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Why is Entrepreneurial Orientation Important?

EO provides a lens to understand how, when, and why some organizations are generally more (or less) entrepreneurial than their peer institutions.

The concept of entrepreneurial orientation (EO) envisions what it means for organizations to be entrepreneurial. As a strategic orientation, EO is an important element of corporate entrepreneurial strategy because it captures how entrepreneurship can be manifest as a generally stable organizational attribute or characteristic through reinforcing patterns of management style, organizational configuration, and new entry initiatives. EO conceptualizes top management style as embedded within an organizational context which is, in turn, embedded within a market environment. Each of these levels of analysis have their own distinct antecedents and consequences. Whereas entrepreneurial top management styles may be more driven by ideological or sociological mechanisms, entrepreneurial organizational configurations might be strongly influenced by resource limitations and institutional conditions, and entrepreneurial new initiatives by pervasive economic and industrial considerations. Thus, for instance, the theoretical perspectives which explicate why entrepreneurial firms select and organize their elements (i.e., a resource-based view), may differ from those that explain why organizational managers believe EO is an appropriate organizational orientation to address their firm’s competitive challenges (i.e., attention-based view). As such, EO provides a helpful framework to understand entrepreneurship as an organizational attribute which exhibits temporal stability, pervades organizations at all levels, engenders the exploration and exploitation of new opportunities, and represents a fundamental strategic dimension upon which all organizations can be plotted.

Practically speaking, EO enables specific, tenable, and actionable implications for organizational managers gripping with issues of renewal and growth. EO studies can provide deep insight into critical why (i.e., top management style), how (i.e., organizational configuration), and what (i.e., new entry initiatives) questions pertaining to organizational entrepreneurship. Using an EO lens, managers are able to recognize interdependencies, a triangulation effect, and that their firm’s strategic orientation is high to the extent that an entrepreneurial theme is well represented at and across all levels of analysis within their organization. That is, managerial success with EO is derived from the successful implementation of a coherent entrepreneurial theme within organizations across their management style, configuration of organizational elements, and new entry initiatives.

To learn more, please refer to the journal article upon which this entry is based which appears within the prestigious Financial Times Top 50 ranked scholarly publication, the Strategic Entrepreneurship Journal:

Wales, W. J., Covin, J. G., & Monsen, E. (2020). Entrepreneurial Orientation: The Necessity of a Multi-Level Conceptualization. Strategic Entrepreneurship Journal.

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