Knowledge‐based theory, entrepreneurial orientation, stakeholder engagement, and firm performance
2021
Research summary:
Our understanding of entrepreneurial orientation (EO) is limited by the inattention to why a
firm arranges itself to give rise to EO, what sets its strategic intent, and what affects its
contribution to performance. These omissions have led to calls for a causally adjacent theory
of EO. Grounded in knowledge-based theory, we investigated (a) how knowledge production
gives rise to EO, (b) how the relationship between EO and profitability is mediated by
knowledge use, and (c) how this relationship between EO and knowledge use is moderated by
stakeholder engagement. Using multi-respondent, multi-source data from small-and-mid-size
enterprises in two economically distinct East Asian countries, Taiwan and Japan, empirical
evidence supports our theory. Our findings are consistent across both studies. We contribute a
knowledge-based theory of EO.
Managerial summary:Why do some firms organize to be entrepreneurial while others do not, and why do some
entrepreneurially oriented firms profit more financially than others? We find that those firms
that organize processes to accumulate, aggregate, activate, store, manage, and distribute
knowledge become more entrepreneurial oriented as the means to create wealth from this
‘knowledge production’. In other words, knowledge production can affect perceptions of
opportunities and resources, leading to choices about organizational arrangements to best use
knowledge. However, we find that the firm also needs to be adept at knowledge use to profit
financially from its entrepreneurial endeavors, and leading firms utilize stakeholder
engagement to strengthen the relationship between entrepreneurial behavior and knowledge
use on the route to greater profitability.
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