Entrepreneurial orientation

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Emmanuelle LUMIER U1071224

Topic: How a SME can improve its performance using entrepreneurial orientation (EO)?

Entrepreneurial Orientation has played an important function in economic growth of countries, innovation, and competitiveness. The entrepreneurial orientation of a business refers to organizational processes, methods and managementstyles used by a company. An entrepreneurial company is a company committed to innovation, which takes risks, pursues opportunities and act proactively (Miller, 1983). The entrepreneurial orientation is also apprehended by the autonomy and some form of aggressive competition prevailing in the firm (Lumpkin & Dess, 1996). These principles are related with the improvement of the company performances inour day's business environments, where the product and economic life cycles are shortened (Hamel, 2000), and where the future profits which outlook of existing activities are undecided and companies should constantly look for new opportunities (Wiklund & Shepherd, 2005). A lot of studies show the results that businesses with a more entrepreneurial orientation perform better. That is what I amgoing to show you in this report. This study will highlight the role of Entrepreneurial Orientation (EO) in the performance of Small and Medium scale Enterprises.

In their conceptual model (1996), Dess and Lumpkin underline that internal and external factors could moderate the relation between the entrepreneurial orientation and the performance. (See appendix 1&2).Indeed this conceptual model explains that the entrepreneurial orientation is basically based on five main dimensions: autonomy, innovativeness, risks taking, proactiveness, and competitiveness. By explaining the meaning of each of this dimension we can easily understand how the entrepreneurial orientation affects the performances of a company. The first one is autonomy. In fact autonomy is theability of being self-directed in the research of opportunities. Autonomy is viewed as an entrepreneurial strategy where the owner of the small company has to take risky and decisive choice for the future of its organisation. Autonomy for small sized companies represents the freedom of acting independently. This model proves that the staffs of a company become more specialized when providing them ahigh level of autonomy that is a good point for a small business and its future performances.

Secondly, Dess and Lumpkin demonstrate that the innovativeness is crucial for a company because it engages and support permanently newest ideas and innovations. Innovativeness is the way of responding to the trend and demand of the market place by facing competitors. Technology and innovation are agood way for an SME to pursue new opportunities. What it means is that the creation and incorporation of new ideas, new products and services or just new technological and creative processes could engage a new form of performance. Corporate entrepreneurship literature shows that the organizational background is an important part of risk taking which is linked with proactiveness and innovativeness.Actually a company that generate new products coming from technological innovations takes significant risks. The risk taking could affect the company performances in a good or bad way according to the context in which they are taken. As an example family firm are more likely to take risk than other types of company because the ownership is not separated from management but the result could be aloss of family wealth. Venkatraman (1989) say that the fact that a company is proactive is an important ingredient in entrepreneurship. Proactiveness is the fact to anticipate the need and demand in the market in a more or less close future. It is linked with innovativeness because small firms want to be pioneers, what could be finalized by emerging opportunities. The aim of proactiveness is also...
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