34 CHAPTER 3 LITERATURE REVIEW: BACKGROUND AND DEFINITIONS 3.0 Overview of Chapter 3 The main purpose of this first part of literature review's chapter is to develop clear understanding of the variables under study by discussing their background and definitions. The first section outlines the background and definitions of entrepreneurship. The second section presents the background and definitions of corporate entrepreneurship followed by the corporate entrepreneurship dimensions. The dimensions of corporate entrepreneurship which include entrepreneurial orientation and corporate venturing are discussed in the third and fourth section. The fifth section discusses the organizational structure. The sixth section discusses dynamism and the hostile environment. The final part of this study discusses firm performance. 3.1 Entrepreneurship's Background and Definition The entrepreneurship in national level is considered as an important driver of economic growth, job creation, and innovation (OECD, 2008). However, there is minimal consensus on the definition of the term entrepreneurship even though it has been used for decades. There are at least seven perspectives on the nature of entrepreneurship including creation of wealth, creation of new venture or enterprise, creation of innovation, creation of change, creation of employment, creation of value, and creation of growth (Morris, 1998; Morris et al., 2008). Most of the researchers use the definition given by Stevenson and Jarrillo-Mossi (1986: 10) that define 35 entrepreneurship as a process of creating value by bringing together a unique package of resources to exploit an opportunity. According to Morris et at. (2008), this definition is widely accepted as it captures all the core keywords of entrepreneurship Iiteratures. The entrepreneurship or entrepreneurial activities are not only essential in start-up firms but also within established firms regardless of their size and age (Kraus et al., 2011). The differences between entrepreneurship in start-ups and large and established firms (corporate entrepreneurship) are shown in Table 3-1. Among the differences are although both start-ups and established firms have similar risks in terms of financial, market, supplier, and others, the small firm's owners are responsible for the risks. Meanwhile, for large firms, the company assumes most of the risks. Entrepreneurship in small firms is more flexible especially in doing experiments of new products or services as compared to the large firms that are subjected to many rules, procedures, and bureaucracy. Despite the difficulty of being flexible, the large firms have more access to resources such as finance, R&D, facilities, an established customer base, good reputation and image and others. (Morris et at., 2008). The terms used to describe the entrepreneurial activities inside existing and established firms include corporate entrepreneurship (Burgelman, 1983: Zahra. 1993), entrepreneurial orientation (Lumpkin & Dess, 1996: Wiklund, 1999), or intrapreneurship (Antoncic & Hisrich, 2001,2004). Since this research is conducted among the large firms in Malaysia, the term corporate entrepreneurship will be used throughout the study. The primary aim of corporate entrepreneurship is to improve the firm's profitability and growth by creating competitive advantage (Zahra & Covin, 1995: Zahra & Garvis, 2000). J6 Table 3-I: Major Differences between Corporate and Start-Up Entrepreneurship Start-Up Entrepreneurship Corporate Entrepreneurship Entrepreneur takes the risk. Company assumes the risks, other than career- related risks. Entrepreneur "owns" the concept Company owns the concept, and typically the and business. intellectual rights surrounding the concept. Entrepreneur owns all or much of the Entrepreneur may have no equity in the business. company, or a very small percentage. Potential rewards for the Clear limits are placed on the rewards entrepreneur are theoretically entrepreneurs can receive. unlimited. One Misstep can mean failure. More room for errors, company can absorb failure. Vulnerable to outside influence. More insulated from outside influence. Independence of the entrepreneur, Interdependence of champion with many although the successful entrepreneur others; may have to share credit with any is usually backed by a strong team. number of people. Flexibility in changing course, Rules, procedures, and bureaucracy hinder the experimenting, or trying new entrepreneur's ability to maneuver. directors. High speed decision-making. Longer approval cycles. Little security. Job security. No safety yet. Dependable benefit package. Few people to talk to Extensive networks for bouncing around ideas. Limited scale and scope initially. Potential for sizeable scale and scope fairly quickly. Severe resource limitations Access to finances. R&D, production facilities for trial runs, an established sales force, an existing brand, existing distribution channels, existing databases, existing databases and market research resources, and an established customer base. Source: Morris et at. (2008: 36) 3.2 The Background and Definition of Corporate Entrepreneurship Entrepreneurial activities within an existing corporation, a firm-level phenomenon or corporate entrepreneurship have evolved over the last four decades in strategic management, innovation, and strategic change literature (Kuratko, 2010; Yang et al., 2007). The definition of corporate entrepreneurship has varied considerably over time, with scholars giving various definitions on the entrepreneurial activities within existing organizations based on their observations and opinions. 37 Additionally, different authors use different terms to describe entrepreneurial efforts inside existing firms while at the same time, the same term is used differently by different authors to describe the same phenomenon (Sharma & Chrisman, 1999). Among the terms used to describe entrepreneurial behaviour at the firm level are: I. intrapreneuring (Pinchot, 1985); 2. intra-corporate entrepreneurship (Cooper, 1981); 3. corporate entrepreneurship (Burgelman, 1983; Guth & Ginsberg, 1990; Hornsby et al., 1993; Stopford & Baden-Fuller, 1994; Covin & Miles, 1999; Sharma & Chrisman, 1999; Antoncic & Zorn, 2004; Morris et al., 2008); 4. internal corporate entrepreneurship (Jones & Butler , 1992); 5. corporate venturing (von Hippel, 1977; MacMillan, 1986; Vesper, 1990); 6. internal corporate entrepreneurship (Schollhammer, 1981; Schollhammer, 1982; Jones & Butler, 1992); 7. innovative (Miller & Friesen, 1983); 8. entrepreneurial strategy making (Dess et al., 1997); 9. firm-level entrepreneurial posture (Covin & Slevin, 1986; Covin, 1991: Kantur & Iseri-Say, 2013); 10. firm's entrepreneurial orientation (Lumpkin & Dess, 1996; Knight, 1997), and; 11. organizational entrepreneurship (Stevenson et al., 1985; Wood et al., 2000; Hjorth, 2005; Handfield et al., 2009). However, the terms that are often used to describe entrepreneurship at the firm level, especially large firms, are corporate venturing, internal corporate entrepreneurship, corporate entrepreneurship, intrapreneurship and organizational entrepreneurship. The lists of definitions by prior researchers of these terms are 38 illustrated in Appendix B (Table B-l, Table B-2. Table B-3, and Table B-4). In this research, the term corporate entrepreneurship is used to describe the entrepreneurial activities of established firms. Corporate entrepreneurship activities have been mentioned in the literature as early as in the 1970s. During this time the study focused on corporate venturing and how to develop entrepreneurship inside existing developed organizations (Hanan, 1976; Hill & Hlavacek, 1972; Peterson & Berger, 1972; von Hippel, 1977). von Hippel (1977) referred to corporate venturing as the organizations' activity to find new ventures internally or externally. Corporate venturing has been further defined by Biggadike (1979) as a means for firms to launch new businesses for the product or in service markets where they had not previously competed. In order to be diversified, the parent company must acquire new equipments, people or new knowledge. Furthermore, in the 1980s, Scholhammer (1981) defined internal (or intra- corporate) entrepreneurship as all formalized entrepreneurial activities within existing business organizations. Formalized internal entrepreneurial activities are those which receive explicit organizational sanctions and resource commitments for the purpose of innovative corporate endeavours - new product developments, product improvements, new methods or procedures (Schollhammer, 1982: 211). Burgleman (1984) and Sathe (1989) defined corporate entrepreneurship as organizational entrepreneurship which is the willingness to strive for organizational renewal through the pursuit of new ventures and opportunities. Other researchers who used the term organizational entrepreneurship were Stevenson et al. (1985), Morris and Paul (1987), referred to it as the willingness to support creativity, flexibility, and calculate risk-taking. In other words, corporate entrepreneurship requires organizational sanctions and resource commitments to develop capabilities. 39 In the 1980s, an additional term, intrapreneurship, was used to describe the entrepreneurial efforts within existing organizations. The term was introduced by Pinchot III (1985) who argued that intrapreneurs are any of the "dreamers who do. " The intrapreneur is the person in an organization that initiates the innovation, which turns ideas into reality and thus transforms to profitable manners. Other than Pinchot, there were a few researchers who used the intrapreneurship term such as Carrier (1994,1997) Antoncic and Hisrich (2000; 2001; 2003; 2007), Carland (2007), and Parker (2009). Antoncic and Hisrich (2001: 497) defined intrapreneurship as entrepreneurship within an existing organization and refers to a process that goes on inside an existing firm, regardless of its size. This leads not only to new business ventures but also to other innovative activities and orientation such as development of new products, services, technologies, administrative techniques, strategies, and competitive posture. In the 1980's, scholars held the same opinion that the corporate entrepreneurship phenomenon involved the entrepreneurial behaviour inside existing large organizations such as new venture creations, new markets, new products or new services creation (Spann et al., 1988; Jennings & Lumpkin, 1989). Moreover, Vesper (1984) added that corporate entrepreneurship behaviour was the employees' initiative from the lower level to do innovation by producing something different without instruction or permission from the higher level manager. If the organization is able to produce higher than the average number of new products and markets, the organization is considered entrepreneurial (Jennings & Lumpkin, 1989). In the 1990s, the definitions and concepts of corporate entrepreneurship became more comprehensive and began to take shape (Kuratko, 2010). The well- known literature on corporate entrepreneurship defined corporate entrepreneurship as 40 formal or informal activities to create new businesses in established companies through product and process innovations and market developments. These activities may take place at the corporate, division (business), functional, or project levels, with the unifying objective of improving a company's competitive position and financial performance (Zahra, 1991). Sharma and Chrisman (1999: 18) suggested that corporate entrepreneurship is the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization. These researches on corporate entrepreneurship illustrate that such initiatives re-energizes and enhances the firm's ability to innovate (Kuratko, 2010). In this 21't century, there is a widening of the definitions of corporate entrepreneurship, with references made not only to the creation of new business ventures but also to other innovative activities and orientations such as development of new products, services, technologies, administrative techniques, strategies and competitive postures. The three most pronounced elements of organizational entrepreneurial activities are: new venture formation, product/service innovation and process innovation (Antoncic & Zorn, 2004: 6). Sathe (2003) defined corporate entrepreneurship as a new business creation within the existing business that requires top management support. According to him, in order to survive, firms must create new businesses which constitute the most important task for senior executives in established firms. He added that the creation of a new business is crucial for the nation's economic and social stability particularly in its attempts to compete with other countries (Sathe, 2003). With all these definitions, Morris et al. (2008) described corporate entrepreneurship as being manifested in companies either through corporate venturing or strategic entrepreneurship as shown in Figure 3-1. 41 Figure 3-1: Defining Corporate Entrepreneurship Corporate Entrepreneurship Corporate Venturing " Internal corporate venturing " Cooperative corporate venturing " External corporate venturing Strategic Entrepreneurship " Strategic renewal " Sustained regeneration " Domain redefinition " Organizational rejuvenation " Business model reconstruction Source : Morris et al. (2008: 81) Corporate entrepreneurship activities, which include corporate venturing, innovativeness, proactiveness, risk taking, and strategic renewal all aim for higher firm growth and profitability. Most researchers observed that corporate entrepreneurship constitutes the entrepreneurial efforts of the large firm rather than the smaller one. This is because large organizations have the sufficient resources to be more innovative, invest in high-risk projects, acquire potential ventures, and other entrepreneurship activities. However, entrepreneurial efforts occur in large and small organizations because it is beneficial for revitalization and performance of the organizations regardless of its size (Carrier, 1994; 1997). 3.3 The Dimensions of Corporate Entrepreneurship The literature on corporate entrepreneurship has no standardized framework that conceptualizes and operationalizes the multidimensional constructs of corporate entrepreneurship (Wong & Zhang, 2009; Zahra et al., 1999). Besides, the relationship between corporate entrepreneurship and other organizational variables are immature and underdeveloped (Zahra et al., 1999). Prior researchers have been using different 42 dimensions of corporate entrepreneurship. The most popular dimension used to describe the firm-level entrepreneurship was entrepreneurial orientation (Lumpkin & Dess, 1996). Zahra (1996) stated that the entrepreneurial orientation dimensions, which include the firm's innovativeness, propensity to take risk, and proactiveness, are the essence of corporate entrepreneurship. These characteristics form the necessary ingredients for the firm to be entrepreneurial and were used as foundations for prior researches on entrepreneurial organizations (Karacaoglu et al. 2013). Apart from the entrepreneurial orientation dimensions, previous researches used the corporate entrepreneurship activities such as corporate venturing, innovation and self-renewal (Antoncic & Hisrich, 2001; Zahra, 1993; 1995) as proxy for corporate entrepreneurship as shown in Table 3-2. Corporate venturing refers to the acts of pursuing and entering new businesses that involve current products or markets. A new business creation is the most salient characteristic of corporate entrepreneurship as it creates new businesses within existing organizations (Stopford & Baden-Fuller, 1994). Innovation refers to new products, services and technologies. The self-renewal emphasizes the strategy formulation, reorganization, and organizational change (Antoncic & Hisrich, 2001). It can be seen from Table 3-2 that the corporate venturing and entrepreneurial orientation dimensions were consistently used by previous researchers, thus influencing the use of the entrepreneurial orientation and corporate venturing dimensions to measure corporate entrepreneurship in this study. These two dimensions will be discussed in the next subsections. 43 Table 3-2: The Dimensions of Corporate Entrepreneurship Used in Literatures No. Author, Year Dimension 1. Antoncic & Hisrich, a. Corporate venturing (2001) - b. Innovativeness Yonggui et al. (2009) c. Self-renewal Zehir & Eren (2007) d. Proactiveness 2. Lumpkin & Dess (1996) a. Innovativeness b. Proactiveness c. Risk taking d. Autonomy e. Com itive aggressiveness 3. Kantur & Iseri-Say (2013) a. Proactiveness Miller (1983) b. Risk taking Luo et al. (2005) c. Innovativeness Kerne Igor (2002) Zahra (1996) Zehir et al. (2012) 4. Rornero-Martinanez et al. a. Product innovation (2010) b. Process innovation c. Organizational innovation d. National venturing e.. International venturing f. Strate is renewal 5. Sally (2001) a. Innovativeness b. Proactiveness c. Risk taking d. Corporate venturing e. Self-renewal 6. Thornberry (2002) a. Corporate venturing b. Intrapreneuring c. Organizational transformation d. Industrrule-breaking 7. Zahra & Garvis (2000) a. Proactiveness b. Risk taking c. Innovativeness d. Corporate venturing 8. Zahra (1993,1995) a. Venturing b. Innovation c. Self-renewal 9. Zhang (2008) a. Corporate venturing b. Innovativeness c. Strate Tic renewal 3.4 Entrepreneurial Orientation Background and Definition Entrepreneurial orientation research has existed for decades, with the entrepreneurial orientation concept having its roots in the work of Mintzberg (1973). 44 He features the joint factors of pro-activity and risk-taking with entrepreneurship. Afterwards, Khandwala (1977) defined entrepreneurship at firm level as a strategic choice and developed an instrumentation to capture the relevant characteristics. Subsequently, by using Khandwala's (1977) scale in the instrumentation, Miller and Friesen (1982) further refined entrepreneurial orientation dimensions to measure relative degrees of entrepreneurship in firms. In addition, Miller and Friesen (1983) stated that entrepreneurial firms have higher propensity towards product marketing innovation, risky ventures and proactive innovations. Most researchers credited Miller (1983) for his contribution in initiating entrepreneurial orientation activities though he did not use the term entrepreneurial orientation in his initial writings on the topic. According to him, an entrepreneurial firm has three characteristics, namely; innovative, proactive and able to take risks. He distinguishes the entrepreneurial firm and conservative firm by describing that the entrepreneurial firm is one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with "proactive" innovations, beating competitors to the punch. A non- entrepreneurial firm is one that innovates very little, is highly risk averse, and imitates the moves of competitors instead of leading the way' (Miller, 1983: 771). These three dimensions of entrepreneurial orientation have been widely used in various fields such as entrepreneurship, strategic management, organizational behaviour, marketing, and operations (Dess et al., 2011 ). The introduction of the conceptual foundations by Miller (1983) and Khandwala (1977) contributed significantly towards the building of entrepreneurial orientation as a construct. In the following years, Covin and Slevin (1986,1989,1990) characterized entrepreneurial firms with high levels of innovativeness, risk-taking, and proactiveness based on the platform of earlier research. Covin and Slevin (1989,1990) 45 labeled these characteristics as the firm's strategic posture which is utilized as the firm's general competitive orientation. Before the term entrepreneurial orientation was introduced, over the years, previous research used different labels for the entrepreneurial orientation phenomenon, for example, entrepreneurial mode (Mintzberg, 1973), entrepreneurial style (Khandwalla, 1976,1977), strategic posture (Covin & Slevin, 1989) and entrepreneurial strategy making (Li et al., 2005). Lumpkin and Dess (1996) later introduced the concept of entrepreneurial orientation which refers to the processes, practices, decision making styles and operating management philosophy related to the strategy of the entrepreneurial firm (Lumpkin & Dess, 1996; Dess & Lumpkin, 2005). Entrepreneurial orientation can also be defined as the firm's overall competitive orientation that can be used as the firm's strategy to compete in their industry (Jogaratsam & Tse, 2006). Various definitions of entrepreneurial orientation are presented in Table 3-3. The unidimensional versus multidimensional construct of entrepreneurial orientation has also been subject to debate. In early research on entrepreneurial orientation, Miller (1983) and Covin and Slevin (1989) conceptualized entrepreneurial orientation as either a unidimensional or composite construct. They argued that each of the dimensions are highly correlated (Rauch et al., 2009), meaning that innovativeness, proactiveness and risk taking are manifested by the firm simultaneously. The weakness of this unidimensional construct is that it neglects the individual influences by each dimension and assumes that all dimensions have similar effects on firm performance (Hughes & Morgan, 2007; Lumpkin & Dess, 2001; Wang & Yen, 2012). Whether the unidimensional or multidimensional construct was employed does not pose a problem or point of disagreement as one is not necessarily superior to one another. The choice is highly dependent on the objective of the study. 46 However, for the firm to be highly entrepreneurial, they should score on all three dimensions (Covin et al., 2006). In contrast, according to Lumpkin and Dess (1996). not all of the dimensions of entrepreneurial orientation would have direct or positive effects on firm performance under different circumstances. It is believed that firms can vary in degree of innovativeness, proactiveness, and risk taking as they may not be equally entrepreneurial across all the three dimensions. However, it is recommended that all dimensions should be positively correlated (Lumpkin & Dess, 2001). The meta- analysis by Rauch et al. (2004) supported the suggestion by Lumpkin and Dess that the sub-dimensions of entrepreneurial orientation vary independently with performance. Therefore, it is necessary to assess the relative impact of each dimension of entrepreneurial orientation (Kraus et al., 2012; Monsen & Boss, 2009). In order to enhance a firm's performance. these dimensions often work together (Dess & Lumpkin, 2005). However, even if only some dimensions of entrepreneurial orientation exist within a firm; the organization can still be very successful (Lumpkin & Dess, 2001). Despite the caution advocated by Lumpkin and Dess (1996), a majority of prior literature have utilized combined dimensions of entrepreneurial orientation. For instance, in the meta-analysis conducted by Rauch, et al. (2009), only 25% (13 out of 51) of the articles included in the analysis used multidimensional entrepreneurial orientation dimensions, whereby, each of the entrepreneurial orientation dimensions measured separately. Other studies supporting Lumpkin and Dess (1996) reported that entrepreneurial orientation is a multidimensional construct and affect a firm's performance differently. For instance, Swierczek and Ha (2003) found that proactiveness and innovativeness were positively related to firm performance in Vietnam and Thailand, while risk taking was not. Another study in the 47 UK found that both innovativeness and risk taking are not significantly related to customer performance (Hughes & Morgan, 2007). However, the most important concern is that entrepreneurial orientation should bring about improvements in firm performance in general (Kraus et al., 2012). Given these arguments, this research examines the entrepreneurial orientation as the multi dimensional constructs that adds to the theoretical and practical understanding. Research on entrepreneurial orientation has increased rapidly in many fields, reflecting attempts to fill the gap in the literature in context of firm level entrepreneurship. Consequently, the overwhelming researches on the entrepreneurial orientation has led to the recognition of entrepreneurial orientation as a major construct in the field of strategic management and entrepreneurship literature (Morris & Kuratko, 2002). There are at least three reasons stated by Covin and Lumpkin (2011) why entrepreneurial orientation is given much attention by researchers. First, entrepreneurial orientation is most appropriate in explaining the characteristics of an entrepreneurial firm at the most fundamental level (Covin & Lumpkin, 2011) with researchers agreeing that the construct theoretically captures the relevant (Miller, 1983), requisite (Lumpkin & Dess, 1996) characteristics of entrepreneurial firms. Notably, evolutionary theorists and strategic management scholars recognize the importance of entrepreneurial orientation as the overall strategic posture that is essential to sustain the firm's viability. In an era where product life cycles are ever decreasing, industry boundaries are continuously morphing and competitive advantages are characteristically unsustainable, entrepreneurial orientation has proven to be a useful construct for the purposes of understanding why and how some firms are able to regularly renew themselves via new growth trajectories while others are not (Covin & Lumpkin, 2011: 862). The second reason why entrepreneurial 48 orientation fills the gap in the literature on firm level entrepreneurship is because it is a continuous variable or set of variables that is represented by a multidimensional construct that can be plotted by all firms. These dimensions are common and have universal characteristics that can be possessed by other firms. Thirdly, since entrepreneurial orientation is the practice of entrepreneurial firms, it makes it easier to assess the level of the entrepreneurship in the firm. The next sections are discussed on the entrepreneurial orientation dimensions. Table 3-3: Selected Past Definitions of Entrepreneurial Orientation Authors Definition of entrepreneurial orientation Mintzberg In the entrepreneurial mode, strategy-making is dominated by the (1973: 45) active search for new opportunities" as well as "dramatic leaps forward in the face of uncertainty. Khandwalla The entrepreneurial [management] style is characterized by bold, (1976/1977: 25) risky, aggressive decision-making. ([ ] added). Miller & Friesen The entrepreneurial model applies to firms that innovate boldly (1982: 5) and regularly while taking considerable risks in their product- market strategies. Miller (1983: 771) An entrepreneurial firm is one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with `proactive' innovations, beating competitors to the punch. Morris & Paul An entrepreneurial firm is one with decision-making norms that (1987: 249) emphasize proactive, innovative strategies that contain an element of risk. Covin & Slevin Entrepreneurial firms are those in which the top managers have (1998: 218) entrepreneurial management styles, as evidenced by the firms' strategic decisions and operating management philosophies. Non-entrepreneurial or conservative firms are those in which the top management style is decidedly risk-averse, non-innovative, and assive or reactive. Merz & Sauber Entrepreneurial orientation is defined as the firm's degree of (1995: 554) proactiveness (aggressiveness) in its chosen product-market unit (PMU) and its willingness to innovate and create new offerings. Lurnpkin & Dess Entrepreneurial orientation refers to the processes, practices, and (1996: 136-137) decision-making activities that lead to new entry" as characterized by one, or more of the following dimensions: "a propensity to act autonomously, a willingness to innovate and take-risks, and a tendency to be aggressive toward competitors and proactive relative to marketplace opportunities. 49 Zahra & Neubaum Entrepreneurial orientation is the sum total of a firm's radical (1998: 124) innovation, proactive strategic action, and risk taking activities that are manifested in support of projects with uncertain outcomes. Voss et at. We define entrepreneurial orientation as a firm-level disposition (2005: 1134) to engage in behaviors [reflecting risk-taking, innovativeness, proactiveness, autonomy, and competitive aggressiveness] that lead to change in the organization or marketplace. [] added). Avlonitis & Entrepreneurial orientation constitutes an organizational Salavou phenomenon that reflects a managerial capability by which firms (2007: 567) embark on proactive and aggressive initiatives to alter the competitive scene to their advantage. Cools & Van den Entrepreneurial orientation (EO) refers to the top management's Broeck strategy in relation to innovativeness, proactiveness, and risk (2007/2008: 27) taking. Source : Covin and Wales (2011) 3.5 The Dimension of Entrepreneurial Orientation The dimensions of entrepreneurial orientation have been derived from both the strategy-making process and entrepreneurship literatures (Dess & Lumpkin, 2005). Lumpkin and Dess (2001: 431) defined the individual dimensions of entrepreneurial orientation as, first, innovativeness, referring to a willingness to support creativity and experimentation in introducing new products/services besides novelty, technological leadership, and R&D in developing new processes. Second, risk taking means a tendency to take bold actions such as venturing into unknown new markets, committing a large portion of resources to ventures with uncertain outcomes, and/or borrowing heavily. Lastly, proactiveness is an opportunity-seeking, forward-looking perspective involving introducing new products or services ahead of the competition and acting in anticipation of future demand to create change and shape the environment. Later, Chen and Hambrick (1995) pointed that entrepreneurial firms should have the characteristics of competitive aggressiveness. This is agreed by Lumpkin and Dess (1996), who formally added two additional dimensions; autonomy and 50 competitive aggressiveness. Competitive aggressiveness reflects the firm's efforts to outperform industry rivals through combative posture or aggressive and forceful response in order to improve the firm's position or conquering rivals threat in a competitive marketplace. On the other hand, autonomy refers to the entrepreneurial efforts of an individual or a team to bring forth a business concept or vision and carrying it through completion. The literature shows that these dimensions permeate the decision making styles and practices of a firm's members. However, the majority of the entrepreneurial orientation studies focused on the three dimensions (George & Marino, 2011; Morris & Sexton, 1996; Soininen et at., 2011; Zahra, 1993a). Thus, this study also employed the three dimensions of entrepreneurial orientation. Table 3-4 illustrates examples of previous dimensions used in the literature. The most popular dimensions of entrepreneurial orientation are innovativeness, proactiveness, and risk taking. Another two dimensions of entrepreneurial orientation which are autonomy and competitive aggressiveness are also used in prior research. Other researchers (Venkatraman, 1989a; Tan and Tan, 2005; Smart & Conant, 1994) developed their own instrumentation and its dimensions to measure the level of entrepreneurial in a firm. They added other variables such as analysis, defensiveness, strategic planning activities, customer needs and want identification, vision to reality, and identifying opportunities. This study employed three dimensions of entrepreneurial orientation which were originally introduced by Miller (1983) and agreed upon by most of the researchers. These dimensions of entrepreneurial orientation which are innovativeness, proactiveness, and risk taking will be explained in the next subsection. 51 Table 3-4: Examples of Entrepreneurial Orientation Dimensions Used by Previous Researchers Item Author, Year Dimensions of Unidimensional or Entrepreneurial Multidimensional Orientation I. Kraus et at. (2012), Innovativeness, Multidimensional Gibb & Haar (2010) proactiveness, and risk taking. 2. Lumpkin & Dess Innovation, proactiveness, Multidimensional (1996), and risk taking autonomy, Lee & Peterson and competitive (2000) aggressiveness. 3. Miller (1983), Innovation, proactiveness, Unidimensional Covin & Slevin and risk taking. (1989) 4. Smart & Conant Risk taking, strategic Unidimensional (1994), planning activities, Churchill & Peter customer needs and wants (1984) identification, innovation, vision to reality, and identify opportunities. 5. Tan & Tan (2005) Futurity, proactiveness, risk Multidimensional affinity, analysis, and defensiveness. 6. Venkatraman Aggresiveness, analysis, Multidimensional (I 989a), defensiveness, Morgan & Strong proactiveness, futurity, and (2003) risk taking. 3.5.1 Innovativeness It is widely agreed that innovativeness is a key component of entrepreneurial orientation constructs (Lumpkin & Dess, 1996). However there is no consensus among researchers on the terms, innovation and innovativeness, (Garcia & Calantone, 2002) especially in entrepreneurial orientation constructs. Some studies called it innovation and some regarded it as innovativeness. It can be seen in Tables 3-5 and 3- 6 that the researchers used the terms innovation and innovativeness to represent the components of entrepreneurial orientation. Although the terms are different, they have similar meanings, and thus the previous researchers used similar instrumentations to 52 measure innovation or innovativeness in entrepreneurial orientation as seen in Tables 3-5 and 3-6. The inconsistent usage of the terms in the literature sometimes caused confusion and emphasizes the need for the researchers, policymakers and managers of large and small firms to understand the relationship and difference between the terms innovation and innovativeness (Kamarudden et al., 2010). Therefore in this study, the term innovativeness is used to refer to one of the dimensions under the entrepreneurial orientation construct. In order to enhance understanding, innovation will be first defined as the term innovativeness is its derivative. Innovation is the creation of new products, services, processes, technologies, structure or administrative systems and other newness (Hult et al., 1998). Thus, innovativeness or innovative behavior is the propensity to support the innovation (Moreno & Casillas, 2011) or defined as the capacity to introduce a new process, product, or an idea in the organization (Damanpour, 1991; Hurley & Hult, 1998). The origin of the word innovation can be traced back to the 1540s. It is derived from the Latin word innovationern which is the noun form of the verb 'innovare'. Innovare is defined as `to renew or change into new (in-novare)'. In other words, it refers to the process of innovating which is to produce a new idea, product, method and others (Gudem & Welo, 2010). Thus, to innovate means to make changes to something that has already been established, especially by introducing new methods, ideas, or products (Oxford University Press). Generally, innovations are a major driving force for economic growth and wealth creation. Innovation at firm level aims for the survival of the firm and to adapt with the rapid change of product life cycle, technologies, competitors, customer preferences and laws (Kamarudden et al., 2010). Schumpeter (1934: 66), the first to 53 introduce innovation in an entrepreneurial process (Lumpkin & Dess, 1996), defined innovation as `the setting up of a new production function and as an entrepreneurship tool which includes five specific attributes; (1) the introduction of a new good, (2) the introduction of a new method of production, (3) the opening of a new market, (4) the conquest of a new source of supply of new materials, and (5) the carrying out of a new organization of any industry (creating a monopoly position or the breaking up of a monopoly)'. Most of the literature on innovation is based on the works of Schumpeter. For example, Damanpour and Gopalakrishnan (1998: 3) defined innovation as the adoption of an idea or behaviour new to the organization and can be a product or service, an organizational process or an administrative program, a technology, or a policy or a system related to organizational members. Innovation can also be defined as the introduction of new products, processes or business systems (Knowles et al., 2008: 24). Firm level innovation also refers to the application of new ideas to the firm which are transformed into new products, processes, services, or work organizations and management or marketing systems (Gibbons et al., 1994). The process of generating innovation in an organization requires a few stages; idea generation, project definition, design and development of the product or services and marketing and commercialization (Baker & McTavish, 1976; Copper & Kleinchmidt, 1990; Damanpour & Gopalakrishnan, 1998: Rothwell & Robertson, 1973). This innovation process was explained by Carlson and Wilmot (2006) as in Figure 3-2 which illustrates the lifecycle of a product or service in the form of an S- curve. `A' indicates the inception of a new idea or concept, which through development becomes a new product or service, working its way up the customer and company value axis. `B' marks the point of market introduction. The product or 54 process is offered to customers until it reaches maturity, point 'C'. where it is either commoditized or obsolete. Ensuring continued profits beyond this point calls for development of new products or services that offer greater value to customers (Gudem & Welo, 2010: 314). Thus, innovation can be defined as the process of creating and bringing new customer value in the market or to transform an idea into commercial value (Carlson & Wilmot, 2006). This definition is described in Figure 3-2 as the process of getting from point `A' to `B'. Innovation is thus, more than idea generation but rather, is an activity that requires a process such as inventions, product and process development until the product is available in the marketplace (Gudem & Welo, 2010). Based on the definition of innovation, it can be concluded that it is the process from idea generation to production of the new invention until it is brought to the marketplace. The new invention could be products, services, processes, new business system, new market, new method, new technology, and others. In order to ensure these new creations are successful, the firm must commercialize it by bringing it to the customer or market. The Doblin Group (Innovation Consultant) identified ten types of innovation which is depicted in Table 3-7. These ten types of innovation developed in 1998 were revised and rapidly became a key tool for firm innovation by entrepreneurs at start-ups and by industry leaders across the globe (http: //www. doblin. coin/thinking/). According to an international innovation consultancy firm, there are three major categories of innovation, namely; configuration, offering and experience. The ten sub-dimensions are profit model, network, structure, process, product performance, product system, service, channel, brand, and customer engagement. These are the ten areas that the firm can do innovation in, to achieve superior firm performance. 55 Subsequently, some researchers have classified innovation into four forms; technical innovation (e. g. new production methods), nontechnical aspects of innovation (e. g. new markets, new forms of organization), product innovations (e. g. new products or services) and process innovations (e. g. new production methods) (Anderson & King, 1993; Totterdell et al., 2002). Innovation comes to an organization in two ways, whether it is generated or adopted by the firm. The firm can generate innovation through the development of new products, services, programs, or technology but it can also be adopted by buying it from another firm (Damanpour & Gopalakrishnan, 1998). Usually the process of buying this innovation is called corporate venturing which acquires highly innovative small ventures. However, innovation in the entrepreneurial orientation dimensions refers to the innovation that is generated within the firm. Next, the definition for innovativeness will be explained. Previous researchers largely adopted the definition of innovativeness given by Lumpkin and Dess (1996: 142). They defined innovativeness as a firm's tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes. This definition is widely used by other researchers such as Chen, Certo, Moss, and Short (2009), Javalgi and Todd (2011). Kraus et al. (2012), Kolimann and Stöckmann (2012), Kreiser (2010), Kropp et al, (2008), Li and Evans (2012), Li et al. (2009), Moreno and Casillas (2008), Schiavone (2007), Wang (2008), Wiklund and Sheperd (2005), Wiklund and Shepherd (2003), and Wiklund and Shepherd (2003) as shown in Table 3-8. Another definition of innovativeness used in the literature on entrepreneurial orientation is illustrated in Table 3-8. For example. innovativeness can also be defined as the willingness of the firm to depart from existing or familiar capabilities or 56 practices and venture beyond to seek creative solutions to problems and needs (Lofsten & Lindelof, 2005; Short et al., 2009; Soininen et al., 2011 ). Zahra (1993) and Kreiser (2011 ) defined innovativeness as the firm's strong commitment to develop new products and placing it in the marketplace. Innovativeness can also be both the efforts of the firm to discover new products and/or service opportunities, or/and make improvements to existing processes, products, and systems (Hage, 1980). In short, innovativeness is the willingness of the firm to embark on innovation, experimentation, technological leadership, and research and development (R & D) to generate new products, services, and processes (Miller & Friesen, 1984). Yet some other researchers combined the definition of innovativeness from other researchers. For example; Morris et al. (2011: 949) defined innovativeness as an organizational characteristic reflected in a tendency to experiment, generate novel ideas, and participate in activities to create new products, processes, and services, as well as the openness of an organization's culture to new ideas and combinations (Hurley & Hult, 1998; Lumpkin & Dess, 1996). However, this current study employs the definition by Lumpkin and Dess (1996) that is widely used in the study on entrepreneurial orientation-performance relationship. The dimensions of innovative behaviour at the organizational level can be manifested in a product/process, behaviour, method, idea, novelty, strategic or/and business system. These dimensions, presented in the Table 3-9, are extracted from past literature. In addition, Morris, Kuratko and Covin (2008), developed a range or continuum of innovativeness and categorised innovativeness in terms of product/services and processes as presented in Figure 3-3 and Table 3-10. According to them, in terms of product/services, there are at least eight areas in which innovativeness can take place, ranging from minor to major innovation; first, the cost 57 of production can be reduced for an existing product or services. Second, repositioning of existing products or services through entrance into new markets or expanding the market. Third, firms can introduce new applications for existing products or services and fourthly, introduce product improvements and revisions. The firm can also introduce additions to existing product/service lines or create new products or service lines. Introductions of new products/services to the marketplace also account for innovativeness besides the commercialization of novel product/services worldwide. Simply put, the innovation in a product can take the form of new or improved services (Morris et al., 2009). The only difference is whether the innovation is minor or major. Other than products and services, innovativeness also takes place in business processes as shown in Table 3-10. The newness in the process can be major (e. g. administrative and service delivery system), minor (e. g. production and financing methods, significant revision of existing process (e. g. marketing or sales approach) and lastly, modest improvement to existing process (e. g. compensation methods, distribution methods, pricing, etc). The innovativeness in products and processes aims to capture the customers' demands and to create a new market segment. This will eventually increase the profitability and growth of the firm. On the other hand, innovativeness in processes concerns simplifying the firm's business system to enhance effectiveness in daily operations. This will facilitate the stakeholders in dealing with the firm besides assisting the firm to reduce costs with the introduction of up to date technology. It can be concluded that innovativeness is essential for every firm in order to survive and remain competitive. The previous literature on the effect of innovativeness on firm performance will be discussed in the next chapter. 58 Table 3-5: List of Researchers that Use the Term Innovativeness in Entrepreneurial Orientation Research Researcher(s Instrumentations used in Research Avlonitis & Salavou (2007) Covin & Slevin (1986,1988) Barrett & Weinstein (1998) Covin & Slevin (1989) Bhuian et al. (2005) Miller & Friesen (1982) Dirnitratos et al. (2004) Miller & Friesen (1982) George et al. (2001) Lumpkin & Dess (1996) Hult et al. (2003) Hurley & Hult (1998) Jambulingam et al. (2005) Own Jantunen et al. (2005) Narnan & Slevin (1993) and Wiklund (1998) Javalgi & Todd (2011) Covin & Slevin (1989) Kernelgor (2002) Covin & Slevin (1986) Lee et al. (2001) Lumpkin & Dess (1996) Lumpkin & Dess (2001) Khandwalla (1977), Miller (1983), Covin & Slevin (1986) and Covin & Covin (1990) Monsen (2005) Covin and Slevin (1989) Moreno & Casillas (2011) Covin & Slevin (1989) Moreno & Casillas (2008) Lumpkin (1998) Narnan & Slevin (1993) Covin & Slevin (1986,1989) Poon et al. (2006) Covin and Slevin (1989) Rauch et al. (2009) Not applicable Slater & Narver (2000) Narnan & Slevin (1993) Soininen et al. (2011) Covin & Slevin (1990) Stain & Elfring (2006) Covin & Slevin (1989) Stain & Elfring (2006) Covin & Slevin (1989) Wiklund & Sheperd (2005) Miller (1983) 8 items Table 3-6: List of Researchers that Use the Term Innovation Terminology in Entrepreneurial Orientation Research Author(s) Instrumentation Atuahene-Gima (2001) Covin & Slevin (1989) Caruana et al. (2002) Miller & Friesen (1982) Chadwick et al. (1999) Khandwalla (1977) Covin & Slevin (1986) Miller & Friesen (1982) 59 Author(s) Instrumentation Covin et al. (2006) Covin & Slevin (1989) Covin et al. (1994) Covin et al. (1990) Green et at. (2008) Jogaratsam & Tse (2006) Kreiser et at. (2002b) Richter (1999) Wiklund & Shepherd (2003) Li et al. (2000) Miller (1987) and Zahra (1993) Harms & Thomas (2003) Covin &Slevin (1986) Miller & Toulouse (1986) Miller (1983) Miller & Breton-Miller (2011) Own Rauch et al. (2006) Covin & Slevin (1986) Smart & Conant (19947 Churchill & Peter (1984) Zahra (199 1; 1993) Miller (1983) Zahra & Neubaum (1998) Zahra & Garvis (2000) Figure 3-2: The Product or Service Life-Cycle, as Reproduced AL Profits a) ý ý CE Investments C( Maturity New product or service AO New concept Time Source: Carlson and Wilmot (2006: 38) Table 3-7: The Ten Types of Innovation, as Presented by Doblin Group Innovation category Innovation type Configuration 1. Profit Model 2. Networks 3. Structure 4. Process Offering 5. Product performance 60 6. Product system Experience 7. Service 8. Channel 9. Brand 10. Customer experience Source : Doblin Group - Innovation Consultant (2013) Table 3-8: Definitions of Innovativeness by Previous Researchers Author(s) Definition Covin & Wales (2011: 694) Innovativeness refers to a the exhibition of experimentation, exploration, and creative acts as reflected in, for example, new products/services, new process technologies, new methods of operation, and new business strategies. Dess & Lumpkin (2005: 148) Innovativeness -A willingness to introduce newness and novelty through experimentation and creative processes aimed at developing new products and services, as well as new processes. Ferreira & Azevedo Innovativeness - is concerned with supporting and (2010: 82). encouraging new ideas, experimentation and creativity likely to result in new products, services or processes Huang & Wang (2011: 564) Innovativeness means an organization is willing to pursue new ideas and concept in process, products, or services development. Hult et al. (2004: 430) Innovativeness relates to the firm's capacity to engage in innovation; that is, the introduction of new processes, products, or ideas in the organization. Keh et al. (2007: 596). Innovativeness refers to a firm's tendency to engage in creative processes, experimentation of new ideas, which may result (p. 595) in the institution of new methods of production and/or bringing new products or services to current or new markets (p. 596). Kim (2010) This study defines innovativeness as the willingness to seek the adoption of new services and the reconstruction of managerial processes (p. 786). Lofsten & Lindelof Innovativeness involves seeking creative or unusual (2005: 726). solutions to problems and needs. In entrepreneurship research and economic studies, innovativeness is often viewed as a surrogate measument for entrepreneurship Lumpkin & Dess (1996: 142) Innovativeriess reflects a firm's tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes. Lumpkin & Dess (2001) Innovaliveness refers to a willingness to support creativity and experimentation in introducing new products/services, and novelty, technological leadership and R&D in developing new processes. 61 Author(s) Definition Lumpkin et al. (2010: 247) Innovativeness is viewed as essential to maintaining a company's viability because it is a key source of the new ideas that lead to product introductions, service improvements, and managerial practices that advance and sustain a thriving company. Lyon et al. (2000: 1056) Innovativeness refers to attempts to embrace creativity, experimentation, novelty, technological leadership, and so forth, in both products and processes. Morris et al. (2008: 54) Innovativeness refers to what extent is the company doing things that are novel, unique, or different? Rauch et al. (2009: 763) Innovativeness is the predisposition to engage in creativity and experimentation through the introduction of new products/services as well as technological leadership via R&D in new processes. Soininen et al. (201 1: 2) Innovativeness represents a basic willingness to depart from existing technologies or practices and venture beyond the current state of art. Urban & Barreria Innovativeness as an attribute describes an (2010: 332) organization's willingness to add newness with added value. Walter et al. (2006: 549). Innovativeness indicates a firm's tendency to support new ideas and to foster creative processes that are aimed at developing new products and services. Wiklund & Shepherd Innovativeness reflects a tendency to support new ideas, (2003: 1309) novelty, experimentation, and creative processes, thereby departing from established practices and technologies (adapted fromLum kin & Dess, 1996) Table 3-9: Dimensions of Innovativeness as Conceptualized in. Previous Research Iý Proclnct llnrkel Pt ocess Be1ºný ior Stt nlegic Business Author Systems Schulnpeter (193-)) I Miller and Friesen (1983) Capon et al. (19t)_) L1 1 . Avlonitis et al (1991) SUUralllaliall alld Ndl a11Ia (1996) lIurleý' aud I hilt (1995) Rainey (1999) L"oll et at. (2000) © 0 ©00ýý North and Small-bone (2000) ý "ý I ý ýýý Boer and During (2001) Cý ý D00 x Wang and : Uuned (2001) Crespell et a. (2006) 17-7: 1 xI Knowles et al. (200, ) Source: Wang and Ahmed (2004) and Hovgaard and Hansen (2004) 62 Figure 3-3: A Range of Options: Innovativeness as it Applies to Products and Services New to the World Product/ Services I New to the Market products/Services New Product/Services Lines in a company i C Additions to Product/Service lines I Product Improvements / Revisions New applications for Existing Products/Services Repositioning of Existing Products/Services Cost Reductions for Existing products/Services I i Source: Morris et al. (2008: 55) Table 3-10: A Range of Options: Innovativeness as it Applies to Processes Degree of innovation Type of Process Major new process Administrative systems Service delivery systems Minor new process Production methods Financing methods Significant revision of existing Marketing or sales approaches process Procurement techniques Modest improvement to existing Compensation methods process Supply chain management technique Distribution methods Employee training programs Pricing approaches Information management systems Customer support programs Logistics approaches Hiring methods Source: Morris et al. (2008) 63 3.5.2 Proactiveness Proactiveness is the second entrepreneurial orientation dimension, otherwise also sometimes called proactivity. The essence of proactiveness was derived from the well-known Nike slogan "Just do it" (Morris et al., 2008). Lumpkin and Dess (1996) defined the term proactiveness based on Webster's Ninth New Collegiate Dictionary (1991: 937) as "acting in anticipation of future problems, needs. or changes", thus highlighting that proactiveness aims to be ahead of other competitors by creating change and shaping the environment. In order to be ahead of other competitors, the proactive firm always introduces a new product or service before others. The proactive firm is always looking for business opportunities (Lumpkin & Dess, 2001; Rauch et al., 2001), also displaying higher adaptability and tolerance of failure (Urban & Barreria, 2010). Conceptually, proactiveness is the opposite of passiveness as passive firms are unable to seize opportunities in the market. Thus, they are followers rather than leaders in the marketplace (Lurnpkin & Dess, 1996). The seeking of new opportunities in proactiveness may or may not be related to the present product lines (Venkatraman, 1989a). Even though the proactive firm is often the first to enter new markets, sometimes fast followers may seize upon new ideas and improve the initial efforts of the first mover (Certo et al., 2009). In other words, a firm can be novel, forward thinking, and fast without always being first (Lumpkin & Dess, 1996: 146). The list of the definitions of proactiveness is depicted in Table 3-11 and illustrates that a majority of research defined proactiveness based on the definition given by Lumpkin and Dess (1996,2001). The definition of proactiveness by Lumpkin and Dess is based on the earlier definition by Miller and Friesen's (1978) and Venkatrarnan (1989a). As such, the proactive firm is the firm that is the quickest in innovation and the first to introduce newness. This concurs with the 64 suggestion by Miller (1983: 771) that the entrepreneurial firm is "first to come up with 'proactive' innovations". The idea of proactiveness is closely related to the prospector type as suggested by Miles and Snow (1978) who stated that finding and exploiting new products and market opportunities is the main capability of the Prospector. Prospectors are frequently the creators of change in their respective industries. Change is one of the major tools used by the Prospector to gain an edge over competitors (Miles & Snow, 1978: 551-553). Additionally, the differentiation strategy by Porter's (1980) also recognizes the importance of proactiveness. Table 3-11: Definitions of Proactiveness by Previous Researchers Author Definition Covin & Wales Proactiveness refers to engaging in forward-looking actions (2011: 694) targeted at the exploitation of opportunity in anticipation of future circumstances, as would be typical of firms that lead and/or pre- empt the actions of others (e. g., market pioneers, early adopters of new technologies). Dess & Proactiveness -A forward-looking perspective characteristic of a Lumpkin marketplace leader that has the foresight to seize opportunities in (2005: 148) anticipation of future demand. Ferreira & Prooacüveness - is concerned with first mover and other actions Azevedo aimed at seeking to secure and protect market share and with a (2010: 82) forward looking perspective reflected in action taken anticipation of future demand. Hameed & Ali Similarly, proactivity is the second entrepreneurial orientation (2011: 103) dimension taken as an ability to benefit from contextual opportunities such as introducing new products and services, technologies and management techniques in attaining competitive advantage. Huang & Wang Proactiveness refers to an organization with a characteristic that is (2011: 564) forward-looking and responsive in the industrial environment it involves in. Jambulingam et Proactiveness refers to a firm's processes aimed at anticipating and al. (2005: 25-26) acting on future needs (adapted from Venkatraman, 1989a) Jantunen et al. Proactiveness refers to the propensity to anticipate future needs (2005: 226) and changes in the operating environment, and to pioneer new methods and techniques. Javalgi & Todd Proactiveness refers to opportunity seeking that involves, for (2011: 1006) example, introducing new products, services and processes ahead of the competition (adapted from Lumpkin & Dess. 1996). 65 Author Definition Kollmann & Proactiveness refers to a posture of anticipating and acting on Stöckmann future needs and trends, thereby creating first-mover advantages (2012: 3) over competitors (Lumpkin & Dess, 1996). Kraus et al. Proactiveness refers to processes which are aimed at "seeking new (2012: 949) opportunities which may or may not be related to the present line of operations, introduction of new products and brands ahead of competition and strategically eliminating operations which are in the mature or declining stages of the life cycle" (adapted from Venkatraman I989a). Kreiser Proactiveness represents an opportunity-seeking perspective (2011: 1027) involving strategic moves that anticipate future demand ahead of competing firms (Lumpkin & Dess, 2001). Kropp, Lindsay Proactiveness refers to an opportunity-seeking, forward-looking and Shoham perspective that involves introducing new products ahead of the (2008: 104) competition (Lumpkin & Dess, 1996) Lofsten & Proactiveness is defined in terms of the firm's propensity, Lindelof aggressively and proactively to compete with its rivals. (2005: 726) Lumpkin & Pronctii'eness is an opportunity-seeking. forward-looking Dess (2001: 43 1) perspective involving introducing new products or services ahead of the competition and acting in anticipation of future demand to create change and shape the environment. Lumpkin & Proactiveness refers to how a firm relates to market opportunities Dess (1996: 146) in the process of new entry. It does so by seizing initiative and acting opportunistically in order to "shape the environment, " that is, to influence trends and, perhaps, even create demand. Lyon et al. Proactiveness relates to forward-looking, first mover advantage- (2000: 1056) seeking efforts to shape the environment by introducing new products or processes ahead of the competition. Morris et al. Proactiveness is the tendency of an or