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Strategic orientation and performance of new ventures: empirical studies based on entrepreneurial activities in China

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Abstract

The purpose of this paper is to investigate the relationship between the strategic orientation and performance of new ventures. Based on organizational ambidexterity theory, we formed five hypotheses to describe the relationships among entrepreneurial orientation, market orientation, and technological orientation, as well as their impact on new venture performance. Using a sampling of 199 new ventures, the regression results reveal that exploration-entrepreneurial orientation and exploitation–technological orientation have a significant impact on entrepreneurial performance, whereas exploitation–market orientation does not. Interaction between entrepreneurial orientation and technological orientation shows a significant positive impact on entrepreneurial performance.

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Notes

  1. “[If] we take the management’s organizational capabilities to be constant and that the risk of any business activity is a general risk affecting all firms, then it would seem logical that those firms capable of taking on higher risk projects will tend to reap a larger reward in the form of greater performance” (Casillas and Moreno 2010, p. 269).

  2. Morgan et al. (2015) pointed out that market orientation negatively affects the relationship between entrepreneurial orientation and new product development performance. The authors argued that it is reasonable that firms with a high level of market orientation will rely too much on information from customers and seem more imitative than innovative. However, even if it is not good for new product development, the information from consumers could help entrepreneurs understand market opportunities more easily, which is helpful for the overall performance of the new venture.

  3. The classification and name of industries follow the standard of the National Bureau of Statistics of China and are offered by the entrepreneurs themselves.

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Acknowledgements

Supported by Support by Chinese National Natural Science Foundation (71572208), the program for New Century Excellent Talents in University, NCET.

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  1. Business School, Central University of Finance and Economics, Beijing, China

    Lin Song & Li Jing

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Appendix

Appendix

Entrepreneurial orientation

In general, the top managers of my company favor……

A strong emphasis on the marketing of tried and true products or services

1

2

3

4

5

A strong emphasis on R&D technological leadership, and innovations

How many new lines of products or services has your company marketed during the past 3 years?

No new lines of products or services

1

2

3

4

5

Very many new lines of products or services

Changes in product or service lines have been mostly of minor nature

1

2

3

4

5

Changes in product or service have usually quite dramatic

In dealing with its competitors, my company. . .

Typically responds to actions which competitors initiate

1

2

3

4

5

Typically initiates actions to which then respond to

Is very seldom the first business to introduce new products or services, administrative techniques, operating technologies, etc.

1

2

3

4

5

Is very often the first business to introduce new products or services, administrative techniques, operating technologies, etc.

Typically seeks to avoid competitive clashes, preferring a “live-and-let live” posture

1

2

3

4

5

Typically adopts a very competitive, “ undo-the-competitors” posture

In general, the top managers of my company have. . .

A strong proclivity for low risk projects (with normal and certain rates of return)

1

2

3

4

5

A strong proclivity for high risk projects (with chances of very high returns)

In general, the top managers of my company believe that. . .

Owing to the nature of the environment, it is best to explore it gradually vi cautious, incremental behavior

1

2

3

4

5

Owing to the nature of the environment, bold, wide-ranging acts are necessary to achieve the firm’s objectives

when confronted with decision-making situations involving uncertainty, my firm

typically adopts a cautious, “wait-and-see’ posture in order to minimize the probability of making costly decisions

1

2

3

4

5

typically adopts a bold, aggressive posture in order to maximize the probability of exploiting potential opportunities

Market Orientation (5 = strongly agree and 1 = strongly disagree)

We continually monitor customers and competitors to find new ways to improve customer satisfaction.

We freely communicate information about our successful and unsuccessful customer experiences across all business functions.

Our strategic for competitive advantage is based on our understanding of customers’ needs.

We are more customer focused than our competitors.

We poll end users at least once per year to assess the quality of our products and services.

Technological orientation (5 = strongly agree and 1 = strongly disagree)

We use sophisticated technologies in our new product development.

Our new products are always at the state of the art of the technological.

Technological innovation, based on research results, is readily accepted in our organization.

Technological innovation is readily accepted in our program/project management.

Market environment (5 = strongly agree and 1 = strongly disagree)

In our kind of business, customers’ product preferences change quite a bit over time.

Our customers tend to look for new products all the time.

Sometimes our customers are very price-sensitive, but on other occasions, price is relatively unimportant.

New customers tend to have product-related needs that are different from those of our existing customers.

We cater to many of the same customers that we used to in the past.

It is very difficult to predict any changes in this marketplace.

Technological environment (5 = strongly agree and 1 = strongly disagree)

The technology in our industry is changing rapidly.

Technological changes provide big opportunities in our industry.

It is very difficult to forecast where the technology in our industry will be in the next two to three years.

A large number of new product ideas have been made possible through technological breakthroughs in our industry.

Technological developments in our industry are rather minor.

The technological changes in this industry are frequent.

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Song, L., Jing, L. Strategic orientation and performance of new ventures: empirical studies based on entrepreneurial activities in China. Int Entrep Manag J 13, 989–1012 (2017). https://doi.org/10.1007/s11365-017-0433-z

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  • DOI: https://doi.org/10.1007/s11365-017-0433-z

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