International Journal of Entrepreneurial Behaviour & Research

Emerald Article: Applying Entrepreneurial Orientation to a Medium Sized Firm Davina Vora, Jay Vora, Douglas Polley

Article information:
To cite this document: Davina Vora, Jay Vora, Douglas Polley, (2012),"Applying Entrepreneurial Orientation to a Medium Sized Firm", International Journal of Entrepreneurial Behaviour & Research, Vol. 18 Iss: 3 pp. 5 - 5 Downloaded on: 06-04-2012 To copy this document: permissions@emeraldinsight.com This document has been downloaded 12 times.

Access to this document was granted through an Emerald subscription provided by University of Pretoria For Authors: If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service. Information about how to choose which publication to write for and submission guidelines are available for all. Additional help for authors is available for Emerald subscribers. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.com With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
*Related content and download information correct at time of download.

Article Title Page

[Article title: Applying Entrepreneurial Orientation to a Medium Sized Firm] [Author Details: Mandatory] Author 1 Name: Davina Vora Department: School of Business University: State University of New York at New Paltz Town/City: New Paltz State (US only): NY Country: USA Author 2 Name: Jay Vora Department: University: St. Cloud State University Town/City: St. Cloud State (US only): MN Country: USA Author 3 Name: Douglas Polley Department: University: St. Cloud State University Town/City: St. Cloud State (US only): MN Country: USA Author 4 Name: Department: University: Town/City: State (US only): Country: Corresponding author: Mandatory: Davina Vora [Corresponding Authors Email: vorad@newpaltz.edu] Please check this box if you do not wish your email address to be published NOTE: affiliations should appear as the following: Department (if applicable); Institution; City; State (US only); Country. No further information or detail should be included Acknowledgments (if applicable):

Biographical Details (if applicable): Davina Vora Davina Vora is an Assistant Professor at the State University of New York at New Paltz. Her publications include articles in Asia Pacific Journal of Management, International Journal of Human Resource Management, Journal of Entrepreneurship, Journal of Organizational Behavior, and Management International Review as well as book chapters in The Handbook of Cross-Cultural Management Research and Handbook of Strategic Alliances. Her main research interests include forms of psychological attachment in multinational contexts, diversity issues, cross-cultural management, subsidiary-MNC relationships, and emerging markets. Jay Vora Jay Vora is Professor Emeritus of Management and International Business at St. Cloud State University. His publications include articles in Management Science, Journal of Applied Business Research, Journal of Black Studies, Journal of Human Resource Planning, and OMEGA: The International Journal of Management Science.

Type header information here His current research interests include spirituality in workplace, comparative management and international entrepreneurship. Douglas Polley Douglas Polley is a Professor of Management at St. Cloud State University. His publications include articles in Organization Science, International Journal of Organizational Analysis, International Journal of Technology Management, and Team Performance Management. His current research interests include spirituality in the workplace, complexity theory, and innovation and entrepreneurship. Structured Abstract [Mandatory] Purpose The purpose of this study is twofold. First, we investigate the applicability of the five (EO) dimensions of autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness to a medium sized firm. Second, we explore firm processes leading to the development of entrepreneurial orientation (EO) in a medium sized domestic U.S. firm. Thus, we examine the applicability of EO dimensions as well as the processes by which EO arose in the focal company. Design/Methodology/Approach - We use a multi-method approach entailing analysis of archival data as well as semistructured interviews of executives to examine the applicability of EO dimensions as well as the processes associated with the development of EO to a medium sized firm competing in a Midwestern U.S. market. Such an in-depth analysis of one firm provides rich data, enabling us to explore EO using qualitative methods. Findings - We found that while our medium sized domestic U.S. business had high levels of autonomy and proactiveness, it exhibited moderate levels of innovativeness and risk taking, and only a low level of competitive aggressiveness. Furthermore, our analysis suggests organizational artifacts facilitate the development of EO and support organizational culture. Specifically, the organizational artifacts of having an ESOP, a flat hierarchy, inter-unit coordination, and customer communication facilitated EO, and reinforced the organizational culture aspects of empowerment, openness, teamwork, quality services, customer satisfaction, and adaptability. Originality/Value This study is among the first to examine all five EO dimensions as well as to use qualitative methods to do so. It also illustrates how EO applies to medium-sized firms, and identifies processes by which these dimensions develop. Keywords [Mandatory]: Entrepreneurial orientation, organizational culture, medium sized firm Article Classification [Mandatory]: Case study

For internal production use only Running Heads:

Type footer information here

Applying Entrepreneurial Orientation to a Medium Sized Firm

Introduction Research on entrepreneurship has burgeoned since its beginnings in the 1930s, and has grown to include a number of concepts, forms, and approaches (Katsikis & Kyrgidou, 2009). While several categorization schemes could be developed (e.g., Schildt, Zahra, & Sillanp, 2006), Stevenson and Jarillo (1990) suggest that entrepreneurship research can be grouped into three broad streams. The first focuses on the economic and market effects of entrepreneurial actions (e.g. Kirzner, 1979; Leibenstein, 1968; Schumpeter, 1934), the second on psychological and sociological reasons for individual entrepreneurial action (e.g. Brockhaus, 1975, 1980; Collins and Moore, 1964; Wilken, 1979), and the third on methods entrepreneurs use to achieve their goals (e.g. Silver, 1983). We focus on this last stream of research, which Stevenson and Jarillo (1990) suggest is the most relevant for corporate entrepreneurship, by exploring the process of firm-level entrepreneurship through the construct of entrepreneurial orientation (EO). The purpose of this paper is to examine whether EO dimensions apply to a medium sized, domestic Midwestern US firm, and the processes by which EO ensues. Specifically, we analyze archival and interview data to discover whether the five EO dimensions of autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness proposed by Lumpkin and Dess (1996) apply as well as the internal, firm level processes that facilitate EO. By exploring such processes, in particular how organizational artifacts and culture influence EO, we can provide insight into some of Covin and Slevins (1991) internal variables suggested to influence a firms entrepreneurial orientation. Our case study exploration of processes leading to firm-level EO in a medium sized firm is important and provides a contribution to theory and practice for a number of reasons. First and foremost, EO is a firm-level construct that has been posited and found to relate to organizational performance (e.g. Covin and Slevin, 1991; Hughes and Morgan, 2007; Keh, Nguyen, and Ng, 2007; Lumpkin and Dess, 1996; Madsen, 2007; Wiklund, 1999). Thus, EO clearly has practical implications for firms and their managers, as well as researchers interested in performance outcomes. Considering that 90% of the worlds firms are small and medium sized enterprises (Udayasankar, 2008), which are major contributors to the global economy, providing substantial employment, production, and innovation worldwide (Jeppesen, 2005), such firms are important to examine. In the U.S. economy, small and medium sized firms generate about 70% of all jobs (Small Business Association, 2003) and contribute to about 48% of total GDP (Ayyagari, Thorsten, Demirguc-Kunt, 2007). Hence, the study of these firms is vital to obtain a well-rounded understanding of EO, as well as to aid these firms in becoming entrepreneurial and enhance their performance. Furthermore, an exploration of internal processes associated with EO could provide insights into how to develop EO in medium sized firms. In addition, although the five dimensions of EO have been developed in the literature (Dess and Lumpkin, 2005; Lumpkin and Dess, 1996), the majority of studies only

examine three of the five dimensions (Hughes and Morgan, 2007). These studies (e.g. Kropp, Lindsay, and Shoham, 2008; Lumpkin and Dess, 2001; Wiklund and Shephard, 2003) therefore provide only a partial analysis of EO. By studying all five dimensions of EO, we conduct a more comprehensive examination of EO. We can ascertain whether all five dimensions exist at the same level of intensity in a medium sized firm. This can inform theory by suggesting which dimensions may be more important to study, as well as to practice, by providing guidance regarding which dimensions are key for firms interested in developing EO. Finally, our qualitative, case-based approach, unusual in studies of EO, can provide a fine-grained analysis of EO. Through a qualitative analysis of archival data and semistructured interviews, we can gain a more in-depth understanding of the processes influencing EO. Though Lumpkin and Dess (1996) advocate the use of case studies and field experiences to explore these processes, there is a surprising absence of case studies on EO. Yet, cases are well suited to an analysis of EO, since EO could be considered a complex organizational phenomenon (Yin, 1989) and cases are useful for examining processes (Hutzschenreuter and Kleindienst, 2006). While theoretical models of EO have been developed (e.g. Aloulou and Fayolle, 2005; Lumpkin and Dess, 1996), these have largely been conceptual models. By using the case method, we are able to not only describe how the firms actions seem to relate to EO dimensions, but also develop a model of the processes involved in their development based on our data regarding the organization. In doing so, we draw upon different levels of analysis, which is important when examining processes (Jarzabkowski, 2004) and entrepreneurship in firms (Zahra, 1993). Thus, through a qualitative case study approach, we can inform both theory and practice by exploring real-life multi-level processes through which medium sized firms can develop EO, and hence potentially improve their performance. Managers may wish to engage in these processes to develop EO, and researchers can gain from a more complete understanding of EO and the possibility of testing our model in future research. Firm-Level Entrepreneurship and Entrepreneurial Orientation Miller (1983) was among the first to move beyond the individual-level analysis of entrepreneurship to the firm level. He suggests that entrepreneurship in a firm (i.e. corporate entrepreneurship) is associated with renewal of the organization and encompasses product innovation, proactiveness, and risk taking. Cornwall and Perlman (1990) distinguish traditional organizations from entrepreneurial organizations along the dimensions of strategy, environmental scanning, effectiveness and control, risk, organizational culture, structure and communication, decision-making, people, and creativity. Entrepreneurial organizations, they argue, are more informal and utilize more horizontal and bottom-up communications, use more rational approaches to risk, and have a culture that supports adaptation, creativity, and innovation than traditional firms. Covin and Slevin (1991) also discuss entrepreneurship at the firm level. Following Burgelman (1984), they view corporate entrepreneurship as extending the firm's competence through developing resources that allow exploitation of opportunities. They argue that the firm level is appropriate for entrepreneurship research since the individual works within an organization and entrepreneurial performance is a function of

organizational as well as individual performance. They emphasize behavioral patterns rather than traits such as culture and structure because behaviors are what actually make organizations entrepreneurial and because behaviors are more easily measured than traits. They propose three types of firm-level entrepreneurial behaviors, which they call entrepreneurial posture. Entrepreneurial posture consists of top management risk taking with regard to investment decisions and strategic actions in the face of uncertainty; the extensiveness and frequency of product innovation and the related tendency toward technological leadership; and the pioneering nature of the firm as evident in the firm's propensity to aggressively and proactively compete with industry rivals (Covin and Slevin, 1991, p. 10). Firms that are high on entrepreneurial posture are considered highly entrepreneurial, which is associated with individual, environmental, and structural conditions of the organization. Lumpkin and Dess (1996) follow a similar approach in terms of characteristics of entrepreneurial firms. However, they move the emphasis from behaviors to processes in a manner analogous to the distinction between strategy and process that exists in the strategy literature (e.g. Bourgeois, 1980; Jarzabkowski and Wilson, 2002; Whittington, 2007). They suggest that entrepreneurial behaviors such as new market entry are supported by five processes within an organization, which they call entrepreneurial orientation. As they describe, EO refers to the processes, practices, and decision-making activities that lead to new entry (Lumpkin and Dess, 1996, p. 136). It reflects the organizational processes, methods, and styles that firms use to act entrepreneurially (Lumpkin and Dess, 1996, p. 139). Thus, EO could be seen as the outcome of organizational activities, which lead the firm to be viewed as entrepreneurial. In their framework, EO consists of five factors: autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness (Lumpkin and Dess, 1996; Dess and Lumpkin, 2005). They suggest that that these five factors vary independently with each other based on the environmental and organizational context. Thus, while these five factors facilitate new entry, all five may not be necessary for success. Different combinations may be appropriate depending on the situation. Given our focus on EO in this paper, we describe each dimension of EO in detail below. Autonomy refers to individuals or teams being self-directive, developing and implementing new ideas (Lumpkin and Dess, 1996). In terms of organizational attributes, organizations characterized by autonomy enable their employees to act independently, to make key decisions, and to proceed (Lumpkin and Dess, 1996, p. 140). In smaller firms this may be reflected in the centralized authority of the owner/entrepreneur who could act autonomously to conduct or manage entrepreneurial activities. In larger firms, to spur entrepreneurial activity within the firm, also called intrapreneurship (Pinchot, 1985), firms may create flat organizational structures and delegate authority to lower levels of the hierarchy (Lumpkin and Dess, 1996). They foster a culture that encourages new projects and keeps these projects relatively free of organizational constraints. Thus, in larger firms, the existence and encouragement of champions working outside the scope of current strategic efforts would be evidence of autonomy.

Innovativeness as conceptualized by EO concerns the willingness of firms to pursue new ideas and to explore and experiment with them creatively (Lumpkin and Dess, 1996). Innovativeness ranges from a willingness to try new products or services, to a commitment to be at the cutting edge of practice (Lumpkin and Dess, 1996), moving beyond the current state of the art (Dess and Lumpkin, 2005, p. 150). It is demonstrated by problem solving, finding creative solutions, and developing new products and services (Kropp et al., 2008) through the support of new ideas and experimentation (Madsen, 2007). Innovativeness thus consists of methods to develop or adopt new products, services, or processes. Such a conceptualization of innovativeness incorporates many aspects of others views of innovation and innovativeness. For example, it is consistent with Schumpeters (1934) proposed forms of innovation pertaining to introducing new products or means of production, finding new sources of raw material, exploring new markets, or organizing a business in a new way. It is also analogous to Van de Ven, Polley, Garud, and Venkatramans (2008) definition of innovation as the process of developing and implementing a new idea[through] a recombination of old ideas, a scheme that challenges the present order, a formula or a unique approach that is perceived as new by the individuals involved (p. 9). In addition, the EO conceptualization of innovativeness fits Garcia and Calantones (2002) discussion of firm innovativeness as the propensity for a firm to innovate or develop new ideas[or] to adopt innovations (p. 113). Thus, the EO conceptualization of innovativeness broadly relates to the literature on innovation. Where it departs concerns detailed aspects of innovation. For example, unlike much of the literature on innovation and innovativeness, the EO dimension of innovativeness does not explicitly classify types of innovation as incremental, modular, architectural, improvement, formalized, ad-hoc, radical, product, process, administrative, or technical (Damanpour, 1991; Gallouj & Weinstein, 1997; Garcia & Calantone, 2002; Subramaniam & Youndt, 2005; Wolter & Veloso, 2008). It also does not delve into specific aspects of innovation such as the nature, type, stages, means, and aims of innovation or the social context, which Baregheh, Rowley, and Sambrook (2009) explain are major topics in the innovation literature, which spans various disciplines. However, it is perhaps this lack of specificity that provides the EO dimension of innovativeness its greatest strength: by being so broad, it can encompass both product/service and process innovations, many types of innovation, and multiple aspects of innovation. Thus, while its definition may vary somewhat from others work, given that there is no clear authoritative definition of innovation (Baregheh et al., 2009, p. 1324), and conceptualizations have varied during the more than 40 years of research on innovation (Hidalgo & Albors, 2008), the EO conceptualization is consistent with numerous definitions of innovation and innovativeness, getting at creative processes to develop new products, services, markets, and businesses. The risk taking dimension of EO, as it implies, refers to risk taking behaviors of firms. While all ventures must deal with some level of risk, there is a range between safe risks that have little uncertainty and few resource commitments, and high risks entailing projects with high uncertainty and large financial and other resource commitments (Lumpkin and Dess, 1996). As Baird and Thomas (1985) suggest, strategic risk encompasses venturing into the unknown (p. 231), committing a high level of resources to a venture, and heavily borrowing. Thus, the EO dimension of risk taking is

characterized by a firm taking such risks as engaging in uncertain ventures, making high resource commitments, and borrowing heavily. However, it is important to recognize that risk taking involves engaging in calculated risks in order to obtain benefits, rather than a firm gambling with little thought about these risks (Dess and Lumpkin, 2005). Proactiveness attempts to capture the idea from early work on entrepreneurship that entrepreneurial efforts require initiative (e.g., Penrose, 1959). Proactiveness refers to attempts to prepare for the future by seeking new opportunities which may or may not be related to the present line of operations, introduction of new products and brands ahead of competition, strategically eliminating operations which are in the mature or declining stages of life cycle (Venkatraman, 1989, p. 949). In other words, firms attempt to discover future opportunities, even when these opportunities may be somewhat unrelated to existing operations. Firms characterized by proactiveness identify and exploit opportunities to meet demand, possibly through their own innovation; adopting existing products, services, or practices; or entering new markets with existing products, services, or products. Proactiveness is somewhat similar to Miles and Snows (1978) category of prospector, those who often initiate change within their industries. Thus, proactiveness concerns the search for and seizure of future opportunities. Finally, the last dimension of EO, competitive aggressiveness, is the tendency to directly confront and challenge competitors (Lumpkin and Dess, 1996). Following Porter (1985), aggressiveness includes reconfiguring the way products and services are delivered, redefining the product use or scope, and outspending competitors. Evidence of aggressiveness might include being a fast-follower, setting high market share goals, lowering prices extensively, or investing heavily in marketing, service and quality, and manufacturing capacity (Lumpkin and Dess, 1996; MacMillan and Day, 1987; Venkatraman, 1989). Covin and Covin (1990, p. 36), for example, distinguish between managerial actions to undo-the-competitors posture and to live-and-let-live. It is relevant to note that competitive aggressiveness is different from proactiveness. Competitive aggressiveness concerns actions related to existing competitors and competing for demand, whereas proactiveness is broader, more future-directed and more concerned with meeting demand than competing for demand (Lumpkin and Dess, 1996). Taking these five dimensions of EO into consideration as well as Lumpkin and Dess (1996) call for more research on the processes involved in EO, we explore two questions: (1) What processes are involved in the development of EO in a medium sized regional U.S. firm? Do organizational culture and artifacts influence EO? (2) How well do the experiences of our medium sized regional firm fit the five EO dimensions? Methodology As noted in the introduction, we use a case study methodology due to its appropriateness for an in-depth analysis of real-world, complex issues, particularly processes. Yin (1981) suggests that cases are ideal to examine issues in a real-life context. He explains: The case study contributes uniquely to our knowledge of individual, organizational, social,

and political phenomena and the distinctive need for case studies arises out of the desire to understand complex social phenomena (Yin, 1989, p. 14). Thus, a case approach enables us to gain understanding of complex organizational issues such as entrepreneurial orientation. Furthermore, this method is well suited to the study of processes, which may be difficult to measure through surveys (Yin and Heald, 1975). In addition, Eisenhardt and Graebner (2007) suggest that case studies are useful to glean the how and why regarding phenomena, and to generate theory. We explore the how component, developing a model based on our qualitative analyses regarding how EO develops in a focal firm. The firm we selected for this study was Marco Business Products, a privately-held firm headquartered in St. Cloud, MN that operated in three different business segments: business furniture, copiers and fax equipment (called Digital Document Solutions, or DDS), and information technology (IT). It has grown substantially since its founding in 1973 when it was located on a side street, employed only fourteen people, and had annual revenues of $500,000. In 2000 sales revenues exceeded $38 million, it had operations in three cities (Mankato, Minneapolis, and St. Cloud), and employed 170 people. Furthermore, it received the Entrepreneur of the Year award from the local Chamber of Commerce. In addition, the firms archival data and our interview data indicated that Marco was an entrepreneurial firm because it exhibited three entrepreneurial characteristics mentioned in the literature (Cornwall and Perlman, 1990; Miller, 1983): entering new markets, seeking and acting on new opportunities, and continually renewing. Marco entered new markets in 1983 when it added personal computers to its product line and in 1992 when it entered the early childhood products. It was opportunity seeking in its geographic expansion to Mankato and Minneapolis markets, and acquisition of various firms in those markets. Renewal was shown by exiting cash register and typewriter businesses and repositioning itself as a technology firm. In 1999 it also quickly changed its focus away from hardware and realigned personal skills to address Y2K related software problems. In the new millennium, Marco continued to change by realigning its software staff to offer internet solutions, including web hosting and applications hosting (including Great Plains Accounting Software). Hence, considering its apparent entrepreneurial nature as well as its size, Marco was an appropriate choice to study EO in a medium sized firm. Consistent with a typical case analysis (e.g. Eisenhardt, 1989; Eisenhardt and Graebner, 2007; Yin, 1981), the data collected from Marco Business Products includes both archival and interview data. Archival data regarding the organization includes annual reports, internal newsletters, documents on the firms history and ownership changes, and current information on the firms website. In addition, we interviewed members of the executive management committee without directly asking questions about the five EO constructs. We used semi-structured interviews and asked managers to discuss the history, strategies, structure, and culture of the firm. This was designed to reduce desirability bias regarding EO in their responses as well as to determine what internal processes seemed central to Marco and to the development of EO. Secondary data were used to crosscheck interview information and to gain additional insights into the firms entrepreneurial behavior. The combination of hard and soft data allowed a more in-depth,

rich understanding of the culture, structure, and activities of Marco than using only one method. Moreover, it allowed us to evaluate EO when objective financial measures would not be appropriate. For example, R&D expenditure could not be used as a measure for innovation, since Marco does not account for new efforts in this way. Interviews of five executives were taped and transcribed for subsequent coding and analysis. To mitigate potential researcher bias, two authors independently coded the contents of one of the interviews using the EO construct of Lumpkin and Dess (1996), compared their findings, and discussed discrepancies and difficulties of applying the five EO dimensions. The researchers individually recoded this interview and compared their analyses to ensure consistency in coding. Next, they separately coded the other four interviews and compared their findings. There was very little disagreement on the final coding of the data from all five interviews into the main five categories of EO. The researchers also agreed on the main components of Marcos organizational culture as well as major organizational artifacts. Furthermore, interviewees were consistent in their relaying of information regarding the firm. Hence, the researchers found no contradictions among interviewees. This indicates reliability among interviewees as well as the researchers, thus giving further confidence in the results. Results Our analysis showed relationships among EO, organizational artifacts, and organizational culture. EO was facilitated by Marcos organizational artifacts, which related to the firms organizational culture. Organizational artifacts refer to the firms constructed physical and social environment (Schein, 1991, p. 14), including behaviors among members of the organization as well as organizational structure characteristics. In contrast, by organizational culture, we refer to the organizations values. This is consistent with the espoused values aspect of Scheins (1991) conceptualization of organizational culture. As noted earlier, Cornwall and Perlman (1990) include organizational culture as an area that distinguishes entrepreneurial firms. Covin and Slevin (1991), on the other hand, focus on the importance of examining behavioral patterns, and distinguish this from organizational culture. By differentiating between organizational culture and artifacts, we can explore both aspects of entrepreneurial firms in depth. Indeed, Schein (1991) suggests that organizational artifacts can be determined through an analysis of the central values that provide the day-to-day operating principles of the firm and its members (p. 15). Since the managers we interviewed did not differentiate between organizational culture and artifacts, we show two-way arrows between specific artifacts and organizational cultural values to demonstrate the interconnectedness and potentially mutually reinforcing relationship between these constructs based on our interviews. EO was found to be more related to organizational artifacts than culture per se, and therefore our model shows direct arrows from specific organizational artifacts to dimensions of EO. Below, we explain our findings as well as the links between these areas. A model of our findings is shown in Figure 1. --- Insert Figure 1 about here ---

Entrepreneurial Orientation Our analysis suggests that Marco had high levels of autonomy and proactiveness, moderate levels of innovativeness and risk-taking, and low levels of competitive aggressiveness. Below, we discuss our findings on each EO dimension in Marco. Autonomy. As discussed earlier, autonomy occurs when organizational units (individuals, teams, etc.) are allowed to take initiative to suggest, champion, and implement ideas for new products or services (Dess and Lumpkin, 2005; Lumpkin and Dess, 1996). Marco exhibited high levels of autonomy, as shown by employee involvement in firm activities, expectations of independence, and rewarding of initiative. One manager stated that employees participate in the development of their projections and comp[ensation] plan development; it is a very participatory type of process and challenging. Thus, employees were expected to be involved and participate in activities that related to firm performance. Employees also were given the power to make their own decisions. A manager explained that direct coaching and directions was not something that happened at Marco. Instead, employees were expected to be independent, take initiatives, and run with it [their ideas]. Another manager explained, People are not going to be hung for making a decision. If it is not deemed as the right decision we may talk about it do some coaching. Nobody is going to lose his or her job for making a bad decision. While this quote does not directly mention the championing of ideas, it does suggest that Marco rewards initiative. Thus, discussion of poor decision-making regarding initiatives, rather than the firing of the decision-maker or requiring him or her to consult a superior before making a decision, helped foster an entrepreneurial environment of autonomy. Employees could take responsibility for new initiatives without being overly concerned about facing negative consequences, and indeed, they could benefit from discussion about such initiatives and potentially feel encouraged to become more involved. For example, one interviewee stated that: Web services was something I brought to the table through a friend who was a programmer. He showed me what he was doing; we needed a website, one thing led to another and now we have a business unit. Nobody told me to do it, nobody directed me to go do it. Consistent with the EO dimension of autonomy, Marco employees initiated and implemented their own ideas. Innovativeness. Looking at the processes and outcomes emphasized in the EO literature, we found that Marco demonstrated innovativeness to the extent that it adopted and modified new, existing technologies to suit the needs of its clients and actively worked to improve its internal processes. For example, in response to local clients, Marco adapted to emerging e-business by creating a new strategic business unit and offering information technology (IT) related products and services. In addition, Marco was able to achieve ISO9000 certification in 2002. This demonstrated innovativeness, as it is a major endeavor for a medium sized firm to adopt new, cutting-edge practices such as those involved in obtaining ISO9000 certification as well as to develop quality products, services, and internal processes.

On the other hand, Marco had little willingness to take on efforts to move beyond current technologies and practices and engage in activities beyond the state of the art. It did not invest in innovating beyond what was already there. However, as noted above, Marco did adopt new practices, products and services based on customer needs. Thus, while Marco did not focus on developing new technologies for the next generation, it showed moderate levels of innovativeness. Risk Taking. Marco showed moderate risk taking behaviors, as it clearly was concerned about risk and tried to minimize its risk. For example, one manager, when talking about the IT division, said: How much risk can we tolerate is a question and yet we have to find a future cash cow or at least a cash hog. You gotta find the cash cow in there and it might be there right now, longer term, but we gotta keep transitioning that way. This quote points to some executives desiring more stability in the firm and less risk taking behavior. To deal with such concerns about risk, Marco leveraged its customer contacts and organizational units. For example, Marco used its low risk furniture division as a cash cow to support its high risk technology division, and these divisions worked with one another to obtain customers. Thus, to minimize risk, Marco creatively applied a synergistic related diversification strategy by using customer contacts of the furniture division and new human and technological resources of the technology division to generate revenues for both. Marco however did engage in calculated risk taking based on consideration of customer demand. For example, due to customer IT needs for Y2K, Marco provided IT services. Then, after considering the growth of customer needs in the web and IT area, Marco decided to expand in this area, creating a third division vastly different from its original product-oriented divisions of furniture and copiers. Thus, Marco engaged in risk taking to support local customer needs. Similarly, Marco engaged in risk taking by deciding to expand to the Minneapolis/St. Paul market. This decision was in part due to current and potential customers mentioning a void in providers of Marcos products and services to small businesses in that area. Such market expansion could be seen as a risk taking action, as shown by managers reactions to this action plan. When talking about entering the Minneapolis/St. Paul market, one manager stated that: This metro decision growth perspective will be very challenging because it will be re-deploying resources into that facility. We have to do a large investment. Thats difficult, coming into the Metro from out state. This statement shows recognition among Marcos executives of the challenges of risk taking behavior due to perceived higher uncertainty and resource commitments. It also suggests that managers were taking a calculated risk to obtain potentially large benefits (Dess and Lumpkin, 2005), since they were aware of the challenges, yet were ready to enter the market given their awareness and responsiveness to customer needs. In the archival data, we found that Marco avoided taking on much debt by financing its initiatives with internally generated cash through selling off a part of its business. Thus, it was not engaging in much risk taking in terms of borrowing behaviors.

Considering the above interview quotes and archival data, Marco was balancing both risk taking and risk averse behaviors. In financing its business, Marco tended to be relatively risk averse, but at the same time it was moderately risk taking in its approach to growth through entering new, potentially risky markets that require resources, based on customer need. Thus, Marco appeared to take a mid-range approach to risk taking. Proactiveness. As stated earlier, proactiveness is related to seizing opportunities, which can include searching for, monitoring, anticipating, and exploiting current and future needs (Dess and Lumpkin, 2005). Marco showed proactiveness in many of its activities, particularly concerning customer needs. Marco identified the needs of its clients and quickly responded to them. One manager described the importance of taking care of the customer, saying: First, last and always, we can turn on a dime. In other words, Marco had a culture where the customer came first and it was expected that employees quickly responded to customer needs and desires. Along similar lines, another manager said that, Marco shares its experience with its customers and that gives you [Marco] more insights [into customer needs]. [The] customer engages with us [so] that they come to where they can trust us or get to know us and there is a comfort level with anyone [i.e. the customer trusts Marco] knowing that you [Marco] are going to bring another avenue [i.e. choice or option]. Thus, not only did Marco respond to stated customer needs, but it also tried to anticipate what these needs might be through working closely with the customer. Such proactiveness benefited Marco in a number of ways. Getting to know customers intimately by sharing internal experiences freely with them helped Marco inform customers of new opportunities, create loyalty among customers, and develop products and services to quickly respond to customer needs. Marco was also proactive in its adoption of new technologies. As mentioned in the above discussion on risk taking, based on customer feedback, Marco sought opportunities and capitalized on them when it could afford to invest in them using internally generated cash flow. In the IT area, Marco identified and capitalized on the opportunity to offer total technology solutions and quality solutions for customers. In addition, it moved from a personal voice messaging system (PBX) to a server for Voice-over-Internet Protocol (VoIP). Furthermore, Marco offered Y2K services in 1999 when its clients needed them and then began offering web services in 2001 as the market demanded them. In its copier division, Marco moved to digital copiers that can provide more output as well as the opportunity for integration with other computer services offered by Marco. One manager explained that Marco developed and customized systems to be used (internally) for multiple industries and divisions, which enabled the firm to speak to them [the customer] not only as a provider of that system but as a user who understands their industry very well. Finally, as noted above, Marco expanded to the Minneapolis/St. Paul area after it learned that small business customers lacked product and service providers. Indeed, expansion into new market opportunities based on customer feedback and networking seemed to occur in all divisions of Marco. One manager stated, As you develop and play off the relationships you have established over the 30 years in the business, we have got some things we can bring to the national scale[A] sales rep is in Canada right now working with a Steelcase dealer up there for our software products. Thus, Marco was poised to take advantage of potential future opportunities based on

10

current relationships. In sum, Marco showed proactiveness through offering new technologies and services to clients, and expanding to new areas in the region. Competitive aggressiveness. Marco did not show much competitive aggressiveness in terms of confronting and challenging its competitors by lowering prices, investing heavily in marketing, or outspending competitors (Lumpkin and Dess, 1996; MacMillan and Day, 1987; Porter, 1985; Venkatraman, 1989). Indeed, in some ways Marco attempted to avoid direct confrontation with competitors, for example entering the Minneapolis/St. Paul market in part due to the absence of competitors in the niche market of small client firms. However, Marco did show competitive aggressiveness in other areas, in particular customer service. One manager stated: Rather than going to a restaurant and get a bad meal, I want to make sure were over serving. Weve taken that approach and thats part of why our services were actually too good almost in terms of how quickly theyre responding. Service, the quick response to customer issues, appears to be one area that distinguished Marco from its competitors. Considering that Macro was over serving, it seems this firm was going above and beyond what other competitors provided, which suggests a less financially-based form of competitive aggressiveness. Thus, Marcos learning about and promptly responding to customer needs gave it some level of competitive aggressiveness in the form of excellent service. In addition, Marcos diverse product range facilitated competitive aggressiveness. As one manager explained, having customized products related to the three divisions gives us a unique advantage. Also, were a very complex organization because we have a multifaceted product mix. Very few systems can handle all those components [aspects of the 3 divisions]as soon as their [the client] organization becomes more complicated with broader offerings we have some opportunity and some advantages that other competitors only in one industry would not. Thus, the development of different division enhanced Marcos competitiveness. By reconfiguring and redefining the scope of its products and services, Marco was able to facilitate some degree of competitive aggressiveness (Porter, 1985). Based on the above, Marco seems to have adopted a live and let live posture towards competitors (Covin and Covin, 1990). It exhibited some competitive aggressiveness, mainly related to customer service and adoption and adaptation of products and services, rather than financial investment or market share goals devoted to beating competitors. Organizational Artifacts and the Link to EO We found several of Marcos organizational artifacts (i.e. the behaviors of employees and the firms structural characteristics), to be related to EO. As shown in Figure 1, dimensions of EO were related to the organizational artifacts of having an Employee Stock Option Program (ESOP), a flat hierarchy, inter-unit coordination, and customer communication. These relationships are discussed below. A number of managers mentioned the importance of Marco being an ESOP, which related to the EO dimension of autonomy. As an ESOP, employees had a financial stake in the company. One interviewee stated: Being an ESOP organization attracted me in

11

that you have a stake in the ground. Given their financial stake in the firm, employees may be motivated to enhance their firms performance through taking initiatives on new products, services, or practices. Furthermore, in part due to being an ESOP, employees asked questions about firm practices and performance, and became engaged in related activities. As mentioned earlier, a manager stated that employees participate in the development of their projections and comp[ensation] plan development; it is a very participatory type of process and challenging. Thus, due to being an ESOP, employees were engaged in organizational activities to enhance the firms performance. It enabled them to have the autonomy to become involved in developing projects and projections. Another key organizational artifact that facilitated the EO dimension of autonomy was Marcos flat organizational structure where hierarchy was not enforced. One manager mentioned, We are defined as a fairly flat organization. Its not [a] pyramid type. We try to empower people at all levels so that we can run flat. Thus, employees were encouraged to be independent and autonomous. Another manager explained that little direction and coaching was provided at Marco, since employees wear too many hats. Instead, if you can take the ball and run youre going to do well here. Thus, a flat hierarchy gave employees the flexibility to develop new ideas and work on new projects, thereby encouraging autonomy. Inter-unit coordination and customer communication were two other organizational artifacts that were linked to each other and related to the EO dimensions of innovativeness, risk-taking, proactiveness, and competitive aggressiveness. Inter-unit coordination refers to the close interaction and cooperation between units, while customer communication, as the name implies, refers to Marcos close contact with customers regarding their changing needs. Marco had close inter-unit coordination, as suggested by one managers comment that you dont see the boundaries as much as in the pastwe work together all the time and anothers that we work together[and] interact well. This was also exemplified by periodic meetings between divisions to discuss market conditions and methods to improve firm performance. Apart from inter-unit coordination, Marco had extensive customer communication. One manager mentioned that our customers want a person to talk to, suggesting that Marco fulfilled this desire. In addition to informal communication, Marco conducted an annual survey of customers. One manager explained the follow up on comments by customers in the annual surveys, saying I listen to [ideas from] my people, adapt, and change, and improve. As suggested in Figure 1 with the oval between inter-unit coordination and customer communication, communication with the customer was not limited to a single division, but instead was closely linked to inter-unit coordination. Unlike what might be expected given the vastly different products and markets of Marcos divisions of furniture, DDS, and IT, these divisions worked together closely to fulfill customer needs. One manager explained All of the divisions are involved with the customer. This is a Marco advantage. Another manager agreed, saying Marco sells multiple products to their customers and each must generate satisfaction or all business products are at risk. Marco helps manage the integration of a variety of products and services for their customers. Archival data from Marco also highlighted the integration across divisions to help serve

12

customers. Thus, it was not inter-unit coordination or customer communication alone, but rather the combination of the two that helped develop EO. As such, we discuss how the combination of the two influenced EO. Considering that Marco used information from customer surveys to adapt, change, and improve its products and services, customer communication enabled innovativeness. Based on these surveys, Marco could determine new areas to become involved in and develop new products and services based on customer needs. Inter-unit coordination helped to facilitate such innovation, as units could collaborate to develop multi-faceted products and services to respond to these needs. As suggested above, all divisions were highly engaged with customers, and worked together to manage the integration of a variety of products and services for their customers. Thus, the communication networks within the company and between Marco and its customers provided the basis for additional product and process innovation. These linkages also alerted Marco to the need for new solutions for customer problems, thereby facilitating innovativeness. In terms of the EO dimension of risk-taking, the combination of inter-unit coordination and customer communication allowed Marco to take calculated risks. Marco decided to take the risk of entering the new Minneapolis/St. Paul market in part based on current and potential customers remarking on a lack of providers of Marcos products and services in that area. Marco also offered IT services in response to customer needs for Y2K, and then created a new IT division when it recognized the growth of customer needs in this sector. Thus, customer communication led to taking the risk of starting a new division of the company. In addition to customer communication, inter-unit coordination played a role in risk-taking, as divisions collaborated with each other to obtain new customers and suggest that existing customers utilize the products and services of other divisions. Thus, Marco was able to reduce risk-taking by leveraging customer contacts in multiple divisions due to inter-unit coordination and recognition of customer needs. Inter-unit coordination and customer communication also facilitated proactiveness at Marco. Through integration between its divisions, Marco was able to utilize its internal network to change its products and services. Members from various divisions even helped one another find customers. As a manager in the furniture division described, I constantly look for leads for copiers. Furthermore, these divisions worked together when trying to obtain customers, collaborating on presentations for one division. Thus, Marco sought future opportunities in terms of new customers through inter-unit coordination. In addition, considering that customer survey feedback enabled Marco to modify and enhance its products and services, customer communication enabled Marco to be proactive by identifying customer needs and exploiting potential opportunities indicated by customers. Moreover, Marco entered new markets in part based on customer feedback. As noted earlier, Marcos proactiveness in entering the new Minneapolis/St. Paul area was partially in response to customers identifying an opportunity to meet potential customer demand. Thus, customer communication allowed Marco to meet current and future demand in products and services, as well as market entry. So, both inter-unit coordination and customer communication supported proactiveness at Marco.

13

Competitive aggression, while albeit only moderate in Marco, also was facilitated from the combination of inter-unit coordination and customer communication. Due to communication with customers, Marco recognized an opportunity in the new niche market of the Minneapolis/St. Paul area. Marco could avoid direct competition in this niche market, and thus customer communication enabled Marco to limit its competitive aggressiveness. However, on the other hand, customer communication contributed to competitive aggressiveness, since it allowed Marco to distinguish itself from competitors. Through recognition of customer needs and over serving with speedy customer service, Marco seems to have invested in service and quality, aspects of competitive aggressiveness. Inter-unit coordination also related to some degree of competitive aggressiveness in Marco. As discussed earlier, one manager suggested that the multifaceted product mix gave Marco a unique advantage over competitors that operated in only one industry. The implication is that competitors could not leverage the knowledge and experience gained from being such a complex organization as Marco. Since the multiple divisions worked closely together, Marco could compete by effectively customizing products and services for customers. Thus, due to integration between divisions, Marco was able to facilitate some degree of competitive aggressiveness in terms of its own capabilities of reconfiguring and redefining products and services. Organizational Culture and Organizational Artifacts Our interviews and examination of archival data suggested a link between Marcos organizational artifacts and different organizational culture characteristics, or key organizational values. This is consistent with Scheins (1991) view that organizational artifacts are reflected in firm values. Six themes emerged regarding Marcos corporate culture: empowerment, openness, teamwork, quality services, customer satisfaction, and adaptability. Below, we discuss these themes and how they relate to the organizational artifacts described in the previous section. Empowerment was mentioned as a key theme in our interviews. For example, one manager mentioned that employees were given the power to make decisions, saying There is a lot of empowerment. Another manager pointed to the fact that employees develop and implement ideas on their own. As he said, You can just about take any idea that is relevant to the business as long as you are willing to do the work and run with itthats the kind of culture Gary [the founder] initiated, created, and encouraged. This manager mentioned that there are number of initiatives taken throughout the company, and that employees have the potential for growth: There are people that started delivering office supplies that are now some of our highest paid sales reps. [When] that kind of potential is there we encourage [it] and try to direct people to grow and become more developed. Another manager pointed to a culture of continuous improvement and learning, as well as a belief in employees. Thus, empowerment of employees was demonstrated in Marco through an open culture encouraging employees to make decisions, to develop and implement new ideas, and to attain personal growth, as well as a culture of promoting these individuals for such activities. The culture of empowerment was related to the organizational artifacts of being an ESOP organization and having a flat hierarchy. One manager explicitly made the link between

14

being an ESOP and empowerment, stating that We try to empower people at all levelsI think that ties back with the ownership the ESOP. Another manager explained that, as employee-owners, employees could, participate in the development of their projections and comp[ensation] plan development; it is a very participatory type of process and challenging. Thus, ESOPs reinforced the culture empowerment by enabling employees to be involved at a strategic level. A flat hierarchy also was associated with empowerment. One manager suggested the relationship between a flat organization and empowerment, stating We try to empower people at all levels so that we can run flat. Openness was mentioned as important to the firm, and related to the organizational artifacts of being an ESOP and having a flat hierarchy. One manager said We are an open company, especially now [as] an ESOP. Thus, the culture of openness and practice of being an ESOP seemed linked. Openness was facilitated by being an ESOP since employees, as owners, had the right to ask about company performance, as one manager pointed out. The flat hierarchy also facilitated openness, as employees at lower levels of the company could ask questions of top managers. As one manager explained, If you want you can walk into Garys [the founders] office, I dont care who you are, shipper in the back office, and you want to ask him about something he will talk to you about it. Hence, the value of open communication among all employees seemed to be a key part of Marcos culture, and was associated with the organizational artifacts of being an ESOP and having a flat hierarchy. The organizational culture component of teamwork was less explicitly stated in our interviews, but seemed to be a key value in Marco that related to the organizational artifacts of inter-unit coordination and being an ESOP. One manager said, We feel that really the integrated solutions, that means you can come to one source for your needs, thats kind of what we are. Everything is being tied to the network [of divisions in the firm] today. The firms conception of itself as a provider of integrated solutions points to teamwork among the different divisions of the firm. As another manager straightforwardly explained, our competitive advantage is the ability to work as a team across divisions. These quotes clearly mention the organizational artifact of inter-unit coordination. The practice of divisions working closely with one another reinforced the culture of teamwork. One manager noted this, stating We work together like a team. We do interact well. He explained that the three divisions meet once a month [by territory of St. Cloud, Minneapolis, or greater Minnesota] which allow that interaction. Thus, regular inter-unit coordination through periodic meetings facilitated the organizational cultural value of teamwork. Also supporting the organizational cultural value of teamwork, employees were cross-trained on a variety of activities and worked together on projects. One manager mentioned that employees worked together on projects, even on short notice, and were ready to help people in other divisions when necessary. Thus, members of the different divisions worked together as a team, reinforcing the culture of teamwork. Being an ESOP also facilitated this, since employees were therefore interested in overall firm performance. As noted earlier, members of various divisions helped one another find customers and worked together on presentations to customers for one division. One manager noted Even though this person does not share that persons paycheck, they are interacting because it does affect shareholder value, the results of the

15

company, and profitability of the company. So they have a vested interestThere is interaction, shared synergy, service. In other words, having an ESOP gave employees an interest in firm performance, and they engaged in teamwork to facilitate such performance. Furthermore, a manager noted that as employee-owners, they could participate in the development of their projections and comp[ensation] plan development; it is a very participatory type of process and challenging. ESOPs therefore reinforced the culture of teamwork by having employees work together. Delivering quality services was also shown to be a strong value in the firm. In answering the question of whether anything in particular represented Marcos culture, one manager answered simply: The quality initiative in the company. In his mind, the quality process of taking care of the customer, first, last, and always[is] under that high quality umbrella [that characterizes Marcos culture]. Another manager suggested that a key strategy of the firm was quality solutions for customers. He suggests that the bottom line[relates to] continuous improvements to quality. This was also enacted in practice. As the operations manager explained, Each year we come up with what the critical initiative operations will be[We] pick those as improvement areas to make us a more effective and efficient operations group. These ideas and initiatives were presented, discussed and evaluated. In sum, continuous quality improvement was a key ingredient to Marcos corporate culture of quality services. This cultural value of quality service was associated with the organizational artifacts of inter-unit coordination and customer communication. One example of inter-unit coordination facilitating quality service related to training in ISO. Employees were trained in ISO to learn about quality and were expected to work with one another to facilitate quality improvements. As one manager described: We run it [the training] once a year and try and continue to get the new people acclimated into continuous improvement processes and work on quality teams with some of the structure in solving problems. As the quote suggests, the firm regularly trained employees to learn about quality, as well as to work together to support these quality initiatives. Thus, inter-unit coordination helped to reinforce the cultural value of quality services. Marco also performed an annual survey of our employees and customers, which a manager suggested is related to continuous improvements to quality. Hence, the organizational artifact of communication with customers was linked to the organizational cultural value of quality services. As might be clear from some of the above quotes regarding quality, customer service was emphasized by a number of managers as another key component of Marcos organizational culture. As noted in the previous paragraph, managers considered quality to be linked to customer responsiveness. The end goal was customer service. This was closely tied to Marcos mission. As one manager put it in our vision statement somewhere up here we have total customer satisfaction. The vision statement stated: Total customer satisfaction for integrated information solutionsguaranteed. Clearly, customer satisfaction was part of Marcos overarching strategy, and could be seen as linked to its organizational culture. This cultural value was reinforced by the organizational artifacts of inter-unit coordination and customer communication. The operations manager noted that his group met annually to determine what the critical initiative operations will beWe have a couple initiatives just on customer[s]. Hence,

16

meetings were held to discuss and evaluate ways to better serve the customer, which is related to customer satisfaction. As mentioned earlier, meetings between divisions were periodically held to understand the marketplace, thus facilitating customer service through the practice of inter-unit coordination to determine how to serve the customer. As discussed earlier, despite quite different products and services, the divisions of furniture, DDS, and IT worked together with the customer to fulfill customer needs. Divisions collaboration on one divisions presentation to potential customers suggests that inter-unit coordination facilitated customer satisfaction. By working together, divisions of the firm could discuss potential customer needs and try to satisfy such needs. Moreover, Marcos goal to improve the overall business of the firm by providing multiple products and services for customers also related to the organizational cultural value of customer satisfaction. One manager explained, All of the divisions are involved with the customer. This is a Marco advantage. Another manager agreed, saying that Marco[s] goals include total customer satisfaction across all products. Marco sells multiple products to their customers and each must generate satisfaction or all business products are at risk. Marco helps manage the integration of a variety of products and services for their customers. As suggested in the above quotes, through divisions working together and separately with the customer, Marco could achieve its goal of customer satisfaction. Indeed, one manager stated, our customers want a person to talk to, suggesting that Marco responded to this need to facilitate customer satisfaction. Furthermore, data and feedback from annual customer surveys enabled Marco to assess and respond to customer needs, thereby reinforcing the organizational culture of customer satisfaction. In sum, the combination of inter-unit coordination and customer communication practices reinforced the organizational culture value of customer satisfaction. Finally, adaptability was another cultural value that emerged from our analysis. One manager mentioned, We also have a history of adapting to change. Another manager explained, We are always looking ahead 3-5 years. What is going to be, where [are] the opportunities?...We can move, change, and adapt in a hurry. The founder reinforced this idea, stating that Marco had to adjust to the market to determine where it could add value. Thus, Marco has had a culture of looking forward to determine how the firm should adapt to the market. This was facilitated by the organizational artifact of customer communication. By talking with customers, Marco could determine where the market was moving. It learned about customer needs, and could adapt accordingly. As noted earlier, one manager explained the follow up on the comments by customers in the annual surveys by stating, I listen to [ideas from] my people, adapt, and change, and improve. Thus, customer communication through surveys helped the manager adapt to customer needs, thereby facilitating achievement of the organizational culture of adaptation. Discussion This qualitative case study of Marco Business Products offers us an opportunity to be deeply involved in one entrepreneurial firm. It provides many insights into the characteristics of a medium sized, regional U.S. business, the applicability of EO dimensions to this business, and the processes leading to EO. Marco showed high levels of autonomy and proactiveness, moderate levels of innovativeness and risk taking, and low levels of competitive aggressiveness. These EO dimensions were found to be

17

facilitated by the organizational artifacts of having an ESOP, a flat hierarchy, inter-unit coordination, and customer communication. Furthermore, these organizational artifacts supported Marcos organizational culture of empowerment, openness, teamwork, quality services, customer satisfaction, and adaptability. Our results provide a number of insights into entrepreneurial orientation. First, the finding that organizational culture and artifacts influence EO support Covin and Slevins (1991) model of internal and strategic variables, most obviously organizational culture, organizational structure, and business practices, influencing entrepreneurial posture. It is also consistent with research on innovation suggesting that organizational culture, empowerment, teamwork, decentralization, and customer communication influence innovativeness (e.g. Agarwal and Selen, 2009; Damanpour, 1991; Dougherty and Hardy, 1996; Gapp & Fisher, 2007; Hage and Aiken, 1970; Kanter, 1983b, Smith, Busi, Ball, and van der Meer, 2008). While our model diverges from above studies by finding that culture related to artifacts, which in turn facilitated EO, our study emphasizes the importance of these factors for the development of EO. Moreover, our finding of the importance of a culture of customer satisfaction and practice of customer communication for the manifestation of several EO dimensions provides further support for the literatures finding of a link between customer orientation and EO (Messeghem, 2003; Sciascia, Naldi, and Hunter, 2006). Second, our findings regarding the varying levels of EO dimensions provide evidence that different dimensions of EO may be emphasized in different contexts, since high levels of all five may not always be beneficial (Hughes and Morgan, 2007; Lumpkin and Dess, 1996). It appears that medium sized firms with a culture of empowerment, openness, teamwork, quality, customer satisfaction, and adaptability may develop artifacts that facilitate high levels of autonomy and proactiveness. While internal organizational artifacts such as a flat hierarchy and having an ESOP related to autonomy, innovativeness was sparked through inter-unit coordination and customer communication. Such coordination and communication practices were also associated with other EO dimensions that were found to exist at moderate and low levels at Marco. Moderate levels of innovativeness and risk taking may have occurred due to size, as smaller firms are faced with resource constraints (Bierly and Daly, 2007). Lack of resources may constrain a medium sized firms ability to explore high levels of innovativeness, yet allow for more small-scale innovativeness as seen in Marco. Similarly, medium sized firms may have moderate levels risk taking, since they have limited financial capital or confidence in their ability to pay their debts, yet recognize the potential benefits of entering new markets. Thus, they try to balance the needs for exploration of new product-market opportunities and exploitation of the firms resource base (March, 1991). It is also interesting to note that risk taking at the organizational level may mask more complex risk taking behaviors within the organization. For the case of Marco, we found that it had moderate levels of risk taking in part due to a combination of low risk businesses (e.g. furniture) and higher risk businesses (e.g. IT). This suggests that, while overall levels of EO are interesting and useful to examine, we could also benefit from a more in-depth examination of EO dimensions, particularly risk taking,

18

among various divisions or sub-components of an organization that may face different contextual, competitive conditions. Consistent with the above notion of different levels of EO dimensions being vital in different contexts, we found low competitiveness aggressiveness in Marco, despite it being considered a successful, entrepreneurial firm. Low competitive aggressiveness may have ensued from the organizational culture focus on customer satisfaction and adaptation rather than other values such as being the market leader in its three industries. Related, perhaps due to its high level of proactiveness and moderate level of innovativeness in terms of customer responsiveness, Marco may not have been concerned with competitors and thus not engaged in high levels of competitive aggressiveness (Lassen, Gertsen, and Riis, 2006). Another issue may have been Marcos diversification into three different industries. Again, resource constraints may have played a role in its ability to be a market leader in any or all three areas, and hence be successful through engaging in competitive aggression. Alternatively, Marco may have considered itself an early entrant, particularly in the IT division, and recognized that engaging in competitive aggressiveness would potentially not influence (Hughes and Morgan, 2007) or hinder (Covin and Covin, 1990) performance. As a medium sized firm, Marco might have been able to fly under the radar of larger or more entrenched competitors. Thus, there may be advantages to not being aggressive in certain entrepreneurial settings. Third, our research also has implications for understanding the EO dimensions themselves. While definitions of the EO factors seem to be largely consistent across researchers (e.g. Hughes and Morgan, 2007; Lumpkin and Dess, 1996), indicators of these dimensions are perhaps less clear. For example, the EO literature on innovativeness tends to focus on large-scale research and development projects, such as development and early adoption of new technology, new forms of organization, and new processes (Dess and Lumpkin, 2005; Lumpkin and Dess, 1996). While this does not preclude the notion of innovativeness occurring on a smaller scale, this seems to be largely unexplored in the literature on EO. Our study suggests that smaller scale innovative activities, such as innovativeness in internal firm processes, small scale projects, training to facilitate innovation among employees, and processes encouraging innovation within the firm are also important aspects of innovativeness. This is also consistent with the literature on incremental innovation (e.g. Garcia and Calantone, 2002; Subramanium and Youndt, 2008). Similarly, literature on the proactiveness dimension of EO seems to be primarily focused on outcomes such as being the first to enter new markets and/or to introduce new products. However, our study suggests that understanding and quick responsiveness to customer needs is a key component of proactiveness. This is reminiscent of Ashbys (1956) concept of requisite variety, where minor adjustments are made to accommodate complex, changing customer needs. It is also consistent with Messeghem (2003), who suggests that strong EO firms listen carefully to clients to develop new ideas, and that these relationships are part of a quality policy. Other researchers (e.g. Avlonitis and Salavou, 2007; Prasanth, 2005) also point to the importance of responsiveness and close relationships to customers in entrepreneurial firms. Thus, our study of Marco suggests that researchers studying EO in small and medium sized firms may benefit from

19

considering a broad consideration of what constitutes EO dimensions, including conceptualizations of these factors at a smaller, more limited scale. Fourth, in addition to potentially broadening the perspective of what the EO dimensions consist of, based on our research, some EO factors appear to be related to each other. For example, autonomy as shown by employees being expected to perform with limited guidance also seems somewhat related to innovativeness and proactiveness, since such autonomy allows employees to explore and develop products and services to benefit the firm and its customers. Alluding to this, Lumpkin, Brigham, and Moss (2010) mention that autonomy can spur innovation. Furthermore, consistent with Kreiser, Marino, Davis, Tang, & Lee (2010), innovativeness and proactiveness could be seen as related to each other, since Marcos innovativeness is geared towards responding to customer needs. Given Marcos close relationship with customers, active seeking of customer needs, and desire to respond to these needs, we could expect creativity and innovation throughout the firm (Keh et al., 2007). Furthermore, such proactiveness of responding to customer needs could also be viewed as being somewhat related to risk taking, particularly to the extent that Marco entered new markets due to customer needs. This is also suggested by research showing correlations between these two dimensions of EO (Andersn, 2010). These examples provide support to the idea that these EO dimensions, while being independent (Lumpkin and Dess, 1996), can influence each other. Contributions to Practice Our findings have a number of implications for small and medium sized firms for whom EO may be critical for performance as well as strategic and competitive orientation (Aloulou and Fayolle, 2005; Keh et al., 2007; Wiklund, 1999). Based on the case of Marco, it appears that a first step would be to develop a culture that supports EO. While we certainly do not suggest that all firms require a culture of empowerment, openness, teamwork, quality services, customer satisfaction, and adaptability, our research suggests that organizational culture and philosophy should be consistent with artifacts leading to EO. Thus, firms wishing to develop EO could consider utilizing either a top-down approach, considering how their current culture could support organizational artifacts that lead to EO, or a bottom-up approach, thinking about the methods that would support different EO dimensions, and what organizational values would endorse such artifacts. Related, our research also suggests that EO can develop through different artifacts. For example, having both an ESOP and a flat hierarchy influenced autonomy in Marco. Thus, firms desiring high levels of EO can develop these dimensions in a variety of ways, and thus can creatively consider the possibilities. In addition, our results suggest that firms may benefit from considering what aspects of EO are important for them. For example, based on prior research as well as our case analysis, competitive aggressiveness may not be critical to small or medium sized firms, particularly newer firms in the area of technology (Covin and Covin, 1990; Hughes and Morgan, 2007). We also found moderate levels of innovativeness to occur in Marco through small scale, incremental innovations. Based on this, managers from medium sized firms may benefit from considering how to develop minor adaptations of products and services to increase the EO dimension of innovativeness. Thus, managers could

20

benefit from a broad conceptualization of what is captured by the different dimensions of EO, recognizing that extremely large allocation of resources may not be necessary to develop a dimension of EO. In sum, firms should consider which dimensions of EO are critical for performance based on the context (Hughes and Morgan, 2007; Lumpkin and Dess, 1996), and focus on broadly defining and fulfilling those dimensions of EO, rather than assuming that all five EO dimensions are necessary to obtain good performance. Limitations, Implications, and Areas for Future Research As with any study, ours has limitations. First, our study focuses on the case of one firm. Even though we have in-depth insight into this firm, it is unclear how generalizable this firms experiences would be to other firms of different sizes, in different industries, or located in different regions of the world. For example, our study finds that Marco does not engage in much competitive aggression. While other researchers suggest that new firms in the high-technology industry and in technologically sophisticated environments may not improve their performance through competitive aggressiveness (Covin and Covin, 1990; Hughes and Morgan, 2007), it would be interesting to determine whether this occurs in other small and medium sized entrepreneurial firms operating in other contexts. Similarly, other firms may have different processes leading to EO. Second, our qualitative methods of analyzing archival and interview data, while rich, preclude us from conducting quantitative analyses regarding EO. Although our purpose has been to explore the processes leading to the development of EO dimensions in a relatively small, regional entrepreneurial firm using qualitative techniques, future research could benefit from using both qualitative and quantitative methods to corroborate findings and improve our understanding of entrepreneurship (Zahra, Jennings, and Kuratko, 1999) and EO (Lyon, Lumpkin, and Dess, 2000). Greater use of qualitative analysis could also enable researchers to develop a more comprehensive understanding of EO dimensions. For example, based on our analysis, a broader, smaller scale understanding of the EO dimensions of innovativeness and proactiveness may be beneficial. In addition, a finer grained qualitative study could shed light on the risk taking dimension as a firm tries to balance high risk and low risk in different divisions. Other researchers may find additional aspects of these, or other, EO dimensions, through qualitative research. Finally, we were limited in the breadth of topics we could discuss in the paper. We focused on internal variables that could influence EO, but clearly external, context variables could play a strong role (Covin and Slevin, 1991; Edwards, 2007; McAdam, Reid, & Mitchell, 2010). Future research could explore a combination of both of these factors. Another limitation of our study is that we focused on EO rather than other issues that impact entrepreneurial firms, such as market-orientation. The literature suggests a poorly understood relationship between market-orientation and EO (Atuahene-Gima and Ko, 2001; Baker & Sinkula, 2009; Li, Zhao, Tan, and Liu, 2008; Merlo & Auh, 2009; Renko, Carsrud, & Brnnback, 2009; Sciascia et al., 2006; Tzokas, Carter, and Kyriazopoulos, 2001). Considering that interfunctional coordination and customer orientation are aspects of marketing orientation (Coley, Mentzer, & Cooper, 2010; Narver & Slater, 1990; ODwyer & Ledowith, 2009) and are somewhat similar to the

21

organizational artifacts of inter-unit coordination and customer communication found in our study, it is possible that EO is at a lower level of analysis than marketing orientation, and that marketing orientation is more closely related to organizational culture than EO. However, it was beyond the scope of our study to delve into the linkages and differences between these constructs. Future research could further examine the relationship between EO and marketing orientation, as well as their various causes and effects. Conclusion Our qualitative case study provides some insight into the processes leading to EO for the case of Marco Business Products. We found that EO dimensions existed at various levels, and EO was facilitated by a variety of organizational artifacts that were supported by components of organizational culture. This not only has implications for the importance of process when studying EO, but also suggests that firms can develop a culture that reinforces EO. We contribute to the literature by providing a rather novel, qualitative, case-based methodology to examine EO and the processes that lead to it, and by finding that internal organizational artifacts and culture encourage EO in a medium sized firm.

22

References Agarwal, R. and Selen, W. (2009), Dynamic capability building in service value networks for achieving service innovation, Decision Sciences, Vol. 40 No. 3, pp. 431-475. Aloulou, W. and Fayolle, A. (2005), A conceptual approach of entrepreneurship orientation within small business context, Journal of Enterprising Culture, Vol. 13 No. 1, pp. 21-45. Andersn, J. (2010), A critical examination of the EO-performance relationship, International Journal of Entrepreneurial Behavior & Research, Vol. 16 No. 4, pp. 309-328. Ashby, W.R. (1956), An Introduction to Cybernetics, Chapman & Hall, LTD, London, England. Atuahene-Gima, K. and Ko, A. (2001), An empirical investigation of the effect of market orientation and entrepreneurship orientation alignment on product innovation, Organization Science, Vol. 12 No. 1, pp. 54-74. Avlonitis, G. and Salavou, H. (2007), Entrepreneurial orientation of SMEs, product innovativeness, and performance, Journal of Business Research, Vol. 60 No. 5, pp. 566-575. Ayyagari, M., Thorsten, B., and Demirguc-Kunt, A. (2007), Small and medium enterprises across the globe, Small Business Economics, Vol. 29 No. 4, pp. 415434. Baird, I.S. and Thomas, H. (1985). Toward a contingency model of strategic risk taking, Academy of Management Review, Vol. 10 No. 2, pp. 230-243. Baker, W. and Sinkula, J. (2009), The complementary effects of market orientation and entrepreneurial orientation on profitability in small businesses, Journal of Small Business Management; Vol. 47 No. 4, pp. 443-464. Baregheh, A., Rowley, J. and Sambrook, S. (2009), Towards a multidisciplinary definition of innovation, Management Decision, Vol. 47 No. 8, pp. 1323-1339. Bierly, P. and Daly, P. (2007), Alternative knowledge strategies, competitive envirionment, and organizational performance in small manufacturing firms, Entrepreneurship Theory & Practice, Vol. 31 No. 4, pp. 493-516. Bourgeois, L.J., III (1980), Strategy and Environment: A Conceptual Integration, Academy of Management Review, Vol. 5 No. 1, pp. 25-39 Brockhaus, R.H. (1975), I-E locus of control scores as predictors of entrepreneurial intentions, Academy of Management, Proceedings of the 35th Annual Meeting, August 1975, pp. 433-435. Brockhaus, R.H. (1980), Risk taking propensity of entrepreneurs, Academy of Management Journal, Vol. 23 No. 3, pp. 509-520. Burgelman, R.A. (1984), Designs for corporate entrepreneurship, California Management Review, Vol. 26 No. 2, The Free Press, New York, NY. Coley, L., Mentzer, J., and Cooper, M. (2010), Is consumer-orientation a dimension of market orientation in consumer markets?, Journal of Marketing Theory & Practice, Vol. 18 No. 2, pp. 141-154. Collins, O.F. and Moore, D.G. (1964), The Enterprising Man, Michigan State University, Least Lansing, MI.

23

Cornwall, J. R. and Perlman, B. (1990), Organizational Entrepreneurship, Irwin, Homewood, IL, Covin, J.G. and Covin T. J. (1990), Competitive aggressiveness, environmental context, and small firm performance, Entrepreneurship: Theory and Practice, Vol. 14 No. 4, pp 35-50. Covin, J. G. and Slevin, D.P. (1989), Strategic management of small firms in hostile and benign environments, Strategic Management Journal, Vol. 10 No. 1, pp. 75-87. Covin, J. G. and Slevin, D.P. (1991), A conceptual model of entrepreneurship as firm behavior, Entrepreneurship: Theory and Practice, Vol.16 No. 1, pp. 7-25. Damanpour, F. (1991), Organizational innovation: A meta-analysis of effects of determinants and moderators, Academy of Management Journal, Vol. 34 No. 3, 555-590. Dess, G. G. and Lumpkin, G. T. (2005), The role of entrepreneurial orientation in stimulating effective corporate entrepreneurship, Academy of Management Executive, Vol. 19 No. 1, pp. 147-156. Dess, G. G., Lumpkin, G. T., and McGee, J.E. (1999), Linking entrepreneurship to strategy, structure, and process: Suggested research directions, Entrepreneurship: Theory and Practice, Vol. 23 No. 3, pp. 85-102. Dougherty, D. and Hardy, C. (1996), Sustained product innovation in large, mature organizations: overcoming innovation-to-organization problems, Academy of Management Journal, Vol, 39 No. 5, pp. 1120-1153. Edwards, T. (2007), A critical account of knowledge management: Agentic orientation and SME innovation, International Journal of Entrepreneurial Behavior & Research, Vol. 13 No. 2, pp. 64-81. Eisenhardt, K. (1989), Building theories from case study research, Academy of Management Review, Vol. 14 No. 4, pp. 532-550. Eisenhardt, K. and Graebner, M. (2007), Theory building from cases: Opportunities and challenges, Academy of Management Journal, Vol. 50 No. 1, pp. 25-32. Gallouj, F. and Weinstein, O. (1997), "Innovation in services", Research Policy, Vol. 26 Nos 4/5, pp. 537-556. Gapp, R. and Fisher, R. (2007), Developing an intrapreneur-led three-phase model of innovation, International Journal of Entrepreneurial Behavior & Research, Vol. 13 No. 6, pp. 330-348. Garcia, R. and Calantone, R. (2002), A critical look at technological innovation typology and innovativeness terminology: A literature review, The Journal of Product Innovation Management, Vol. 19 No. 2, pp. 110-132. Hage, J. and Aiken, M. (1970), Social Change in Complex Organizations, Random House, New York, NY. Hidalgo, A. and Albors, J. (2008), Innovation management techniques and tools: A review from theory and practice, R&D Management, Vol. 38 No. 2, pp. 113-127. Hughes, M. and Morgan, R.E. (2007), Deconstructing the relationship between entrepreneurial orientation and business performance at the embryonic stage of firm growth, Industrial Marketing Management, Vol. 36 No. 5, pp. 651-661. Hutzschenreuter, T. and Kleindienst, I. (2006), Strategy-process research: What have we learned and what is still to be explored, Journal of Management, Vol. 32 No. 5, pp. 673-720.

24

Jarzabkowski, P. (2004), Strategy as practice: Recursiveness, adaptation, and practicesin-use, Organization Studies, Vol. 25 No. 4, pp. 529-560. Jarzabkowski, P. and Wilson, D. (2002), Top teams and strategy in a UK university, Journal of Management Studies, Vol. 39 No. 3, pp. 355-381. Jeppesen, S. (2005), Enhancing competitiveness and securing equitable development: Can small, micro, and medium-sized enterprises (SMEs) do the trick?, Development in Practice, Vol. 15 No. 3/4, pp. 463-474. Kanter, R.M. (1983a), The middle manager as innovator, Harvard Business Review, Vol. 60 No. 4, pp. 95-106. Kanter, R. (1983b), The Changemasters. Simon & Schuster, New York, NY. Katsikis, I. and Kyrgidou, L. (2009), Entrepreneurship in teleology: The variety of the forms, International Journal of Entrepreneurial Behavior & Research, Vol. 15 No. 2, pp. 209-231. Keh, H., Nguyen, T., and Ng, Hwei. (2007), "The effects of entrepreneurial orientation and marketing information on the performance of SMEs", Journal of Business Venturing, Vol. 22 No. 2, pp. 592-611. Kirzner, I.M. (1979), Perception, Opportunities, and Profit: Studies in the Theory of Entrepreneurship, University of Chicago Press, Chicago, IL. Kreiser, P., Marino, L., Davis, J., Tang, Z., and Lee, C. (2010), Firm-level entrepreneurship: The role of proactiveness, innovativeness and strategic renewal in the creation and exploration of opportunities, Journal of Developmental Entrepreneurship, Vol. 15 No. 2, pp. 143-163. Kropp, F., Lindsay, N.J., and Shoham, A. (2008), Entrepreneurial orientation and international entrepreneurial business venture startup, International Journal of Entrepreneurial Behavior & Research, Vol. 14 No. 2, pp. 102-117. Lassen, A., Gertsen, F., and Riis, J. (2006), The nexus of corporate entrpreneurship and radical innovation, Creativity & Innovation Management, Vol. 15 No. 4, pp. 359-372. Leibenstein, H. (1968), Enterpreneurship and development, The American Economic Review, Vol. 58 No. 2, pp. 72-83. Li, Y., Zhao, Y., Tan, J., and Liu, Y. (2008), Moderating effects of entrepreneurial orientation on market orientation-performance linkage: Evidence from Chinese small firms, Journal of Small Business Management, Vol. 46 No. 1, pp. 113-133. Lumpkin, G., Brigham, K., and Moss, T. (2010), Long-term orientation: Implications for the entrepreneurial orientation and performance of family businesses, Entrepreneurship & Regional Development, Vol. 22 Nos. 3-4, pp. 241-264. Lumpkin, G.T. and Dess, G.G. (2001), Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle, Journal of Business Venturing, Vol. 16 No. 5, pp. 429-451. Lumpkin, G. T. and Dess, G.G. (1996), Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance, Academy of Management Review Vol. 21 No. 1, pp. 135-138. Lyon, D., Lumpkin, G., and Dess, G. (2000), Enhancing entrepreneurial orientation research: Operationalizing and measuring a key strategic decision making process, Journal of Management, Vol. 26 No. 5, pp. 1055-1085.

25

Macmillan, I.D. and Day, D.L. (1987), Corporate ventures into industrial markets: Dynamics of aggressive entry, Journal of Business Venturing, Vol. 21 No. 1, pp. 29-39. Madsen, E. (2007), The significance of sustained entrepreneurial orientation on performance of firms -- A longitudinal analysis, Entrepreneurship & Regional Development, Vol. 19 No. 2, pp. 183-204. March, J. G. (1991), Exploration and exploitation in organizational Learning, Organization Science, Vol. 2 No. 1, pp. 7187. Mastakar, N. and Bowonder, B. (2005), Transformation of an entrepreneurial firm to a global service provider: The case study of Infosys, International Journal of Technology Management, Vol. 32 Nos. 1/2, pp. 34-56. McAdam, R., Reid, R., and Mitchell, N. (2010), Longitudinal development of innovation implementation in family-based SMEs: The effects of critical incidents, International Journal of Entrepreneurial Behavior & Research, Vol. 16 No. 5, pp. 437-456. Merlo, O. and Auh, S. (2009), The effects of entrepreneurial orientation, market orientation, and marketing subunit influence on firm performance, Marketing Letters, Vol. 20 No. 3, pp. 295-311. Messeghem, K. (2003), Strategic entrepreneurship and managerial activities in SMEs, International Small Business Journal, Vol. 21 No. 2, pp. 197-212. Miles, R. and Snow, C. (1978), Organizational Strategy, Structure, and Process, McGraw-Hill, New York, NY. Miller, D. (1983), The correlates of entrepreneurship in three types of firms, Management Science, Vol. 29 No. 7, pp. 770-791. Narver, J.C. and Slater, S.F. (1990), The effect of a market orientation on business profitability, Journal of Marketing, Vol. 54 No. 4, pp. 20-35. ODwyer, M. and Ledowith, A. (2009), Determinants of new product performance in small firms, International Journal of Entrepreneurial Behaviour & Research, Vol. 15 No. 2, pp. 124-136. Penrose, E.T. (1959), The Theory of the Growth of the Firm, Oxford University Press, Oxford, England. Pinchot, G. (1985), Intrapreneuring, Harper Row, New York, NY Porter, M. E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, The Free Press, New York, NY. Prasanth, S. (2005), Management of technology in an SME: A case study of Hind High Vacuum Co. Pvt. Ltd., International Journal of Technology Management, Vol. 32 Nos 1/2, pp. 73-87. Renko, M., Carsrud, R., and Brnnback, M. (2009), The effect of a market orientation,entrepreneurial orientation, and technological capability on innovativeness: A study of young biotechnology ventures in the United States and in Scandinavia, Journal of Small Business Management, Vol. 47 No. 3, pp. 331 369. Schein, E. (1991), Organizational Culture and Leadership, Jossey-Bass, San Francisco, CA.

26

Schild, H., Zahra, S., and Sillanp, A. (2006), Scholarly communities in entrepreneurship research: A co-citation analysis, Entrepreneurship Theory & Practice, Vol. 30 No. 3, pp. 399-415. Schumpeter, J.A. (1934), The Theory of Economic Development, Harvard University Press, Cambridge, MA. Sciascia, S., Naldi, L., and Hunter, E. (2006), Market orientation as a determinant of entrepreneurship: An empirical investigation on SMEs, Entrepreneurship Management, Vol. 2, pp. 21-38. Silver, A.D. (1983), The Entrepreneurial Life, John Wiley & Sons, New York, NY. Small Business Association. (2003), Administrative Economic Plan (Release 03-02), Author, Washington D.C. Smith, M., Busi, M., Ball, P. and van der Meer, R. (2008). Factors influencing an organisations ability to manage innovation: A structured literature review and conceptual model, International Journal of Innovation Management, Vol. 12 No. 4, pp. 655-676. Stevenson, H.H. and Jarillo, J.C. (1990), A paradigm of entrepreneurship: Entrepreneurial management, Strategic Management Journal, Vol. 11 No. 4, pp. 17-27. Subramaniam, M. and Youndt, M. (2005), The influence of intellectual capital on the types of innovative capabilities, Academy of Management Journal, Vol. 48 No. 3, pp. 450-463. Tzokas, N., Carter, S., and Kyriazopoulous, P. (2001), Marketing and entrepreneurial orientation in small firms, Enterprise and Innovation Management Studies, Vol. 2 No. 1, pp. 19-33. Udayasankar, K. (2008), Corporate social responsibility and firm size, Journal of Business Ethics, Vol. 83 No. 2, pp. 167-175. Van de Ven, A., Polley, D., Garud, R., and Venkatraman, S. (2008), The Innovation Journey, Oxford University Press, New York, NY. Venkatraman, N. (1989), Strategic orientation of business enterprises: The construct, dimensionality, and measurement, Management Science, Vol. 35 No. 8, pp. 942962. Wolter, C. and Veloso, F. (2008), The effects of innovation on vertical structure: Perspectives on transaction costs and competencies, Academy of Management Review, Vol. 33 No. 3, pp. 586-605. Whittington, R. (2007), Strategy practice and strategy process: Family differences and the sociological eye, Organization Studies, Vol. 28 No. 10, pp. 1575-1586. Wiklund, J. (1999), The sustainability of the entrepreneurial orientation performance relationship, Entrepreneurship Theory & Practice, Vol. 24 No. 1, pp. 37-48. Wiklund, J. and Shephard, D. (2003), Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses, Strategic Management Journal, Vol. 24 No. 13, pp. 1307-1314. Wilken, P.H. (1979), Entrepreneurship, A Comparative and Historical Study, Ablex, Norwood, NJ. Yin, R. (1989), Case Study Research: Design and Methods, Sage Publications, Newbury Park, CA.

27

Yin, R. (1981), The case study crisis: Some answers, Administrative Science Quarterly, Vol. 26 No. 1, pp. 58-65. Yin, R. and Heald, K. (1975), Using the case survey method to analyze policy studies, Administrative Science Quarterly, Vol. 20 No. 3, pp. 371-381. Zahra, S., Jennings, D., and Kuratko, D. (1999), The antecedents and consequences of firm-level entrepreneurship: The state of the field, Entrepreneurship Theory & Practice, Vol. 24 No. 2, pp. 45-65. Zahra, S. (1993), A conceptual model of entrepreneurship as firm behavior: A critique and extension, Entrepreneurship Theory & Practice, Vol. 17 No. 4, pp. 5-21. Zahra, S. and Covin, J. (1995), Contextual influences on the corporate entrepreneurshipperformance relationship: A longitudinal analysis, Journal of Business Venturing, Vol. 10 No. 1, pp. 43-58.

28

Figure 1: The Process of Obtaining EO in Marco Business Products

Organizational Culture
Customer Satisfaction

Quality Services

Organizational Artifacts
Customer Communication Adaptability

Inter-Unit Coordination

Teamwork

Openness

Flat Hierarchy

Empowerment Autonomy Innovativeness Risk Taking Proactiveness Competitive Aggressiveness

EO

ESOP

29