Implications

The aim of this dissertation is to ascertain whether EO would result in firm performance by adding external factors and internal factors. Based on the results of examination in Chapter 4, this dissertation summarizes following implications.

1. Existing studies have tried to sort out the complexities regarding the possible associations between EO and the specific resource/capability. Some scholars content that EO represents a type of resource/capability; thus, EO and resource/capability are viewed as the same construct (Conner, 1991; Foss, Klein, Kor, Mahoney, 2008;

Stevenson, & Gumpert, 1985; Lee, Lee, & Pennings, 2001). These scholars argue that entrepreneurship is an intrinsic feature of the resource-based framework, and the commitment and control of resources can be viewed as characteristics of a firm’s entrepreneurial focus (Foss et al., 2008; Stevenson and Gumpert, 1985).

In contrast, some scholars argue that the relationship between entrepreneurship and resource/capability might not be so straightforward (Alvarez & Busenitz, 2001;

Barney & Arikan, 2001; Ireland, Hitt, & Sirmon, 2003; Lumpkin & Dess, 1996).

Specifically, resource/capability and EO might represent completely different constructs and their associations deserve close examination (Lumpkin and Dess, 1996; 2001; Miller, 1983). This study challenges the conventional wisdom of the resource heterogeneity approach, which may over-emphasize the relationship between the role of a specific resource/capability and firm performance (Deephouse, 2000). The results of this study show that EO and resources/capabilities attributes (including value and rareness) represent different constructs (Ireland et al., 2003;

Lumpkin & Dess, 1996).

2. RBV is used by strategic management scholars and integrated increasingly by

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entrepreneurship scholars, identifying and explaining sustained competitive advantage and persistent performance differences among firms (Alvarez & Barney, 2002; Ireland et al., 2003). A firm with EO has a unique mindset or cognitive value resources and capabilities, thus grasping opportunities to own them. This firm’s unique bundle of resources and capabilities, valuable resource-capability combinations, is different from those of competitive firms (Alvarez & Busenitz, 2001). The results also show that entrepreneurial orientation is positively associated with the value of resource-capability combinations.

3. Some studies point out that a firm with EO has an insight into the value of resources while others do not have the capability of recognition and may be unable to employ these resources, which implies that such resources and capabilities are rare (Casson, 1982; Shane & Venkataraman, 2000). Newbert’s (2007) empirical study reports that a firm with EO knows better how to exploit rare resources and is more motivated to identify rare resource-capability combinations. The results of this study also show that EO has a positive influence on the rareness of resource-capability combinations.

4. Based on the above argument, a firm’s EO stems from its innovation, proactiveness, and risk-taking, which determines the value and rareness of resource-capability combinations. This dissertation further explores whether firms with EO are likely to enhance their firm performance by reducing costs or differentiating products/services via the combination of resources and capabilities. All the results are examined in two different outcomes. Some results indicate that the relationship between EO and firm performance (including CA and satisfaction) is mediated by the value or rareness of resource-capability combinations while other results show that there is no relationship between EO and firm performance (including ROA and TQ) through these combinations. This implicates that a firm with EO lead to the high levels of

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ambition, courage, and challenge, which support it to do right things rather than efficient things. That is, the promotion of competitive advantage and satisfaction is regarded as a main direction by firms with high levels of EO than with low levels of EO, and thereby such firms concern about prospective markets and needs of customers by grasping and exploiting value and rareness resources and capabilities. A firm with EO is more effort to obtaining competitive advantage or satisfaction in long-term than abnormal returns in short-term. Therefore, to aggressively carry off economic returns, even though a firm has entrepreneurial posture, it may be not expect to develop core competence by cultivating and exploiting valuable or rare resources and capabilities.

5. As to the association between resources attributes and firm performance, differing from Western firms (Newbert, 2008), Taiwanese firms show inconsistent results.

With respect to the four indicators of firm performance, value and rareness have positive impact on competitive advantage and satisfaction, as opposed to ROA and TQ. There may be three reasons for explaining the results. First, Data for EO and resources attributes is derived from subjective measures while data for ROA and Tobin’s q is derived from objective measures. These two different sources may lead to the insignificance of this relationship. Second, ROA and Tobin’s q from a TEJ database are financial measures, and they may not really reflect valuable or rare resources. Especially, new ventures may not obtain such resources in their start-up years, thus resulting in negative economic returns (Luke et al., 2007). In addition, financial measures only present accounting returns rather than the advantages that are gained from intellectual, human and organizational capital. With respect to EO, the innovation of products, a forward-looking perspective and risk-taking are associated with intellectual, human, and organizational capital, thus yielding firm performance.

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Third, the measurement of ROA and Tobin’s q may be influenced by a so-called

“Financial Tsunami” environment.

6. Based on the theoretical framework, this dissertation investigates the effects of EO on firm performance from following perspectives. (1) In addition to prior internal factors from inside-out view, (2) this study further explores whether a firm with EO can obtain the value or rareness of resource-capability combinations in a high level of environmental dynamism from outside-in view. It is found that a firm with EO does exert a positive influence on value and rareness, yet it seems that EO alone is not a major driving force in determining value and rareness (Covin & Slevin, 1991; Zahra, 1993). In order to survive in all stages of the organizational cycle, firms with EO aggressively seize valuable/rare resources and capabilities to reduce uncertainty that they face, but conservative firms without innovation, proactiveness, and risk-taking might exploit valuable/rare resources and capabilities in a low level of environmental dynamism rather than in a high level of environmental dynamism (Jones, 2007) (please see Figure 4-13). However, ignoring environmental dynamism, a firm’s EO is still pursing performance through high levels of value and rareness (Covin & Slevin, 1991; Lumpkin & Dess, 1996; Zahra, 1993).

Moreover, by interviewing Mr. Huang and Mr. White in YAGEO Company and GIGA-BYTE Technology Company respectively (Appendix B), this study finds that both internal factors (such as intelligent, financial, organizational, and human resources and capabilities) and external factors (such as environmental dynamism) would influence firm performance. That is, both resources attributes in an organization and environmental dynamism in the out an organization are simultaneously considered in business operation from strategic thinking and analytical framework. Thus, a firm can build strategic positions and may have

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opportunities to improve performance by fitting internal resources/capabilities and environmental dynamism (Figure 5-1). With respect to the view of IO and entrepreneurship theory, when a firm with EO cognizes new opportunities and enters new markets in environmental dynamism, the critical resources/capabilities utilized by this firm may not be viewed as valuable resources/capabilities by its competitors.

Therefore, the situation of environmental dynamism is necessary to precipitate the effect of EO on resource attributes; that is, environmental dynamism plays a significant supporting role in facilitating the value/rareness of resource-capability combinations for a firm with EO (Schumpeter, 1934). However, top managers in case study emphasize no matter what environment a firm faces, valuable and rare resources/capabilities are important in strategic position, which is consistent with the concept of RBV (Barney, 1991). Therefore, according to the strategic logic, when the influence of EO on firm performance can be promoted, firms must simultaneously consider two views: inside-out and outside-in.

External factor Internal factor

Figure 5-1 Strategic Logic of Inside-out and Outside-in

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7. In the field of strategic management, some research issues can be empirically examined by using a questionnaire survey or secondary data to measure the constructs of management issues. However, the limitation in scales and measures of items may lead to miss some important variables in the framework of this study.

Therefore, this dissertation provides case study from firms’ practices to identify and support the accuracy of research propositions, through interviewing a top manager in firms. Based on the literature of RBV, entrepreneurship theory, and environmental dynamism, this dissertation acquires several constructs and further constructs the propositions between these constructs by pilot case to fill a gap of literature (Yin, 1994). In terms of these propositions and literature review, all hypotheses are built in this dissertation. Finally, all hypotheses are strong supported or partially supported by several statistical analyses. Thus, the research framework of the associations between EO, environmental dynamism, value and rareness, and firm performance is not only proposed by operations of firms and literature but also supported by statistical analyses.

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