Entrepreneurial Orientation

In the business and academic world, the level to which a firm is entrepreneurial is commonly known as its “entrepreneurial orientation” (EO). The EO concept provides a big impetus in focusing not only on entrepreneurship, but expanding from management and reaching marketing to health care.

EO is measured by the following major factors.

• Risk-taking − Risk-taking is a key characteristic linked with entrepreneurship. It is the risk that individuals take by working for themselves rather than being employed. It is the tendency to take the uncharted path of being avant-garde in building a strategy.
• Pro-activeness − Pro-activeness illustrates the nature of entrepreneurial actions to gauge the future opportunities, both in regard to products or technologies and in sync with markets and consumer demand.
• Innovativeness − Innovativeness refers to the introduction of different types of products or services in the market. Entrepreneurs are innovative by the very fact of their entry into the market. In the concept of EO, innovativeness mainly emphasizes the importance of technological leadership to the company, and also some changes in the company’s product lines.
• Competitive aggressiveness − Competitive aggressiveness is a company’s action of engaging with its competitors. It distinguishes between the companies that shy away from direct competition from other companies that aggressively competes in their competitors’ target markets.
• Autonomy − Autonomy refers to the independent action of an individual or a team in bringing forth an idea or a vision and carrying it through to completion without being demotivated or dominated by overly stringent organizational bottlenecks.

Insights on Effectiveness of EO

The purpose of empirical research on EO by Miller was to “show the merits of a configurational approach to the study of organizations” citing examples of how entrepreneurship has different drivers and different actual manifestations in different industries.

Studies have revealed a broad range of factors that can influence how EO relates to company performance. They contain internal factors such as technical and market knowledge within the firm, and external factors such as industry dynamics.

Different studies have found differences between different cultural contexts and other external factors. From a policy-making and strategic perspective, EO can create as well as destroy the very essence of the firms’ intent to build a successful market around its products or services.

The original question raised by Miller − How does entrepreneurship differ in different firms? And a logical extension thereof − may provide the clue to the very idea of entrepreneurship and EO.

If research could establish that a strong EO is beneficial for companies, policy makers and program makers can target interventions at the companies which will be most beneficial from a stronger sense of EO.