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HomeInsightsEntrepreneurial orientation and social ties in transitional economies

Entrepreneurial orientation and social ties in transitional economies

Abstract
Recent research suggests that entrepreneurial orientation (EO) has a more complex effect on performance (i.e. non-linear instead of linear) than previously considered. We extend this view by examining the non-linear effect of each individual dimension of EO (i.e. innovativeness, proactiveness, and risk-taking) on firm performance in the context of a transitional, collectivist economy. Drawing upon social capital theory, we also examine under which social capital conditions (i.e., business and political ties) each dimension of EO is most effective. Using survey data from 137 firms in Vietnam Top 500 Companies, this study shows that innovativeness and proactiveness have inverted U-shaped relationships with firm performance, while the effect of risk-taking on firm performance is also non-linear but in the form of increasing returns. Findings also show that social capital from business ties differentially moderates the effects of EO dimensions on performance. Similarly, social capital from political ties has different moderating effects on the innovativeness-performance and proactiveness-performance linkages. The findings urge managers of firms operating in transitional economies to take the levels of social capital from business ties and political ties into consideration when making their decision on which entrepreneurial strategy to pursue.

Ngoc Luu is a Lecturer in Marketing at University of Sussex, United Kingdom. She has published in Industrial Marketing Management and Journal of Services Marketing. Her research interests focus on buyer-supplier relationships, entrepreneurship, and service innovation.

Liem Viet Ngo is an Associate Professor of Marketing at the School of Marketing, University of New South Wales, Australia. His research has been published in Journal of Product Innovation Management, Industrial Marketing Management, Journal of Business Research, European Journal of Marketing, Journal of Marketing Management, British Journal of Management, and European Business Review, among others.

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