the impact of entrepreneurial orientation on strategic alliances’ formation and the role of a top...

The Impact of Entrepreneurial Orientation on Strategic Alliances Formation and the Role of a Top Management Team CLADEA 2015

THE IMPACT OF ENTREPRENEURIAL

ORIENTATION ON STRATEGIC

ALLIANCES FORMATION AND THE

ROLE OF A TOP MANAGEMENT TEAM

Doctoral Student Antonio Benedito de Oliveira Jr FEI

Prof. Dr. Felipe Mendes Borini ESPM

Prof. Dr. Roberto Carlos Bernardes FEI

Prof. Dr. Mauro Jos de Oliveira FEI

So Paulo, Brazil.


Context

Gaps

Purpose and Hypothesis

Research questions

Theorical reference

Research design

Findings

Discussion

Agenda


Although entrepreneurship and alliances research fields provide valuable information on exploitation and knowledge basis, the studies relating Entrepreneurial Orientation (EO) to Strategic Alliances (SA) formation remains limited.


To the best of our knowledge, only five studies (Marino et al., 2002; Teng, 2005; Franco & Haase, 2013; Brouthers et al, 2014; Shu et al., 2014) related entrepreneurship to SA.

However, these studies did not consider Lumpkin and Dess (1996) EO perspectives as a multiple construction, and these studies failed to consider how these two factors [EO and Top Management Team (TMT)] interact and influence SA.


Overall, our belief is that large corporations and small and medium-sized enterprises (SME) that effectively integrate EO to SA are well positioned to continuously create wealth.


GAPs


This research follows the logic proposed by Covin and Lumpkin (2011) seeking to fulfill such theoretical and empirical gap in EO research.

Autonomy (A)

Innovativeness (I)

Proactiveness (PA)

Risk Taking (RT)

Competitive Aggressiveness (CA)

Covin and Lumpkin

(2011) argue and

suggest there is a gap

in entrepreneurial

orientation (EO),

since few empirical

studies have used all

five dimensions of EO

construct proposed

by Lumpkin and Dess

(1996) as multi

construct.


No research has related TMT

and all EO dimensions to SA

Top Management

Team

(TMT)

(Antecedent)

Strategic Alliance

(SA)

(Dependent)

Entrepreneurial Orientation

(EO)

(Independent)

considering the EO by Lumpkin and Dess (1996).


The main objective of this work is to extend and contribute to the

literature by looking at the multi-dimensionality

of the EO construct, generating a conceptual

mechanism that illustrates the impact of EO on the formation of SA and the role of TMT

on this relationship, teasing out a novel aspect for the EO

literature.


H1: Test the hypothesis that

EO is associated with SA.

H2: This relationship is

influenced by antecedents

(top management team).

Purpose & Hypothesis


So


RQ1: Is there a relationship between the all EO dimensions and SA?

RQ2: The relationship between EO and SA is influenced by antecedent (top management team of EO?

Research Questions


Entrepreneurial

Orientation

Dimensions


Entrepreneurial Orientation (EO) is a strategic process in which the conceptual domain includes certain performance indicators and managerial preferences, related beliefs and behaviors expressed by top management (Covin et al., 2006).


All these factors - Autonomy (A), Innovativeness (I), Risk Taking (RT), Proactiveness (PA) and Competitive Aggressiveness (CA) - may be present when a company operates in a market or enters in a new one.


Strategic Alliances


Strategic Alliances (SA) refers to the strengthening of key business locations through association with others and strategic suppliers, as well as its ability to maintain them over time as a way to reduce or eliminate uncertainties and build barriers to entry (Sarasvathy, 2001).


Research Design


Type Search

Descriptive

Technical Research

Structural Equation Modeling

Data Collection Instrument

Survey - On-line questionnaire

Data Analysis

Partial Least Square (PLS)

Method of Research


Data Collect

Sending email to top management:

owners, presidents, vice

presidents and/or directors of firms in various sectors of the economy.

Sample

2014: 101 Brazilians firms

Data

Non-probabilistic data.

To analyse the relationship

between EO and SA.

Constructs

Online survey to measure all five dimensions of

EO independent variable (A, RT, CA, I and PA)

and dependent variable (SA).

Specifications


The scales was composed of three-

item, seven-point Likert-type

The SA developed for this study was based on the alliances theory (Sarasvathy, 2001; Hitt et al., 2001; Dickson et al., 2006). EO construct was measured by 5 subdomains: Autonomy (A) adapted from Lumpkin and Dess (2005); Innovation (I) from Miller and Friesen (2005); Proactiveness (PA) by Lumpkin and Dess (2005); Competitive Aggressiveness (CA) from Covin and Covin (1990); Risk Taking (RT) of Khandualla (1977 cited in Miller and Friesen, 1982) one item; Friesen and Miller (1982) one item; and Covin and Slevin (1988) one item.


Proposed Model and

Hypothesis

Autonomy

(A)

Risk Taking

(RT)

Competitive

Aggressiveness

(CA)

Innovation

(I)

Proactiveness

(PA)

TOP

Management

Team

(TMT)

Strategic

Alliances

(SA)

Entrepreneurial

Orientation

(EO)

H1a

H1b

H1c

H1d

H1e

H2a

H2f

H2c

H2d

H2e

H2b


Findings!


Description Analysis


Reliability of Measures

Internal consistency, varying from 0.71 to 0.88, surpassed the recommended value of 0.7 (Fornell & Larcker, 1981). Moreover, in consonance with Fornell and Larcker directives, the average variance extracted (AVE) > 0.50.

The data

indicates

robustness of the

measurements


Discriminant Validity

For all cases, the diagonal elements of the matrix, which represent the square root of the AVEs, are larger than the elements out of the diagonal line (situated in its correspondent row and column).

The discriminant

validity of the

scales was

supported


Convergent Validity

The results indicate that all loaded factors exceeded both the inferior (0.70) and superior (0.95) limits. The convergent

validity was

supported


Confirmation of Sample Validity

According to Hair et al. (2009), factor loadings above 0.70 assure significance in samples in which the number of records is superior to 60, which corroborates the sample size of 101 companies.

The sample

is okay


Structural model results

Strategic

Alliances

(SA)

R2 = 0.255

SA1

SA2

0.78

0.71

Innovatiness

(I)

A2A1

0.83 0.79

Autonomy

(A)

Competitive

Aggressiveness

(CA)

PA3PA2

0.82 0.81

Proactiveness

(PA)

PA1

0.90

0.840.80

Risk Taking

(RT

RT3

0.80

RT2RT1

0.173

0.042

0.046

0.280*

-0.075

Nota: Path coefficients.

* Significant: p < 0.10

** Significant: p < 0.05

*** Significant: p < 0.01

0.87

Top

Management

Team

(TMT)

TMT2

0.83TMT4

0.337***

0.210**

0.268***

0.372***

0,180

0.321***

I3I2

0.84 0.86

CA2CA1

0.91 0.70

CA3

0.73


H1 The beta coefficients of Risk Taking (RT) (beta = 0.280; p < 0.10) are positive and significant. RT dimension of the EO construct had a positive influence on SA. The others EO variables did not show a significant influence on SA.

H1 was partially

accepted


H2 Excepting innovativeness (beta = 0.180), all beta coefficients of the EO dimensions including the TMT itself are positive and significant. TMT has a highly relevant role in the EO and SA relationship of the firm.

H2 was almost

fully accepted


Model Fit The present model explained 25.5% of the EO variance in SA. According to Cohen (1988), R2 > 26% indicates a large effect size and an excellent explanatory power.

It is reliable

representative of the

entrepreneurship field


Ok, you may be thinking ...


Leaders are an important antecedent of EO in its relationship with SA, as four of five dimensions of EO were related to them in 2014.

RT dimension, was related to SA, supporting our hypothesis.


EO is a multidimensional construct.

The relationship between EO and SA will be affected by TMT.

R2=26.7%


As suggested by Han et al. (2012) and Franco and Haase (2013), it was found that there is a relationship between EO and SA.

Refuting the results of Montoro-Sanchez et al (2009) who found no relationship between EO and SA.


Discussions


The present study assumed the existence of a relationship between Lumpkin and Dess EO (1996) and SA as a manner to decrease business-associated risks.

This relationship would be affected by the companys TMT.

EO would act as a multidimensional construct.


According to what has been suggested by Marino et al. (2002), Teng (2005), Franco and Haase (2013) and Shu et al. (2014), the present study found a relationship between EO and SA.


This study empirically assessed

the cooperation as a manner to

put the entrepreneurial activities

into practice and connected two

study areas: EO and SA, filling a

theoretical and empirical gap

identified in the literature.

Contribution

to Theory


The article showed that RT is

associated to SA.

This result exalts Covin and

Lumpkins (2011) propositions

that EO is a multidimensional

construct.

Contribution

to Theory


Investing in EO, especially, RT dimension is important in order to promote SA. Of course, that TMT influences SA, but companies with RT developed capabilities are more prone to give support to an SA decision and to conduct their implementation.

Lumpkin and Dess (1996) pointed out that researchers have failed to find consistency in relations/perceptions of RT in entrepreneurship, whether in the form of creation of new businesses or misleading relations between RT and performance.


The RT resides primarily at the individual level and then is transported to the company level.

The firms RT that appear to contribute to high performance in the formation of SA are:

(1) Strong tendency to high-risk projects with a chance to receive very high returns

(2) Take a bold approach in which large actions are needed to achieve the company's goals

(3) Adopt an aggressive posture to maximize the probability to explore potential opportunities.


The present study calls attention

to TMT as predecessor of EO on

the EO-SA relationship helping in

connecting the TMT within the

entrepreneurship literature (Menz,

2012).

Contribution

to Theory


The results incentivize firms to develop TMT in order to have an EO.

Despite different views and approaches about the entrepreneur, there are many points of convergence among them.

This study provides evidence and an understanding regarding the potential benefits associated with closer links between TMT and firms EO and SA.


Practical

Implications

For practitioners, a firm can benefit from partners with strong EO through sharing knowledge that can induce to form an alliance and improve performance.

These imply that their companies need to have RT in seeking to form a partnership.

As a way to promote an EO, we would suggest two things.


TMT must cultivate good

relationships with their team

members to encourage them to

generate ideas and identify

opportunities.

Practical

Implications


TMT must protect their

entrepreneur from the institutional

sanctions if their efforts fail,

considering that, employees with

autonomous entrepreneurial

behaviour already have EO.

Practical

Implications


Limitations and

Suggestions


Whilst on one hand, theoretical guidance EO effectiveness suggests that EO outcome relationships should exhibit moderation from internal organizational variables (Covin & Slevin, 1991; Lumpkin & Dess, 1996; Rauch et al., 2009), on the other hand, it is possible that these variables may influence EO. However, we consider this limitation as unimportant.


We argue that EO is influenced by the philosophies of the TMT, which helps to explain the formation of SA.

Therefore, we believe that our framing is appropriate and sheds interesting light upon a theoretically meaningful EO-SA relationship, as calls have long advocated for within the EO literature (Journal of Business Venturing, v. 21, 2006).

Future work could verify the EO-SA relationship through secondary data or combining survey with secondary data.


Any questions?


Thank You

for your attention! Doctoral Student Antonio B. de Oliveira Jr. Centro Universitrio da FEI,

So Paulo, Brazil. [email protected]

Prof. Dr. Mauro Jos de Oliveira Centro Universitrio da FEI, So Paulo, Brazil. [email protected]

Prof. Dr. Felipe Mendes Borini ESPM, So Paulo, Brazil. [email protected]

Prof. Dr. Roberto Carlos Bernardes Centro Universitrio da FEI, So Paulo, Brazil. [email protected]

the impact of entrepreneurial orientation on strategic alliances’ formation and the role of a top...

Small Business & Entrepreneurship