is first to come up with proactive innovations, beating competitors to the punch; suggesting the dimensions of innovativeness, risk-taking, and proactiveness, respectively. We have also proposed two additional dimensions that are critical to the EO concept: competitive aggressiveness and autonomy.12 Collectively, these five dimensionsinnovativeness, proactiveness, risk-taking, competitive aggressiveness, and autonomypermeate the decision-making styles and practices of a firms members. The factors often work together to enhance a firms entrepreneurial performance. But even some firms that are strong in only a few aspects of EO can be very successful.13 Table 1 summarizes the dimensions of an entrepreneurial orientation. Based on earlier research, we advanced a framework for investigating the relationship between the dimensions of EO and firm performance as well as factors that moderate the EO-performance relationship.14 Many studies have explored the role of such constructs as structure,16 environment, alliance usage,17 planning and control,18 entrepreneurial management in international settings,19 as well as combinations of CE attributes.20 Prior research has explored the direct relation-

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Table 1 Dimensions of Entrepreneurial Orientation

Dimension Autonomy Innovativeness Proactiveness Competitive aggressiveness Definition Independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion. A willingness to introduce newness and novelty through experimentation and creative processes aimed at developing new products and services, as well as new processes. A forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand. An intense effort to outperform industry rivals. It is characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace. Making decisions and taking action without certain knowledge of probable outcomes; some undertakings may also involve making substantial resource commitments in the process of venturing forward.

Risk-taking

Sources: Covin, J. G., & Slevin, D. P. 1991. A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1): 724; Lumpkin, G. T., & Dess, G. G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1): 135172; Miller, D. 1983. The correlates of entrepreneurship in three types of firms. Management Science, 29: 770 791.

ship between EO and performance21 as well as the sustainability of the EO-performance relationship.22 However, other work has found that the EOperformance relationship is dependent on the fit between EO and such factors as environment, structure, and strategy.23 Moreover, Wiklund and Shepherd24 suggested EO as a moderator and found that the relationship between knowledgebased resources and performance was stronger among firms with higher levels of EO. There has also been debate as to whether the dimensions of EO are independent or co-vary with each other.25 This issue has spurred a fair amount of empirical research which generally supports the notion that exploring relationships among individual dimensions of EO and performance is superior to considering EO as a unidimensional construct. For example, in a rigorous structural equation analysis of 865 healthcare executives, EO dimensions were found to vary independently.26 The study also found that the individual dimensions of EO were more robust predictors of firm growth than a summated unidimensional EO construct. Another study explored the psychometric properties of data on EO dimensions from eight countries and also found that EO dimensions tended to vary independently of each other and have different associations with environmental hostility.27 In addition, Richard, Barnett, Dwyer, and Chadwick28 found that innovativeness and risk-taking had different relationships with firm performance in their study of cultural diversity and firm performance. Specifically, innovativeness positively moderated and risk-taking negatively moderated nonlinear relationship patterns for both racial and gender heterogeneity. Such results are consistent with

findings from a recent meta-analysis that included 42 samples from 39 studies.29 Specifically, the overall correlation between EO and performance was moderately large across these studies. However, the individual EO dimensions (e.g., risk-taking, proactiveness), type of performance criteria, business size, and industry type moderated the EOperformance relationship. The relationship was found to be strongest in high-tech industries because risk taking, innovative behavior as well as proactive strategies and tactics are essential in coping with the unpredictable change and uncertainty that is inherent in such challenging environments.30 Next, we consider each of the five dimensions of EO and how they add value to the corporate entrepreneurship and new venture creation process. Entrepreneurial Orientation: The Five Dimensions in the Practice of Corporate Entrepreneurship Many fast-growing young corporations attribute much of their success to an entrepreneurial orientation. Firms often rely on an EO to enhance their corporate venturing activities. Virgin Group, the British conglomerate that began as Virgin Airlines under the leadership of Richard Branson, has spawned nearly 200 new businesses in its short history. Virgins businesses include entertainment megastores, cinemas, a fun-to-fly airline, an all-inone consumer banking system, a hip radio station, and a passenger train service. Smaller ventures have also been launched by persistent employees with good ideas. A woman who believed the com-

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panys airline should offer passengers onboard massages camped on Bransons doorstep until she was allowed to give him a neck and shoulder rub. Now an in-flight massage is a valued perk among Virgin Atlantics Upper Class passengers. On another occasion, a soon-to-be married flight attendant came up with the idea of offering an integrated bridal-planning service, including everything from wedding apparel and catering to limousines and honeymoon reservations. She became the first CEO of Virgin Bride.31 Some of the most familiar entrepreneurial firms are leading companies that create products nearly all consumers have used: Sony is one of these, along with Panasonic, Intel, and Microsoft. Few, however, have a more exemplary and lasting reputation for effective entrepreneurship than 3M. With its overarching philosophy of entrepreneurship, 3M is a strong example of how a corporate strategy can induce internal venture development. Every aspect of 3Ms management approach is aimed at new venture creation and 3Ms policies create a climate of innovation and entrepreneurial development. These examples depict corporations with a company-wide dedication to entrepreneurship. Virgins emphasis on autonomy and proactiveness, and Sonys dedication to innovation and risk-taking are indicative of a strong entrepreneurial orientation. In the remainder of this article, we will discuss the role of each EO dimension individually and suggest how EO can be used to stimulate CE, enhance internal venture development, and foster strategic renewal. Before proceeding, it is important to emphasize that merely possessing or instilling the various elements of EO is hardly a recipe for success. We also address some of the limitations or pitfalls of each of the EO dimensions and provide Table 2 that summarizes some broad questions that managers should ask when considering how to implement an entrepreneurial orientation. We conclude by suggesting some issues that provide opportunities for researchers which have potential implications for practicing managers. Autonomy Only a handful of companies have a dedication to entrepreneurship similar to that of 3M and the Virgin Group. Yet even organizations that support innovation and new venture creation must sometimes make an extra effort to stimulate entrepreneurial behavior. Entrepreneurial thinking must be encouraged. Companies with an overall entrepreneurial mis-

sion use a top-down approach to stimulate entrepreneurial activity. That is, in organizations such as 3M and the Virgin Group, the top leaders of the organization support programs and incentives that foster a climate of entrepreneurship. Many of the best ideas for new corporate ventures, however, come from the bottom-up. In some organizations, even the best ideas are not welcomed by top management. Therefore, within many corporations, extra effort and special incentives may be needed to develop and build support for an entrepreneurial venture. A new venture idea must pass through two critical stages or it may never get off the ground: project definition and project impetus. In project definition, a promising opportunity has to be justified in terms of whether it will be attractive in the marketplace and how well it fits with the firms other strategic objectives. Subsequently, for the project to gain impetus, its strategic and economic impact must be supported by senior managers who have experience with similar projects. The project then becomes an embryonic business with its own organization and budget. For a project to advance through these stages of definition and impetus, a product champion is often needed to generate support and encouragement. Product champions are especially important after a new project has been defined but before it gains momentum. In essence, product champions create a link between the definition and impetus stages of internal development. They do this by procuring resources and stimulating interest for the product among potential customers.32 Thus, in a corporate setting, product champions play an important entrepreneurial role by scavenging for resources and encouraging others to take a chance on promising new ideas.33 Firms that want to expand via corporate venturing usually either acquire existing ventures or develop ventures internally. Another alternative is corporate venture funding; that is, investing in independent start-ups, which is used by corporations that want to be entrepreneurial but still maintain their autonomy. Two other methods that companies can use to effectively foster corporate entrepreneurship via autonomy include: 1. Using skunkworks to encourage independent thought and action. To help managers and other employees set aside their usual routines and practices, companies often develop independent work units called skunkworks. The term is used to represent a work environment that is often physically separate from corporate headquarters and free of the normal job require-

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ments and pressures. Skunkworks are often used to encourage creative thinking and brainstorming about new venture ideas. 2. Reorganizing work units to stimulate entrepreneurial initiatives. To encourage entrepreneurship, corporations sometimes need to do more than create independent think tanks to help stimulate new ideas. Changes in organizational structure may also be necessary. Established firms with traditional structures often have to break out of such molds in order to remain competitive. For example, the use of teams and autonomous work units have often been shown to improve organizational coordination and control as well as enhance the number of creative solutions through the sharing of members tacit knowledge.34 That said, creating autonomous work units and encouraging independent action may have pitfalls that can jeopardize their effectiveness. Autonomous teams, for example, may lack coordination and sustained support from upper management.35 Excessive decentralization has a strong potential to create inefficiencies, such as duplication of effort and wasting of resources on projects with questionable feasibility. For example, Chris Galvin, former CEO of Motorola, scrapped the skunkworks approach the firm had been using to develop new wireless phones. Fifteen teams had created 128 different phones, which led to spiraling costs, redundancies, and overly complex operations.36 Consequently, for changes in organizational structure and independent projects such as a skunkworks to work, the effort must be measured and monitored. This requires a delicate balance having the patience and budget to tolerate the explorations of autonomous groups, and having the strength to cut back efforts that are not bearing fruit. It must also be undertaken with a clear sense of purpose namely, to generate new sources of competitive advantage. Innovativeness Innovativeness refers to a firms efforts to find new opportunities and novel solutions. It involves creativity and experimentation that result in new products, new services, or improved technological processes. Innovativeness is one of the major components of an entrepreneurial strategy. The job of managing innovativeness, however, can be quite challenging. Innovativeness requires that firms depart from existing technologies and practices and venture

beyond the current state of the art. Inventions and new ideas need to be nurtured even when their benefits are unclear. However, in todays climate of rapid change, effectively producing, assimilating, and exploiting innovations can be an important avenue for achieving competitive advantages. Innovations come in many different forms. Technological innovativeness consists primarily of research and engineering efforts aimed at developing new products and processes. Product-market innovativeness includes market research, product design, and innovations in advertising and promotion. Administrative innovativeness refers to novelty in management systems, control techniques, and organizational structure.37 Innovativeness can be a source of great progress and strong corporate growth. However, there are also major pitfalls for firms that invest in innovation. Expenditures on R&D aimed at identifying new products or processes can be a waste of resources if the effort does not yield results. Another danger is related to the competitive climate. Even if a company innovates a new capability or successfully applies a technological breakthrough, another company may develop a similar innovation or find a use for it that is more profitable.38 Finally, R&D and other innovation efforts are often among the first to be cut back during an economic downturn. Therefore, while innovativeness is an important means of internal corporate venturing, it also involves major risks because investments in innovations may not pay off. For strategic managers of entrepreneurial firms, however, successfully developing and adopting new innovations can generate competitive advantages and provide a major source of firm growth.39 Proactiveness Proactiveness refers to a firms efforts to seize new opportunities. Proactive organizations monitor trends, identify the future needs of existing customers, and anticipate changes in demand or emerging problems that can lead to new venture opportunities. Proactiveness involves not only recognizing changes but also being willing to act on those insights ahead of the competition. Strategic managers who practice proactiveness have their eye on the future in a search for new possibilities for growth and development. Such a forward-looking perspective is important for companies that seek to be industry leaders. Many proactive firms seek out ways to not only be future oriented but also to change the very nature of competition in their industry. From its begin-

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ning, Dell sold computers directly to consumers, diminishing the role of retail stores as a way to reach customers. Its success changed the way PCs were sold.40 Proactiveness is especially effective at creating competitive advantages because it puts competitors in the position of having to respond to successful initiatives. The benefit gained by firms that are the first to enter new markets, establish brand identity, implement administrative techniques, or adopt new operating technologies in an industry is called first mover advantage.41 First movers usually have several advantages. First, industry pioneers, especially in new industries, often capture unusually high profits because there are no competitors to drive prices down. Second, first movers that establish brand recognition are usually able to retain their image and hold on to the market share gains they earned by being first. Sometimes these benefits also accrue to other early movers in an industry. But, generally speaking, first movers have an advantage that can be sustained until firms enter the maturity phase of an industrys life cycle.42 That said, first movers are not always successful. For one thing, the customers of companies that introduce novel products or embrace breakthrough technologies may be reluctant to commit to a new way of doing things. In his book, Crossing the Chasm, Moore notes that most firms seek evolution not revolution in their operations. This makes it difficult for a first mover to sell promising new technologies.43 Second, some companies try to be a first mover before they are ready. Even with these caveats, however, companies that are first movers can enhance their competitive position. Two other methods firms use to act proactively include: 1. Introducing new products or technological capabilities ahead of the competition. 2. Continuously seeking out new product or service offerings. Being an industry leader does not always lead to competitive advantages. Some firms that have launched pioneering new products or staked their reputation on new brands have failed to get the hoped-for payoff. Nowhere is this more evident than on the Internet. Two major entertainment companies NBC and Disney that made large investments in promising Internet ventures had to pull back after suffering huge loses. Disney spent an estimated $2.5 billion to create a major portal called the Go Network (Go.com) but abandoned its plans when it started losing $250 million per quarter. NBC Internet (NBCi) was an early mover in

acquiring assets and leading other media companies into the Internet age. But its venture never got off the ground and its prospects for ever breaking even have fizzled.44 Therefore, careful monitoring and scanning of the environment, as well as extensive feasibility research, are needed for a proactive strategy to lead to competitive advantages. Firms that do it well usually have substantial growth and internal development to show for it. Many of them have been able to sustain the advantages of proactiveness for years. Competitive Aggressiveness Competitive aggressiveness refers to a firms efforts to outperform its industry rivals. Companies with an aggressive orientation are willing to do battle with competitors. They might slash prices and sacrifice profitability to gain market share, or spend aggressively to obtain manufacturing capacity.45 As an avenue of firm development and growth, competitive aggressiveness may involve being very assertive in leveraging the results of other entrepreneurial activities such as innovativeness or proactiveness. Strategic managers can use competitive aggressiveness to combat industry trends that threaten their survival or market position. Sometimes firms need to be forceful in defending the competitive position that has made them an industry leader. Firms often need to be aggressive to ensure their advantage by capitalizing on new technologies or serving new market needs. Two of the ways competitively aggressive firms enhance their entrepreneurial position include: 1. Entering markets with drastically lower prices. Smaller firms often fear the entry of resourcerich large firms into their marketplace. Because the larger firms usually have deep pockets, they can afford to cut prices without being seriously damaged by an extended period of narrow margins. 2. Copying the business practices or techniques of successful competitors. Weve all heard that imitation is the highest form of flattery. But imitation may also be used to take business from competitors. And as long as the idea or practice is not protected by intellectual property laws, its not illegal. Another practice companies use to overcome the competition involves making preannouncements of new products or technologies. This type of signaling is aimed not only at potential customers, but also at competitors, to see how they will react

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or to discourage them from launching similar initiatives. In fact, sometimes the announcements are made just to scare off competitors, an action that has potential ethical implications. Competitive aggressiveness may not always lead to competitive advantages. Some companies (or their CEOs) have severely damaged their reputations by being overly aggressive. Microsoft is a good example. Although it continues to be a dominant player, its highly aggressive profile makes it the subject of scorn by some businesses and individuals. Its image also contributed to the huge antitrust suit brought against Microsoft by the U.S. government. Efforts to find viable replacements for the Microsoft products that users have become overly dependent on may eventually erode Microsofts leading role as a software provider. Therefore, competitive aggressiveness is a strategy that is best used in moderation. Companies that aggressively establish their competitive position and vigorously exploit opportunities to achieve profitability may, over the long run, be better able to sustain their competitive advantages if their goal is to surpass, rather than decimate, their competitors.

success. This is the risk associated with entering untested markets or committing to unproven technologies. Financial risk-taking requires that a company borrow heavily or commit a large portion of its resources in order to grow. Risk is used in this context to refer to the risk/return tradeoff that is common in financial analysis. Personal risk-taking refers to the risks that an executive assumes in taking a stand in favor of a strategic course of action. Executives who take such risks stand to influence the course of their whole company and their decisions can also have significant implications for their careers. Even though risk-taking involves taking chances, it is not gambling. The best run companies investigate the consequences of various opportunities and create scenarios of likely outcomes. Their goal is to reduce the riskiness of business decisionmaking. Two of the methods companies can use to strengthen their competitive position via risk-taking include: 1. Researching and assessing risk factors to minimize uncertainty. 2. Using tried-and-true practices and techniques that have worked in other domains. Risk-taking, by its nature, involves potential dangers and pitfalls. Only carefully managed risk is likely to lead to competitive advantages. In contrast, actions taken without sufficient forethought, research, and planning may prove to be very costly. The era of dot-com start-ups and subsequent failures proved that businesses are often launched at great expense without a clear sense of the long-term or even, in some cases, short term consequences. Between March 2000 and March 2001, more than $3 trillion of investment wealth was wiped out of the U.S. stock markets, due in large part to the collapse of the dot-com surge.47 Along with the financial losses, the business and personal losses were enormous. Strategic managers must always remain mindful of potential risks. In his book Innovation and Entrepreneurship, Drucker argues that successful entrepreneurs are typically not risk takers. Instead, they take steps to minimize risks by carefully understanding them. Consequently, they avoid focusing on risk and remain focused on opportunity.48 Therefore, risk-taking is a good place to close our discussion. Entrepreneurs who launch startups and companies that choose to grow via internal corporate venturing must remember that entrepreneurship always involves embracing what is new and uncertain.

Risk-taking Risk-taking refers to a firms willingness to seize a venture opportunity even though it does not know whether the venture will be successful and to act boldly without knowing the consequences. To be successful via corporate entrepreneurship, firms usually have to take on riskier alternatives, even if it means forgoing the methods or products that have worked in the past. To obtain high financial returns, firms take such risks as assuming high levels of debt, committing large amounts of firm resources, introducing new products into new markets, and investing in unexplored technologies.46 In some ways, all of the approaches to internal development that we have discussed are potentially risky. Whether they are being aggressive, proactive, or innovative, firms on the path of corporate entrepreneurship must act without knowing how their actions will turn out. Before launching their strategies, corporate entrepreneurs must know their firms appetite for risk. How far is it willing to go without knowing what the outcome will be? Three types of risk that organizations and their executives face are business risk, financial risk, and personal risk: Business risk-taking involves venturing into the unknown without knowing the probability of

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Table 2 summarizes some of the important implications of our work for practicing managers. Here, we propose several broad questions that managers should ask when seeking to develop an entrepreneurial orientation. As the examples above suggest, an EO can enhance an organizations initiatives directed at corporate entrepreneurship and new venture creation. Promising Research Directions and Their Implications for Managers We would like to close by suggesting some avenues for research inquiry that we feel also have practical implications for managers. First, it would be helpful to consider what factors increase or diminish the EO-firm performance relationship. For example, much has been written recently on emotional intelligence by Goleman and others.49 Studies could explore to what extent a leaders behavior enhances his firms propensity to be proactive, innovative, and take risks. Perhaps, there wouldnt be a direct linear relationship; too much

emphasis on empathy or social skills may cause subordinates to lose their edge and erode their initiative and drive toward attaining demanding organizational goals and objectives.50 Similarly, in some cases, strong cultures may lead to core rigidities and retard innovation and risk-taking.51 And, research directed at examining how reward systems (e.g., behavioral based or outcome based) either enhance or erode proactive behaviors could have important implications for managers. Second, we encourage researchers to look beyond economic outcomes (either accounting or market measures) when examining the EO-performance relationship. As noted by Rita McGrath, entrepreneurial failures may lead to new resource combinations and, in turn, help create learning platforms which may facilitate future value creation.53 New skills as well as valued relationships can be developed that may be exploited at some point in the future. Thus, indicators of the creation of human and social capital both within the focal organization as well as with suppliers, customers,

Table 2 Enhancing a firms entrepreneurial orientation: Issues to consider

Autonomy Does your firm consider developing independent work units such as skunkworks to enhance creative thinking? When using autonomous work units, does your firm ensure adequate coordination to minimize inefficiencies and duplication of efforts? Does your firm have a proper balance between patience and tolerance for autonomous groups and the forbearance to reduce or eliminate initiatives that are not succeeding? Does your firm implement necessary structural changes such as small, autonomous groups to stimulate new ideas? Does your firm foster the necessary culture, rewards, and processes to support product champions? Innovativeness Does your firm encourage and stimulate technological, product-market, and administrative innovation? How does your firm stimulate creativity and experimentation? Does your firm properly invest in new technology, R&D, and continuous improvement? Are your firms innovative initiatives hard for competitors to successfully imitate? Does your firm safeguard investments in R&D during difficult economic periods or are they generally the first area where significant cuts are made? Proactiveness Does your firm continuously monitor trends and identify future needs of customers and/or anticipate future demand conditions? Does your firm strive to be a first mover to capture the benefits of being an industry pioneer? Is your firm aware of the downside of being a first mover, such as customer resistance to novel ideas and bearing the costs associated with unforeseen technological problems? Does your firm effectively use the following methods to act proactively: introducing new products and technologies ahead of the competition and continuously seeking out new product or service offerings? Competitive Aggressiveness Does your firm effectively use an aggressive posture to combat industry trends that may threaten your survival or competitive position? Does your firm enhance its competitive position by entering markets with drastically lower prices, copying the business practices or techniques of successful competitors, or making timely announcements of new products or technologies? Does your firm know when it is in danger of acting overly aggressive and avoid such actions which can lead to erosion of firm reputation and retaliation by competitors? Risk-taking Does your firm foster and encourage a proper level of business, financial, and personal risk-taking? Does you firm enhance its competitive risk position by researching and assessing risk factors in order to minimize uncertainty? Does your firm enhance its competitive risk position by applying techniques and processes that have worked in other domains? Overall, does your firm carefully manage risks and avoid taking actions without sufficient forethought, research, and planning?

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and alliance partners can become a valued outcome.54 Third, Jim March, in a seminal article, has articulated the need for organizations to balance both the exploration of new product-market opportunities and the exploitation of a firms resource base.55 In a similar vein, scholars have advocated the need for firms to become ambidextrous, wherein, they have the attributes of both adaptabilitythe ability to move quickly toward new opportunities and to adjust to avoid complacencyas well as alignment. The latter attribute enables an organization to have a clear sense of how value is created in the short run and how activities must be coordinated and streamlined to deliver value.56 Clearly, advocates of the need for a firm to possess a strong entrepreneurial orientation have a normative bias. That is, they would implicitly favor the need for exploration and adaptation over the short-term needs for the efficient allocation of a firms existing resource base. Hence, studies could investigate what reward systems, strategic human resource practices, cultures, information processes, and so on could promote a balance between these two often opposing forces. And, as suggested above, such research would be enhanced by having a broad perspective of the dependent variable of organizational performance. That is, failed initiatives may have the potential to generate human and social capital but at what cost? The consumed resources may, of course, deprive a firm of the ability to take advantage of new opportunities because of an eroded resource base. Insights into the relevance of such important tradeoffs for value creation and competitive advantage have important implications for both scholars and practitioners. Lastly, analyzing the best practices of leadingedge organizations can provide useful insights into the EO-performance relationship. Research is a constant process of rediscovery and such initiatives would enable scholars to inductively derive theory that can form the basis to confirm or disconfirm extant knowledge. Such efforts serve to enhance the viability of descriptive and prescriptive EO theory. Endnotes
Guth, W. D., & Ginsberg, A. 1990. Guest Editors introduction: Corporate entrepreneurship. Strategic Management Journal, 11(5): 515. 2 Insightful discussions of the benefits and limitations of diversification strategies can be found in Collis, D. J., & Montgomery, C. A. 1998. Creating corporate advantage. Harvard Business Review, 76(3): 71 83 ; Goold, M., & Luchs, K. 1993. Why diversify? Four decades of management thinking. Academy of
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Management Executive, 7(3): 725. For a recent review of the scholarly research in diversification literature, refer to Bergh, D. D. 2001. Diversification strategy research at a crossroads: Established, emerging, and anticipated paths. In M. A. Hitt, R. E. Freeman, & J. S. Harrison (Eds.). Handbook of strategic management: 362383. Malden, MA: Blackwell Business. 3 Pinchot, G. 1985. Intrapreneuring. New York: Harper & Row. 4 The person most credited for developing and articulating the value chain concept is Michael Porter in his 1985 book, Competitive advantage (New York: Free Press). He suggests viewing an organization as a sequential process of value-creating activities as a means of a powerful conceptual tool for understanding the building blocks of competitive advantage. He argue that five primary activitiesinbound logistics, operations, outbound logistics, marketing, and sales and service contribute to the physical creation of a product or service, its sales and transfer to the buyer, and service after the sale. Support activitiesincluding purchasing, human resource management, information systems, research development, and organizational infrastructure either add value by themselves or indirectly support the primary activities. For a more recent discussion, refer to Porters 1996 article entitled What is strategy? published in Harvard Business Review, (74(6): 6178). 5 See Covin, J. G., & Slevin, D. P. 1991. A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1): 724; Lumpkin, G. T., & Dess, G. G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1): 135 172; McGrath, R. G. & MacMillan, I. 2000. The entrepreneurial mindset. Cambridge, MA: Harvard Business School Press. 6 Rajagopalan, N., Rasheed, A., & Datta, D. 1993. Strategic decision processes: Critical review and future directions. Journal of Management, 19: 349 384. 7 Mintzberg, H. 1973. Strategy making in three modes. California Management Review, 16(2): 44 53. 8 Miller, D. & Friesen, P. 1978. Archetypes of strategy formulation. Management Science, 24: 921933. 9 Fredrickson, J. W. 1986. The strategic decision process and organization structure. Academy of Management Review, 11(2): 280 297. 10 Examples of this stream of research include: Covin, J. G., & Slevin, D. P. 1988. The influence of organization structure on the utility of entrepreneurial top management style. Journal of Management Studies, 25: 217234; Miller, D. & Friesen, 1978. op. cit.; and, Venkatraman, N. 1989. Strategic orientation of business enterprises: The construct, dimensionality, and measurement. Management Science, 15: 942962. 11 Miller, D. 1983. The correlates of entrepreneurship in three types of firms. Management Science, 29: 770 791. 12 Lumpkin, G. T. & Dess, G. G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1): 135172. 13 In an empirical study, the following article found that proactiveness and competitive aggressiveness were independent dimensions: Lumpkin, G. T., & Dess, G. G. 2001. Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and life cycle. Journal of Business Venturing, 16: 429 451. 14 Ibid. 15 Covin, J. G., & Slevin, D. P. 1988. op. cit.; and, Miller, D. 1983. op. cit. 16 Kreiser, P. M., Marino, L. D., & Weaver, K. M. 2002. Assessing the psychometric properties of the entrepreneurial scale: A multi-country analysis. Entrepreneurship Theory & Practice, 26: 7195; and, Zahra, S. A., & Covin, J. G. 1995. Contextual influences on the corporate entrepreneurshipperformance rela-

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tionship: A longitudinal analysis. Journal of Business Venturing, 10: 4358. 17 Dickson, P. H., & Weaver, K. M. 1997. Environmental determinants and individual-level moderators of alliance use. Academy of Management Journal, 40(2): 404 425. 18 Barringer, B. R., & Bluedorn, A. C. 1999. The relationship between corporate entrepreneurship and strategic management. Strategic Management Journal, 20: 421 444. 19 Knight, G. A. 1997. Cross-cultural reliability and validity of a scale to measure firm entrepreneurial orientation. Journal of Business Venturing, 12: 213225. 20 Stopford, J. M., & Baden-Fuller, C. 1994. Creating corporate entrepreneurship. Strategic Management Journal, 15: 521536. 21 Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. Entrepreneurial orientation and business performance: Cumulative empirical evidence. Paper presented at the 2004 Babson College-Kauffman Foundation Entrepreneurship Research Conference. 22 Wiklund, J. 1999. The sustainability of the entrepreneurial orientationperformance relationship. Entrepreneurial Theory & Practice, 24: 37 48. 23 Dess, G. G., Lumpkin, G. T., & Covin, J. G. 1997. Entrepreneurial strategy making and firm performance: Tests of contingency and configurational models. Strategic Management Journal, 18: 677 695. 24 Wiklund, J., & Shepherd, D. 2003. Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses. Strategic Management Journal, 24: 13071314. 25 For example, Covin, J. G., & Slevin, 1989, op. cit. has advocated a unidimensional approach and Lumpkin, G. T., & Dess, G. G. Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle, Journal of Business Venturing, 16: 429 451. 26 Stetz, P. E., Howell, R., Stewart, A., Blair, J. D. & Fottler, M. D. 2000. Multidimensionality of entrepreneurial firm-level processes: Do the dimensions covary? In Frontiers of Entrepreneurial Research 2000, Wellesley, MA: Babson College. 27 Kreiser, P. M., Marino, L. D., & Weaver, K. M. 2002. Reassessing the environment-EO Link: The impact of environmental hostility on the dimensions of entrepreneurial orientation. Academy of Management Proceedings, G1-G6. 28 Richard, O. C., Barnett, T., Dwyer, S., & Chadwick, K. 2004. Cultural diversity in management, firm performance, and the moderating role of entrepreneurial orientation dimensions. Academy of Management Journal, 47(2): 255266. 29 Rauch, et. al. 2004, op. cit. 30 See, for example, Khandwalla, P.N. 1987. Generators of pioneering-innovative management: Some Indian evidence. Organization Studies, 8:39 59. 31 Hamel, G. 1999. Bringing Silicon Valley inside. Harvard Business Review, 77(5): 71 84. 32 See, for example, Burgelman, R. A. 1983. A process model of internal corporate venturing in the diversified major firm. Administrative Science Quarterly, 28: 223244. 33 Green, P. G., Brush, C. G., & Hart, M. M. 1999. The corporate venture champion: A resource-based approach to role and process. Entrepreneurship Theory & Practice, 23(3): 103122. 34 For useful insights on how teams and autonomous work groups can enhance organizational effectiveness refer to: Pfeffer, J. 1998. The Human equation: Buildup profits by putting people first. Cambridge: Harvard Business School Press; Thompson, L. 2003. Improving the creativity of organizational work groups. Academy of Management Executive, 17(1): 96 111. 35 For an excellent review of the leadership literature, refer to: Yukl, G. 2002 Leadership in organizations (5th ed.). Upper Saddle River, NJ: Prentice-Hall.

Crocket, R. O. Chris Galvin shakes things up--again. Business Week, 28 May 2001: 38 39. 37 For an interesting perspective on the benefits of innovative product market strategies, refer to Hamel, G. Killer strategies that make shareholders rich. Fortune, 27 June 1997: 70 83. 38 For insightful discussions on factors that determine the sustainability of advantages in the marketplace, refer to Barney, J. B. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17(1): 99 120; Collis, D. J., & Montgomery, C. A. 1995. Competing on resources: Strategy in the 1990s. Harvard Business Review, 73(4): 119 128. 39 Commitment to R& D and investments in innovation can be affected by a firms diversification strategy. See, for example, Hitt, M. A., Hoskisson, R. E., & Kim, H. 1997. International diversification: Effects on innovation and firm performance in product-market firms. Academy of Management Journal, 40(4): 767 798. 40 Evans, P., & Wurster, T. S. 2000. Blown to bits. Boston: Harvard Business School Press. 41 Lieberman, M.. B., & Montgomery, D. B. 1988. First mover advantages. Strategic Management Journal, (Special Issue) 9: 4158. 42 Much of the earlier interest in first mover advantages was based on several articles including, Lambkin, M. 1988. Order of entry and performance in new markets. Strategic Management Journal, 9: 127140; Lieberman, M.. B., & Montgomery, D. B. 1988. First mover advantages. Strategic Management Journal, (Special Issue) 9: 4158; Miller, A., & Camp, B. 1985. Exploring determinants of success in corporate ventures. Journal of Business Venturing, 1(2): 87105. Recent literature on first mover advantages can be found in the competitive dynamics literature. Examples include Ferrier, W., Smith, K., & Grimm, C. 1999. The role of competition in market share erosion and dethronement: A study of industry leaders and challengers. Academy of Management Journal, 42(4): 372388; Chen, M., & MacMillan, I. 1992. Nonresponse and delayed response to competitive moves. Academy of Management Journal, 35(3): 539 570. 43 Moore, G. A. 1999. Crossing the chasm (2nd ed.). New York: Harper Business. 44 The failure of new media. The Economist, 9 August 2000: 5355. 45 An insightful perspective on competitive aggressiveness can be found in Smith, K., Ferrier, W., & Grimm, C. 2001. King of the hill: Dethroning the industry leader. Academy of Management Executive, 15(2): 59 70. 46 For insightful managerial perspectives on risk, refer to Sitkin, S. B., & Pablo, A. L. 1992. Reconceptualizing the determinants of risk behavior. Academy of Management Review, 17(1): 9 38; Shapira, Z. 1994. Risk-taking: A management perspective. New York: Russell Sage Foundation. 47 Coy, P., & Vickers, M. How bad will it get? Business Week, 12 March 2001: 36 42. 48 Drucker, P. F. 1985. Innovation and Entrepreneurship. New York: Harper Business: 109 110. 49 Goleman, D. 1998. What makes a leader? Harvard Business Review, 76(6): 114 125. 50 For an insightful discussion on some perspectives on the downside of emotional intelligence from the perspective of executives, academics, and other professionals, refer to Mayer, J. D. et. al., 2004. Inside the mind of the leader. Harvard Business Review, 82: 2737. 51 Hamel, G. & Prahalad, C. K. 1996. Competing in the new economy: Managing out of bounds. Strategic Management Journal, 17: 237242. 52 McGrath, R. G. 1999. Falling forward: Real options reasoning and entrepreneurial failure. Academy of Management Review, 24(1): 1330.

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Grenadier, S. R. & Weiss, A. M. 1997. Investment in technological innovations: An option pricing approach. Journal of Financial Economics, 44: 397 416. 54 For an interesting perspective on the relationship among social capital, human capital and competitive advantage, refer to: Nahapiet, J. & Ghoshal, S. 1998. Social capital, human capital, and the organizational advantage. Academy of Management Review, 23(2): 242266. 55 March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71 86. 56 For excellent discussions of the tradeoffs between exploration and exploration and the benefits of ambidextrous organizations, refer to: Birkinshaw, J. & Gibson, C. 2004. Building ambidexterity into an organization, MIT Sloan Management Review, 45(4): 4771; and, OReilly III, C. & Tushman, M. L. 2004. The ambidextrous organization. Harvard Business Review, 82(4): 74 81. For an empirical study of the ambidexterityperformance relationship, see: Gibson, C. B. & Birkinshaw, J. 2004. The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal, 47(2): 209 226. Gregory G. Dess is the Andrew R. Cecil Chair in Management at the University of Texas at Dallas. He received his Ph.D. in management from the University of Washington. His interests include strategic management, entrepreneurship, and knowledge management. He recently coauthored (with Tom Lumpkin and Alan Eisner) Strategic Management: Text and Cases (Burr Ridge, IL: McGraw-Hill Irwin). Contact: gdess@utdallas.edu. G.T. (Tom) Lumpkin is an Associate Professor of Management and Entrepreneurship at the University of Illinois at Chicago. He received his Ph.D. from the University of Texas at Arlington. His published work includes articles and book chapters about entrepreneurial orientation, opportunity recognition, new venture strategies, and strategy-making processes. Contact: tlumpkin@uic.edu

Managing the Initial Job Interview: Smile, Schmooze, and Get Hired?
Clive Muir, Stetson University

People seeking new employment look for ways to distinguish themselves from scores of similarly credentialed competitors. As a result, job seekers are deluged with advice designed to demystify and manage the search process. This includes how to write resumes and cover letters, prepare for psychometric tests, network, and scour the Internet for jobs. If youre offered an interview, theres more advice about techniques to master and pitfalls to avoid. These include dressing appropriately, arriving at a certain time, making small talk, using humor effectively, and so on. And while a single misstep may take you out of the running, a flawless performance doesnt guarantee youll land the job. One truism is that the initial job interview is the critical stage where applicants must separate themselves from the rest of the pack. At this stage, youve ostensibly met the paper requirements for the position, and must now sell your superior

experiences and interpersonal qualities to interviewers. So in addition to appropriately highlighting academic and work experience, you must display the requisite physical image, eloquence, and bearing. The challenge is to convince the employer that youre credible, reliable, agreeable, and, generally speaking, fit the organizations culture. In essence, you need to connect with the interviewer interpersonally. This process can be unpredictable and is highly subjective. Initial job interviews are typically short (30-45 minutes). They give the applicant and interviewer an opportunity to assess the potential for a longterm employment relationship. Given the stakes and short time frame, the encounter is usually ambiguous, if not awkward, for applicants since they have to quickly assess the interviewers demeanor and size up the behaviors appropriate for the interaction. After this quick assessment, astute applicants will adjust their influence tactics to nudge the interviewer toward a favorable outcome. But which influence tactics offer the most promise in this interview scenario? And what constitutes an astute applicant? Fortunately, the successful use of influence tactics in initial job interviews was the subject of recent study conducted by Chad Higgins of the University of Washington and Timothy Judge of the University of Florida. In a nutshell, they found that applicants who focused more on being pleasant, agreeable, and offering compliments to interviewers were deemed better fits to their prospective jobs (and were hired at a higher rate) than applicants who focused more on their credentials for the job. Indeed, the study confirms several of the principles stressed more than 80 years ago by Dale Carnegie begin with praise, then smile, empathize, and be agreeable. Specifically, Higgins and Judge wanted to know how applicants go about managing the shared meaning between themselves and interviewers. In their research, they wanted to understand whether influence tactics had a direct effect on the outcome of initial job interviews and what determined the tactics that applicants selected in the first place. To address these issues, Higgins and Judge enlisted the assistance of college students applying for jobs through their university placement office. The students completed surveys about their use of influence tactics before and immediately after their interviews. Students were again surveyed three months later when they would have had enough time to learn about the outcome of their interviews. The recruiters who interviewed these students were also surveyed about their perceptions and evaluation of each candidate. Higgins and Judge focused on two types of influ-