In a study my co-authors and I propose a structure of corporate entrepreneurship in manufacturing firms, and links it to manufacturing strategy. The study also highlights the role played by product-process dynamism and competitive priorities. In order to empirically evaluate these relationships, data was collected from 66 manufacturing firms and analyzed. The results show that firms can attain higher entrepreneurial orientation by co-aligning risk taking, innovation, and proactiveness, and achieve better performance by doing so. Such firms also tend to operate in highly competitive environments, and configure product lines and internal processes accordingly to quickly adapt to changes. Finally, entrepreneurial firms tend to compete on the dimensions of high performance design, quality, and on-time delivery. Overall, the findings establish corporate entrepreneurship as a performance enhancing strategy, and provide insights into the constituent elements of entrepreneurial orientation in a manufacturing context. Implications of our study for research and practice are also discussed. The following research questions are addressed in this study:
- What is the structure of entrepreneurial orientation in manufacturing firms?
- Do manufacturing firms with higher entrepreneurial orientation also exhibit higher performance?
- How does competitive intensity differ among firms with varying levels of entrepreneurial orientation?
- Do firms with varying entrepreneurial orientation place different level of emphasis on product-process dynamism and competitive priorities?
The research model is as follows:
The results obtained from an analysis of survey data show that entrepreneurial orientation is positively associated with firm performance after controlling for sales, process type, and fulfillment strategy. Further, the findings suggest that manufacturing firms with higher entrepreneurial orientation operate in highly competitive business environment. These firms frequently change their product lines and manufacturing processes. Firms with high entrepreneurial orientation compete in the marketplace based on high performance design, consistent quality, and on time delivery. This result is quite consistent with the notion of how proactive enterprises and innovator firms compete.
The results of this study highlight the importance of innovation in manufacturing firms. Firms with higher entrepreneurial orientation tend to focus on the competitive priority of high performance design. By focusing on high performance design, entrepreneurial firms take these periods into their stride and redefine the competitive landscape. For these entrepreneurial firms, technological change, defined as radical or incremental innovations, plays an important role in the formation of new markets and in the development of new products and processes as a part of the operations strategy. This study brings innovation, manifested in terms of high performance product design, to the forefront in manufacturing firms. Since entrepreneurial orientation is positively associated with high performance and entrepreneurial firms give high level of priority to high performance design, it behooves research and practice to give due consideration to this important variable in manufacturing strategy.
Our study emphasizes a distinct view of dynamism in products and processes. Specifically, the results of this study highlight that entrepreneurial firms distinguish themselves from others in terms of their ability to frequently change product lines and manufacturing processes. This could partly be due to the increasingly competitive and dynamic environment faced by these firms. However, it could also be part of a conscious and proactive approach towards staying ahead of competition by taking calculated risks. This perspective of product-process dynamism puts manufacturing strategy at par with marketing strategies in a firm’s attempt to gain competitive advantage. More research can shed light on this important variable, and a deeper understanding would enable the formulation of a proactive manufacturing strategy in practice.
Overall, the findings of this study suggest that entrepreneurial firms pursue high performance design approach, which involves not only transforming the product performance frontier, but also reliably delivering such products to the marketplace in a time effective fashion. Further, such firms tend to operate in a relatively more competitive environment and configure manufacturing process that can quickly adapt to changing market conditions. The configuration of expertise and routines is subject to managerial decision-making. Thus, managers have a choice about pursuing a viable entrepreneurial configuration. This study informs the managers on how to configure processes and routines to achieve high entrepreneurial orientation and under what conditions entrepreneurial orientation based strategy makes more sense. The results of the study provide directions to reverse the current erosion of manufacturing in US. The typology presented in this paper provides a firm an understanding of its entrepreneurial orientation, how it can successfully adopt such an orientation, and conditions under which such an orientation will result in a high payoff.
Source: Malhotra, M.K., Saeed, K.A., Nair, A. 2009. Entrepreneurial Orientation and Firm Performance: An Empirical Examination of Manufacturing Strategy Typology based on Corporate Entrepreneurship. Unpublished manuscript.