Journal of Enterprising Culture Vol. 13, No. 1 (March 2005) 21-45

A CONCEPTUAL APPROACH OF ENTREPRENEURIAL ORIENTATION WITHIN SMALL BUSINESS CONTEXT

WASSIM ALOULOU University ofSfax

TUNISIA

and

ALAIN FAYOLLE EM. Lyon and CERAG

FRANCE

There is abundant literature about individual entrepreneurs hip (entrepreneurs) and about corporate entrepreneurs hip within organizations. But little is written about a related concept like Entrepreneurial Orientation (EO) in small businesses, and also, about how to describe its role in their strategic formulation.

The paper attempts to identify the main attributes of the EO concept and its determinants within small business context. EO consists of three components: In-novativeness, proactiveness, and risk-taking by strategic leaders in these firms. An innovative small business will not be an entrepreneurial if it does not take risks or is not sufficiently proactive towards competitors and environment.

After describing the emergence of this concept, the paper shows the impor­tance of the EO as a valid strategic orientation for small businesses when they re­think their strategic analyses with Opportunity-based and Resource-based views. Adopting such orientation seems to reflect a needed conciliation between other strategic orientations (market-, technology- and stakeholder orientations) and alto­gether blending of them.

Finally, the paper concludes with proposing some implications for future re­search to deepen the study (conceptually and empirically) of the EO within small business context.

INTRODUCTION

The environment within firms is constantly changing. The technological development and the scarcity of resources alone endanger stability and pre-

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dictability of the market. To face fierce competition, small firms must re­view practices and actively search for new ways to practice flexibility, in­crease its capacity of innovation and show more competitiveness.

The strengthening of entrepreneurship is an important objective for any enterprise that is building its responsiveness to a globalized and changing environment. Today's enterprises will not even survive in this time of rapid mutation and innovation if they do not maintain an entrepreneur's profi­ciency (Drucker, 1985).

Small sized firms lack the capabilities, market power and other re­sources of larger firms. Their success depends, in great part, on the formula­tion and implementation of competitive strategies reflecting responses to challenges posed by the business environment (Miles and Snow, 1978; Por­ter, 1980). One important area for small businesses that has received little attention is how these firms is strategic management, especially kind of that lead to improved mobilization and resources.

Significant research has been conducted on entrepreneurial dimensions, which small business should embrace, including innovation, risk taking, and proactiveness (Miller, 1983; Miller and Friesen, 1984). These key dimen­sions represent the Entrepreneurial Orientation (EO) strategy, which reflect­ing a firm's propensity to engage in entrepreneurial behaviours to achieve its strategic objectives (Covin and Slevin, 1988; 1989; Lumpkin and Dess, 1996; Dess etal, 1997; Wiklund, 1998b).

After defining its attributes, the purpose is to show the emergent con­sideration of the EO's construct in the entrepreneurship and strategic man­agement literature and its relevance for strategy formulation within small business context.

Regarding the organisation of the paper, it is divided into three sec­tions; section one deals with an overview of selected concepts linked to en­trepreneurship, especially these linking EO to e.g. when blending with stra­tegic management; corporate entrepreneurship, entrepreneurial strategy and entrepreneurial orientation. This overview provides a definition of entrepre­neurship as a firm-level phenomenon offering the occasion for organizations to renew themselves through innovative, proactive and risk-bearing business activities. Section two describes phenomena within the small business con­text, especially those related to strategic orientations of their leaders in ref­erence to EO. Subsequently, this section argues that an EO is a valid strate­gic pathway for small businesses as strategy. The main attributes of EO and selected determinants identified in literature are also. Section three advances the idea of how to include EO thinking in an entrepreneurial strategy formu­lation within the small business context. In this regard the proper strategy

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would be a balanced mix of strategic orientations focused on market, tech­nology and stakeholders. The optimal balance of EO will reinforce the pre­vailing theme, namely how to create opportunities and how to mobilize re­source. Two main analyses are made: opportunity-based and resource-based views. The paper concludes with methodological consideration de­signed to maintain our conceptualisation about EO within small businesses.

AN OVERVIEW OF SELECTED CONCEPTS AT THE CROSS ROAD OF ENTREPRENEURSHIP AND STRATEGIC MANAGEMENT

During the last two decades, interest in entrepreneurships has grown. The foci of studies turned from the individual to the process of founding and de­veloping of new strategies (Gartner, 1989; Bygrave and Hofer, 1991; Cun­ningham, and Lischeron, 1991; Hernandez, 1995; Fayolle, 2000), and atten­tion has also been paid to organizational (Schendel, 1990).

Prevailing definitions of entrepreneurship are largely built on the argu­ment for the exploration and exploitation of opportunities. Thus, the pursuit of opportunity is the most important component of entrepreneurship (Ste­venson and Gumpert, 1985; Stevenson and Jarillo, 1990; Bygrave and Hofer, 1991; Shane & Venkataraman, 2000). Some researchers shifted their interest from individual to the organisational and human processes. Thus a shift in emphasis was made and alternative definitions of entrepreneurship were established. In fact, Bygrave and Hofer (1991: 14) define the entrepre­neurial process as involving "all the functions, activities and actions associ­ated with the perceiving of opportunities and the creation of organization to pursue them". Recently, Shane and Venkataraman (2000: 218) state that entrepreneurship is about "how and why opportunities to create future goods and services are discovered, evaluated and exploited".

The classic definition given by Schumpeter (1934) stresses the fact that entrepreneurship has to do with combining resources in new ways (introduc­tion of new product with higher quality, with new methods of production, breakthroughs in new market, conquests of new sources of supply for raw material or semi-finished products and reorganisation of a new sector) that disrupt the market equilibrium in economic systems. These new ways can also destroy this equilibrium as referred to the Schumpeterian "creative de­struction" process, that summons entrepreneurs to suspend current para­digms and invest significant resources in new activities. Schumpeter's claim that innovation remains at the core of entrepreneurship (Drucker, 1985; Fil-

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ion, 1997). Ever since Schumpeter, the emergence of new businesses has been explored, not only in terms of opportunities, but also, in terms of re­sources combined in specific ways that best lead to competitive advantages (Wernerfelt, 1984; Barney, 1991; Grant, 1991; Peteraf, 1993).

Another important component of entrepreneurship is resource acquisi­tion.. These two complementary components of entrepreneurship when combined together, define it as "taking advantage of opportunities by novel combinations of resources in ways which have impact on the market" (Wik-lund, 1998b: 2), and entrepreneurial actions as "creating new resources or combining existing resources in new ways to develop and commercialize new products, move into new markets, and / or service new customers" (Hitt et al., 2001: 480). The process of taking advantage of opportunities and combining new resources is driven by a firm's strategic orientation. This implies that when a firm wants to be entrepreneurial, it successfully imple­ments a strategic orientation that mixes the two dimensions of entrepreneur-ship.

Corporate Entrepreneurship

The topic of entrepreneurship is increasingly recognised as critical aspect field of strategic management. To give just one example, fifteen years ago a Special Issue of the Strategic Management Journal, was dedicated entirely to the theme of Corporate Entrepreneurship (CE) (Schendel, 1990; Guth and Ginsberg, 1990). The term has become commonplace. The prevailing idea is that an organization, the established firm, takes the entrepreneur's perspec­tive and action and demonstrates entrepreneurial attitudes and abilities.

The need to pursue CE has arisen from a variety of pressing problems among larger firms, including stagnation, decline, weakness of managerial practices and turnover of innovative-inclined employees who were con­strained by bureaucratic inertia of their firms (Kuratko et al, 1990; Stopford & Baden-Fuller, 1994). In fact, pursuing CE (as an entrepreneurial orienta­tion and activity) at the established firm-level creates a serious challenge for large firms, as well as small ones, intended to prosper and flourish in com­petitive environments (Covin and Slevin, 1989; Covin and Covin, 1990; Carrier, 1991; 1993; Barringer and Bluedorn, 1999).

As mentioned, most research about entrepreneurship has focused on the entrepreneur and sought to uncover individual-level phenomenon, as em­bodied in entrepreneurs. In the past decades, though the research turned to study it as an organisational level phenomenon. In other words, what is most important here is the process of entrepreneurship itself, not only who the

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key individuals performing it are. Unfortunately, the existence of a large number of terms referring to the same phenomenon and describing entre­preneurial efforts inside existing organization [Such as mtrapreneurship (Pinchot, 1985); intra- or internal corporate entrepreneurship (Schollham-mer, 1981, 1982; Cooper, 1981); corporate venturing (MacMillan, 1986; Vesper, 1990); strategic renewal (Guth and Ginsberg, 1990; Stopford and Baden-Fuller, 1994),...] has confused, even slowed the development of the research. (Lumpkin and Dess, 1996).

The concept of CE was formally defined and both theoretically and empirically developed in the works of Robert Burgelman (1983; 1984a; 1984b) and Danny Miller (1983). CE is recognised as a potentially viable means for promoting and sustaining competitiveness and transforming cor­porations and industries into opportunities for value-creating innovation. (Miller, 1983; Guth and Ginsberg, 1990; Naman and Slevin, 1993; Stopford and Baden-Fuller, 1994; Lumpkin and Dess, 1996). CE refers not only to creation of new business ventures, but also to innovative activities (devel­opment of new products/services, technologies, administrative techniques...) and orientations towards competitive actions carried out to aggressively and proactively compete with industry rivals (Covin and Slevin, 1991; Lumpkin and Dess, 1996).

Moreover, we can now see that entrepreneurship, as a firm-level phe­nomenon, is "a behavioral phenomenon and all firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial" (Barringer and Bluedom, 1999: 422).

Entrepreneurial Strategy

The term "entrepreneurial strategy" is identified in the strategy literature.. Strategic management theorists have suggested that an entrepreneurial ap­proach to strategy making may be vital for organizational success (Murray, 1984). Miller and Friesen (1982) posit that entrepreneurial organizations try to obtain a competitive advantage by habitually making dramatic innova­tions and taking challenging risks. Mintzberg (1973) identified such behav­iour as one of three modes of strategy making (entrepreneurial, adaptive and planning) relating it to leadership styler. This behaviour is apparent even in simple organisations. But, firms with an adaptive mode are 'reactive' com­pared to proactive entrepreneurial firms when facing competitive environ­ments. Entrepreneurial strategy making seems to represent an important strategy-making process (Dess et al, 1997).

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Mintzberg and Waters (1985) considered strategy formulation between the deliberate and the emergent. Among the eight types of strategy formula­tion proposed by them, is a critical one where a leader may guide the action but opportunities may come to modify his or her plans.

Actually, the central elements of entrepreneurial strategy are such ac­tions as innovation, risk taking and proactiveness (Miller, 1983). Miller made one of the most important contributions in this field with his theory and research instruments for examining key linkages between environ­mental, strategic variables and a firm's entrepreneurial activities. His con­ceptualisation has become the instrument of choice in studying firm-level entrepreneurship. As he informs us: "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". (1983: 771) Here, Miller focuses on the entrepreneurship proc­ess rather than on the individual entrepreneur behind it. The three dimen­sions constituting entrepreneurship figure within the eleven dimensions of the strategy making process proposed by Miller and Friesen (1978). This means, that Miller takes a strategic approach to entrepreneurship (Wiklund, 1998b).

Recently, a debate on the notion of 'entrepreneurial strategies* appears in several research issues and works {Strategic Management Journal, July 2001; Academy of Management Executive, February 2001; and Meyer & Heppard, 2000) and substitutes, to a certain extent, the one about CE in the nineties (Guth & Ginsberg, 1990). The purposed topic of this debate is how to adopt strategic orientation towards entrepreneurial behaviour so that the creativity and initiatives of employees in established firms benefit from the offered business opportunities. The answer may be given through the im­plementation of entrepreneurial strategy in which entrepreneurship becomes the "dominant logic'" (Verstraete, 2001; 2002). In a rapidly-changing world, organizations have to adopt what Hamel and Prahalad (1989) call a "strategic intent" or what Covin and Slevin (1991) describe as an "entrepre­neurial orientation".

Even though the heart of entrepreneurship is a strategic orientation to­ward seeing (and acting on) opportunities regardless of existing resources (Stevenson and Jarillo, 1990), organizations and especially small businesses need to continually identify new opportunities if they are to survive and are particularly involved in adapting their strategies with the environment and with their specific resource bases.

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Entrepreneurial Orientation

Researchers do not define entrepreneurship the same way. In fact not even common terms are used. For example, entrepreneurship (Miller, 1983), cor­porate entrepreneurship (Zahra, 1991; 1993; 1995; Dess et al, 1999; Bar-ringer and Bluedorn, 1999), intrapreneurship (Kuratko et al, 1990; Carrier, 1996), entrepreneurial posture (Covin and Slevin, 1990; 1991), strategic posture (Covin and Slevin, 1988; 1989), entrepreneurial strategy making (Dess et al, 1997), and entrepreneurial orientation (Lumpkin and Dess, 1996; Knight, 1997; Wiklund, 1998a, 1998b, 1999) all receive attention. Despite differences in labelling, most researchers have adopted Miller and Friesen's (1982) measurement of organisational-level entrepreneurship or a modified version of the instrument (Zahra et al, 1999). The different sug­gested interpretations do not deny its viability for measuring important as­pects of entrepreneurial strategy.

To define the concept of EO, Wiklund (1998b: 65) uses the findings from Merz et al. (1994) and Brown (1996) to put his label on the construct of EO as The CEO (the Chief-Executive-Officers)'s strategic orientation reflecting the willingness of a firm to engage in entrepreneurial behaviour. This definition is chosen, in this paper to characterise the entrepreneurial dimensions of small business' strategy as reminded of in some previous studies (Covin and Slevin, 1989; Naman and Slevin, 1993; Wiklund, 1998b). Entrepreneurship researchers have often considered entrepreneurial organi­zations as possessing three main characteristics: Innovativeness, risk-taking, and proactiveness (Miller and Friesen, 1982; Miller, 1983) and adopted or extended by several other studies (Covin and Slevin, 1989; Lumpkin & Dess, 1996). Therefore, most researches dealing with entrepreneurship-related concepts (behaviour, posture, orientation) utilized the original or slightly modified Miller measurement (1983). As such, EO is demonstrated by the "extent to which top managers are inclined to take business-related risks, to favor change and innovation in order to obtain a competitive advan­tage for their firm, and to compete aggressively with other firms." (Covin and Slevin, 1989: 77)

Innovativeness. Innovation is at the very heart of entrepreneurship (Schumpeter, 1934; Drucker, 1985; Filion, 1997). Schumpeter was one of the first scholars to argue that innovation is the fundamental endeavour of entrepreneurial organization for developing new products or inventing new processes. The attribute of innovativeness describes an organisational im­perative to introduce newness with added value. It reflects a firm's propen-

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sity to engage in new idea generation, experimentation, and R&D activities by introducing new products/services, manufacturing processes and new markets (Lumpkin and Dess, 1996).

Risk-taking. This concept, long associated with entrepreneurship de­scribes the willingness of entrepreneurs to engage in calculated business-related risks (Brockhaus, 1980; 1982). The varying and conflicting findings in the studies of risk-taking behaviour does not negate the rich conceptual discussions involving it. Thus, risk-taking seems to be an attribute of entre­preneurship (Stewart et al9 1998). Firms with an EO typically display risk-taking behaviour derived from its readiness to incur large and risky re­sources commitments to uncertain but novel and promising business (Brockhaus, 1980; Miller and Freisen, 1978; Miller, 1983; Lumpkin and Dess, 1996).

Proactiveness. This concept has received less attention from entrepre­neurial scholars. Two main attributes of proactiveness are posited: 1) ag­gressive competitive behaviour directed to rival firms (being ahead of com­petitors) and 2) the organizational pursuit of favourable business opportuni­ties (Lumpkin and Dess, 1997; Stevenson and Jarillo, 1990). Thus, this con­cept can be broken into two separate dimensions (Lumpkin and Dess, 1996; 1997). In a conceptual study, Lumpkin and Dess (1996) suggest the inclu­sion of competitive aggressiveness and autonomy to a postutate or a corol­lary of EO. Autonomy refers to actions undertaken by individuals or teams intended to establish a new business concept, idea, or vision. In fact, they suggested that proactiveness is a response to opportunities referring to "how firms relate to market opportunities by seizing initiative and leading in the marketplace". Whereas competitive aggressiveness is a response to threats referring to "how firms react to competitive trends and demands that already exist in the marketplace" (Lumpkin and Dess, 1997).

To summarize, this section has shown that such concepts as CE, ES or EO, have mostly concerned large firms. The challenge is to investigate whether these concepts are also applicaple for small businesses. The folloe-ing considers the main aspects of entrepreneurial orientation, its consistency and its internal and external determinants within a small business context.

ENTREPRENEURIAL ORIENTATION IN THE SMALL BUSINESS CONTEXT

The small business is an engine of change and growth for any economy and the entrepreneurial attitude fuels it. Even though CE is a concept developed

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for introducing entrepreneurship in large organisations, according to Schumpeter, this concept can be adapted to and managed and represented in the small business context. In exploring this issue we have to shed light on critical attributes and specific considerations of this context.

How to Think About Corporate Entrepreneurship Concept

Entrepreneurship and small business are not synonymous, but they are linked. On one hand, the first concept is a type of behavior centered on op­portunities (Stevenson and Gumpert, 1985), but also, on resources (Schum­peter, 1934; Wiklund, 1998b; Hitt et al9 2001). It can be pursued in big as well as small enterprises, but the challenge should be shifted to study how small firms are strategically oriented and managed to recognize and seize opportunities and then mobilize needed resources. On the other, small busi­nesses are considered to be one of the principal driving forces in economic development. They stimulate private ownership, entrepreneurial skills, they are flexible and they can adapt quickly to changing market conditions. They have the role of bringing more flexibility to the economy and facilitate tech­nological innovation as well as provide significant opportunities for the de­velopment of new ideas and skills. Their context is generally an auspicious land to innovation considering their small size and its simple and flexible structures permitting them to respond more quickly to changes of its com­petitive environment, as Marchesnay and Julien remind us,small is beautiful (1990).

The need for a deep investigation of entrepreneurship and small busi­nesses is pressing. Furthermore, gaining a systematic knowledge about the two fields is also imperative.. Entrepreneurship is a necessary condition for redirecting small firms towards growth (Wiklund, 1998b).

CE can be very suitable with the reality of small firms. The two reali­ties are reconcilable (Carrier, 1991; 1996). If CE as an organizational phe­nomenon, small firms can either stimulate or inhibit the entrepreneurship according to the orientations of its organizational culture, the nature of its climate and its practices of management. Since small firms differ from big ones, it is necessary to recognize the requirement of an elaborate framework of CE adapted to them and to avoid tracing or transferring frameworks con­ceived for the biggest firms (Carrier, 1991).

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How to Think About Entrepreneurial Orientation Concept

The concept of EO can be of great interest for small businesses. From the reasoning above, EO is stated as the CEO's strategic orientation reflecting a willingness of a firm to engage in entrepreneurial behaviours. Moreover, in small firms, the strategic orientation of key managers (founder, director) is likely to equal the strategic orientation of the firm (Wiklund, 1998b). EO appears to be a sign of a firm's overall strategic and competitive orientation in its intention to take advantage of opportunities (implying a focus on per­ceiving and pursuing opportunities) and to consider new combinations of resources (Stevenson and Gumpert, 1985). The challenge of EO is consider­able; small businesses must face a changing global environment and ever scarce resources (Stevenson and Jarillo, 1990; Wiklund, 1998b). The fol­lowing two themes further define EO

As a strategic orientation', Entrepreneurship orientation and its imple­mentation are both parts of its strategy. In fact, when studying the strategic choices that may influence success and performance of small business,, the focus must be on strategy. Thus, EO seems to be a "key ingredient of organ­izational success" (Lumpkin and Dess, 1996: 151). Several useful typolo­gies of strategic orientation have been set forth in the strategic management literature (Porter, 1980; Miles and Snow, 1978). Among the various typolo­gies, Miles and Snow's (1978) typology has received the most attention. The typology consists of four strategic orientations: defender, prospector, analyzer, and reactor. Organizations in each category exhibit a consistent pattern of decision making behaviour while dealing with various environ­mental forces. The most aggressive strategy is "prospecto '" and underlies an organisation's aggressiveness in pioneering products and markets, requir­ing management to spend more time in scanning its external environment and evaluating opportunities and threats (Miles and Snow, 1978; Dess et al, 1997). EO is conceptually very close to the particular orientation.

Venkatraman (1989) elaborates on Miles and Snow by identifying a va­riety of dimensions of the business strategy tied positively with organiza­tional performance: aggressiveness, analysis, defensiveness, futurity, proac-tivity and risk. Many of the metrics of these dimensions also constitute the main attributes of the EO in the strategy.

Willingness to engage in entrepreneurial behaviour. EO has been shown to be a good predictor of the outcomes of entrepreneurial behaviour (Covin and Slevin, 1990; Merz et al, 1994). Wiklund (1998a, 1998b) as re­searchers determine a strong association between entrepreneurial orientation and entrepreneurial behaviour. This means that a strategic EO leads to ac-

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tual entrepreneurial behaviour, such as entering new markets and manufac­turing new product. As well, EO describes a voluntary oriented-action re­sulting in actual entrepreneurial behaviour.

To sum up, the proposal to study EO will hold in consideration signifi­cant determinants, which influence the orientation to entrepreneurial activi­ties. This study does not negate leadership dimensions of CEOs (owners-managers, founders, or key managers) who are influential in projecting and developing a particular strategic orientation for their firms, or the value of human choice.

Further Considerations of Entrepreneurial Orientation Determinants

Drawing on Miller and Friesen's (1984: 200) insistence that entrepreneur-ship is integrally related to characteristics of environment, structure, strat­egy, and strategic leaders, there are explicit elements that may be manipu­lated in order to enhance the level or quality of entrepreneurship within an organization (Herbert and Brazeal, 1998). In fact, several studies based on the literature of strategy sought to identify the determinants and correlates of entrepreneurship (Miller, 1983), of entrepreneurial behaviour (Burgelman, 1983; Covin and Slevin, 1991), of the strategic entrepreneurial posture (Covin and Slevin, 1989; 1990). Some researchers explained and predicted corporate entrepreneurship and its outcomes by building contingency mod­els (Zahra, 1991; Naman and Slevin, 1993; Dess et al, 1997).

To build upon this theme, several factors constitute EO and suggest that it is a strategic orientation for the creation of a competitive advantage through combining new resources and seizing business opportunities (op­portunity & resource orientations) (Wiklund, 1998b). The strategic factors most pertinent to success are related to external and internal environments. In Figure 1, we suggest a number of such factors. They determine the stra­tegic orientation of the small business.

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Figure 1. Determinants of Entrepreneurial Orientation within Small Business Context.

External environmental characteristics

Dynamism

''""' y---} ?j'/ ""••''

Perceived opportunities to be pursued +

Available resources to mobilize

Hostility Heterogeneity Abundance

1 •

•*d b -

Entrepreneurial Ori­entation

Innovativeness, risk taking proactivity

Internal environmental characteristics

Organizational structure Competencies of CEO

Firm's Resources & capabilities Openness on organizational

boundaries Mission strategy

External Environment An important determinant of EO at both the in­dividual and the organizational level (Miller, 1983; Covin and Slevin, 1991; Zahra, 1993; Zahra and Covin, 1995; Dess et al9 1997) is external environ­ment. Characteristics, such as dynamism, hostility, heterogeneity, and abun­dance, power small organizations to respond to challenging conditions by adopting an entrepreneurial posture and to engage in entrepreneurial behav­iour (Guth and Ginsberg, 1990). A Dynamic environment is characterized by instability and continuous change and may be source of abundant oppor­tunities in such arenas are industry growth, technology, customer prefer­ences, and demand for new products. These of course, are available as op­portunities for small businesses. (Covin and Slevin, 1991). A hostile envi­ronment creates threats to the firm, either through increased rivalry or de­creased demand for the products. Environmental heterogeneity indicates that there are several different segments of the market with varied character­istics and needs that served by the firm. Uncertain and complex environ­ments often necessitate a strong entrepreneurial posture in strategy making (Dess et al9 1997) especially for small businesses, which may lack the re­sources to compete head to head with domestic rivals and competition from abroad. Environmental abundance means a great avalaibility of resources in the environment. CEO's perception of environmental abundance (great op­portunity in access and acquirement of resources needed) would seem to have an impact on an organisation's EO (Brown and Kirchhoff, 1997). In short, EO may be very useful for small organizations during turbulent times by providing them with opportunities (Stevenson and Gumpert, 1985; Covin and Slevin, 1989). It is expected that a small firm with an EO will cope

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A Conceptual Approach of Entrepreneurial Orientation ...

more successfully with unstable conditions than those that lack such an ori­entation (Dess et al, 1997; Miller and Friesen 1984).

Several researchers have recognised the importance of organizational antecedents in promoting and supporting corporate entrepreneurship (Kuratko et al, 1990; Amabile et al, 1996). These factors determine in part, how leaders strategically engage in EO. Five are selected for examination here.

Organizational Structure In relation to Mintzberg's typology of firms (1979), a distinction can be made between "simpl"9 and "adhocrac"' cate­gories and then adopted to the corresponding visions of their leaders (Miller, 1983; Mintzberg, 1979). Covin and Slevin (1988) argued that the entrepre­neurial style, or orientation of top managers is influenced by an organiza­tion's structure. Organic structure promotes entrepreneurial activities that enable an organisation to respond rapidly to competitive actions of other organizations., While mechanistic structures facilitate routine tasks and pro­vides certainty, order and uniformity,differently than organic structure does. Organisations operating in hostile environments required both an entrepre­neurial posture and an organic structure to realize high performance. (1989; Slevin and Covin, 1990) Moreover,as Lumpkin and Dess (1996: 156) pro­pose firms with an EO that use an organic structure will have higher per­formance relative to those that do not use an organic structure..

Competencies of CEO Zahra (1993) notes that senior executives' back­grounds and experiences may be important antecedents of a firm's EO. Also, top manager(s) need entrepreneurial competencies in order to catch the innovative business opportunities (spotter), formulate new directions for the enterprise while imagining one or more realistic scenarios for comple­tion, and make the use of his or her personal network of relations (Baum, 1995; Chandler and Jansen, 1992; Filion, 1989; Nkongolo-Bakenda et al, 1994)

Availability of Resources & Capabilities A factor demanding cur­rently is resources because the lack of access to them can be seen as a seri­ous constraint of entrepreneurial activity. The traditional view of EO fo­cuses on the importance of having resources. Therefore, an organization's entrepreneurial capacity will be, to some extent, limited by its resource base. Organizations with abundant resources may have a greater capacity than those with sparse resources to engage in entrepreneurial activity" (Covin and Slevin, 1991:15).

According to Barney (1991), there are many types of resources, includ­ing physical (technology, raw materials), human (experience), social capital, as well as financial and organizational (information systems, coordination,

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control, investment potential). It was argued that resource availability is an important contextual factor that stimulates EO, especially in high growth potential firms. Lack of resources does not only constrain growth but also limits entrepreneurial activity that leads to growth (Covin and Slevin, 1991; Brown and Kirchhoff, 1997).

In addition, capabilities refer to organisation's capacity to deploy and coordinate different resources, usually in strategically conbined ways, to achieve a desired end. Capabilities indicate how and where decisions are made within a company, the kind of behaviours a company rewards, and the core competencies. The capabilities further refer to the learning mecha­nisms, information-processing systems, cultural norms and values, and how they are mobilized (Prahalad and Hamel, 1990; Grant, 1991; Peteraf, 1993). Possession of resources sufficient for entrepreneurship is a necessary but not a sufficient condition for success. They must also have specific capabilities to pursue and reinforce a strategic orientation.

Boundaries of the Small Entrepreneurial Firm In order to gain an op­timal environmental response maximum, access to critical resources and supplemental capabilities, a small entrepreneurial firm has to maintain use­ful relations within its network including the 'tutelar' (supporting), 'partenariaV (suppliers and subcontractors; clients and retailers; and even competitors; licensing; technology sharing) and 'expertaV networks (coun­selors; universities and research centers) as well as other stake holders. Net­works provide advice, information, money and other resources to the entre­preneurs (Marchesnay, 2000). The types of information are necessary not only to identify entrepreneurial opportunities that warrant survival of a business, but also to ensure the success (growth) of the business (Pre-maratne, 2001). Opportunity identification and resource accumulation occur through an exchange relationship between an organisation and the stake­holders or the network.

Mission strategy of Small Firm Naman and Slevin (1993: 143) argue that "entrepreneurial management style may be associated with particular mission strategies, particularly growth and innovation". Hence, a CEO's growth orientation will be positively associated with entrepreneurship. Therefore, desired levels of entrepreneurship are best suited by organisa­tions possessing well-oriented mission strategies (Naman and Slevin, 1993). A determinant of small business firm growth is therefore seen in the quality of the business strategy. (Davidsson, 1991; Brown, 1996; Wiklund et al, 1997, (Wiklund, 1998b).

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FORMULATING ENTREPRENEURIAL STRATEGY IN THE SMALL BUSINESS CONTEXT

Entrepreneurship can be seen like an organizational characteristic. Given that the behaviour of a firm is the central element in entrepreneurial process, it is clear that entrepreneurial behaviour on the organizational and individual levels is observable, diagnoseable and manageable (Miller, 1983; Covin and Slevin, 1990; Stevenson and Jarillo, 1990; Naman and Slevin, 1993). Past studies conclude that delimiting the study of entrepreneurship and its proc­ess only to individuals is an unnecessary limitation (Hernandez, 1995). En­trepreneurial behaviour is an important part of an organization's activities as well, the strategic orientation, EO, is essentially linked to a firm's strategy (strategy formulation). It leads and precedes entrepreneurial strategy.

Like entrepreneurial behaviour, EO can be managed, fostered or im­peded. It affects and is affected by the components of an organization. It seems necessary to take account of the organizational structure, of a firm's resources and capabilities, the competencies of the CEO the degree of open­ness of the organizational boundaries, and mission. Consequently, EO can strengthen or weaken entrepreneurial behaviour internally and externally. The environment (internal and external) is a plentiful source of opportunity and a warehouse of resources. The extent to which the environment is moni­tored, assessed and analysed for potential strategies determines the level of competitive activities.

While adopting an EO orientation, smaller organizations attempt to adopt practices of management and styles of decision making that allow then to be closer to their markets, technologies and stakeholders. When de­ployed effectively, such practices lead toward competitive advantages (Amabile et al, 1996). The idea is to incorporate this orientation in the stra­tegic planning.

Incorporating Entrepreneurial Orientation in Strategy Formulation

When demand increases the rate of technological growth is of critical im­portance. For organisations that utilise, for example, the SWOT-analysis "it may be profitable to mainly focus on the opportunity dimension, matching it against internal capabilities, and more actively pursue new opportunities" (Wiklund, 1998b: 262). Moreover, seizing the opportunity can further posi­tion a firm to take advantage of growth opportunities and provide potential competitive advantage. Incontestably, these dimensions will strengthen an organisation's EO and place it in a position to capture better growth oppor-

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tunities than those of competitors. But, what about market opportunities? (Verstraete, 2002).

A systematic scanning of the environment factors promises a continu­ous repositioning that is needed for small firms to be responsive to and an-ticipative of competitor's actions (Slevin and Covin, 1995). The construc­tion of relevant strategic tools could assist planners reposition an organiza­tion to be responsive. In order to rehabilitate the conceptions of strategic analyses, Verstraete (2001) proposed, for example, a socio-cognitive dimen­sion to be integrated in these analyses based on the Key Success Factors (FSC) and Strategic Factors of Risk (FSR).

The questions of shifting repositioning and organizational design con­stitute the core of entrepreneurial behaviour (orientation and activity) (Ver­straete, 2001). But is it really necessary for an organisations' strategies to be guided by such logic? To ascertain their strategic choices, leader of organi­sation must integrate in their strategy analysis two key approaches (see Fig­ure 2):

• Opportunities-oriented approach. This approach permits the enterprise to understand and act upon the best business opportunities and to decide how to proceed. Thus, small organisation will be able to mobilize its expertise to monitor markets, technology and action of rival (Brown, et al, 2001).

• Resources-oriented approach. This approach is used to decide upon proper financial, human, technological and information resources for competitive­ness. When resources are insufficient, an aspiring small organisation enters into strategies of collaboration allowing it faster access to new mar-kets.(Wiklund, 1998b). *

These approaches offer another chance to rethink the usual process of environmental scanning and conventional analysis, for example, the SWOT model.

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A Conceptual Approach of Entrepreneurial Orientation ...

Figure 2: The Opportunity-and Resource-based Analyses and Strategy Formulation.

1 f

External Environment

Macro-environment: tecr ogy, economy, culture,.. Micro-environment: cust< suppliers, competitors,..

inol-

Dmers,

Environment Scanning and Analysis

**[ Analysis of \ f Analysis of Y ^ ^ ^ ^ J * s ' ^ ^ Opportuni- J \ ^ Resources J ^ ^ ^

Entrepreneurial Orientation

\ r

Entrepreneurial Strategy Formula-

1 Internal

Environment

Structure, strategy, culture, resources / capabilities, nrocesses...

Reconsidering Entrepreneurial Orientations as a Mix of Strategic Orientations

In strategy and marketing literature, the strategic orientation is defined vari­ously. In fact, three distinct schools of thought exist: Market-, Technology-and stakeholder. Hre it is very important to link these orientations to the EO. The proposition of EO is a mix of these orientations.

Market Orientation. This orientation is based on customer preferences permitting the integration of its preferences into product development and on relevant information about competitors action and positions. It reflects a proactive search of information on the market, a capacity to disseminate in­formation interpretation and suitable responses. When well-maintained a market approach focuses on the long term and determines the actions of in­novation at the level of products/services (Kohli and Jaworski, 1990; Jawor-ski and Kohli, 1993; Narver and Slater, 1990; Tzoka, et al9 2001). Empirical work has consistently demonstrated a significant positive correlation be­tween these two points (Miles and Arnold, 1991).

Technology Orientation. This capacity represents the ability and will to acquire a substantial technological background and the capacity to use it to develop new products/services with high quality and least cost. It includes the capacity of integration of new technology manufacturing, Information &

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Communication Technology, etc., and a certain proactivity in developing new technology and generating new product ideas. This orientation can be internal and external, and it is very closely linked to Market Orientation, especially in the dynamic biotechnology, ICT and high technology indus­tries (Gatignon and Xuereb, 1997; Renko and Tikkanen, 2002).

Stake/Shareholder Orientation. Based on partners like employees, suppliers, state, bankers, associations, venture capital community, this orien­tation may considerably influence the EO. For example, an orientation cen­tered on organizational staffing and and rewards can create an incentive climate (involving in decision, autonomy, incentive,...) to better satisfy cus­tomer's needs (Greenley and Foxall, 1997). Thus, an organisation that cre­ates new products/services and conceives new manners of organization, make use of their partners. Also, the scarcity of internal resources techno­logical encourages it to cooperate through such means of training and li­censing. (Renko and Tikkanen, 2002). To act entrepreneurially, small or­ganisation keep a strong proximity with their partners.

To summarize, the existing contributions in the literature on the topic of strategic orientation do not introduce, in a pronounced or explicit manner, EO as such. EO is a unique concept in entrepreneurship and strategy litera­ture. Figure 3, adapted from Gauzente and Kalika (1999: 5) describes the position of external strategic orientations and market-orientation. Of impor­tance in figure 3 is that small organisation can assure a conciliation between internal and external strategic orientations by adopting an EO to reinforce its proactive and innovative behavior. Small firms that adopt a strategic orien­tation that center on their markets can innovate more in their products (prox­imity to customers) than those that do not adopt it. Moreover, small firms that center on stakeholders or on technology can be more proactive in their competitive choices than their competitors.

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Figure 3. Entrepreneurial Orientation as a Mix of Strategic Orientations.

Strategic Orien-/ tations (SO) of I

the firm y

^ ^ ^ I n t e r n a l

/ Technology / (Product/service, '

Cost/quality...)

\ Stakeholders *^~^ \ (Employees)

^ ^ x ^ E x t c

Entrepreneurial 1_ Orientation j

\ Innovativity Is

\ Risk Taking / \ Proactivity /

j r n a l S ^ 1 ^ ^

Stake/shareholders\ >w / (suppliers, \ X

/ bankers...) \ \

Market 1 (Customers, / 1

\ Competitors) / /

Technology / /

Consequently, EO can be appreciated as a "Mix of Strategic Orienta­tions" based on a three-part model (market - technology -stake/shareholders) and can explain competitive positioning on its markets. These three orientations can be a means for constructing EO and then, achieving entrepreneurial strategy and behaviours. Exploring the links among these orientations and EO is an emergent research issue for small businesses.

CONCLUSION

The strategic orientation of leaders influences strategy formulation and deci­sions making processes. By understanding organizational processes that promote entrepreneurial behaviour we verify the importance of consistency of management practices and entrepreneurial ambitions within small busi­nesses. This topic is a critical area of research. (Knight, 1997; Brown and Davidsson, 1998; Barringer and Bluedom, 1999; Hitt, et al, 1999; Covin and Slevin, 1991; Zahra, 1993; Herbert and Brazeal, 1998; Messeghem, 2000; 2001).

The concept of EO can be understood in terms of contingency and con­figuration approaches, in relation to the environment (Miller, 1983; Gins­berg, 1985; Lumpkin and Dess, 1996; Dess et al, 1997; 1999). Multivariate analyse methods help us understand entrepreneurial processes related to EO, its preservation as a strategic orientation and its several antecedents includ-

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ing internal/external contingencies. The role of environment remains sig­nificant for the enterprise as a constant to be managed and integrated in or­ganizational development and strategic orientations. It plays a moderator role in the relationship between EO and enterprise's performance and growth (Miller, 1983, 1987; Covin, 1989; Naman, 1993; Zahra, 1993; 1995; Merz and Sauber, 1995; Dess, et al, 1997; Brown and Kirchhoff, 1997; Wiklund, 1998a, 1998b).

The links between EO and other strategic orientations (Market, Tech­nology, and stakeholders) shall be explored for further research.

Then, future research employing the Resource-based, Opportunity-based, and Entrepreneurial viewpoints should prove fruitful in identifying the extent and circumstances to which each viewpoint better captures the relative importance of the external/internal environments in keeping updated the business opportunities and affluent resources/capabilities. These view­points will stimulate the debate on the phenomenon and revisit the classic Stevenson's classic conceptualization of entrepreneurship (Wiklund, 1998b; Brown and Davidsson, 1998; Brown et al, 2001).

The literature showes entrepreneurship to be a multidimensional con­cept with three dimensions: innovation, risk-taking, and proactiveness (Miller, 1983; Covin and Slevin, 1986; 1989). The three dimensions of EO may be able to vary independently of one another (Kreiser et al, 2002; Dess et al, 1999; Lumpkin and Dess, 1996; Yoo, 2001; Stetz et al, 1998; 2000). Therefore, a measurement scale will be used for EO and reflect 'the CEO's strategic orientation reflecting the willingness of a firm to engage in entre­preneurial behaviour' (Wiklund, 1998a, 1998b).

As for future research methodology in the future, managerial percep­tion's approach to measurement of EO may be the preferred measure, and may provide a greater understanding of the causal links in models of EO (Naman and Slevin, 1993; Marchesnay, 1993; Wiklund, 1998b; Lyon et al, 2000; Homsby et al, 2002). Young and small organisations are often man­aged by a key executive (or a small team) and only a few one are involved in the strategic decision making process. As EO refers to key managers's self-perception of firm's strategic orientation, their self-perception will be closely related to the behaviour of the firm. Nevertheless, if the measure­ment instrument of EO really addresses CEO self-perception, then, it serves "as a relevant proxy for the entrepreneurial strategy" of the small firm (Wik­lund, 1998b).

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