Linking Entrepreneurial Orientation and Firm Performance: The Role of Organizational Learning Capability and Innovation Performance

TL;DR: In this paper, the authors contribute to the entrepreneurial orientation (EO) performance literature by offering a wider picture that includes two intermediate steps: organizational learning capability (OLC) a...

Abstract: This research contributes to the entrepreneurial orientation (EO)–performance literature by offering a wider picture that includes two intermediate steps: organizational learning capability (OLC) a...

Summary

Introduction

• Appropriate medical staffing is essential to provide optimal trauma care [1].
• Mortality in trauma patients admitted during, before, and after national academic emergency medicine and trauma surgery meeting dates in Japan.
• The authors received no specific funding for this work.
• The authors hypothesized that hospital mortality would be higher during the meeting dates of national scientific emergency medicine and trauma surgery professional organizations than non-meeting dates and hospital mortality would be lower after the meeting dates than before the meeting dates because of reduced staffing and the positive impact of the academic meeting on high physician performance.

Materials and methods

• Study design and data sources, and setting The Okayama University Hospital ethical committee approved the study (ID 1805–020).
• Since patient data was extracted anonymously, the requirement for informed consent was waived.
• This study was designed as a nationwide retrospective cohort study.
• Patients with Abbreviated Injury Scale (AIS) scores of 3 or above are recorded in the database from 264 Japanese hospitals participating in trauma research and care [17].
• Hence, the on-call attending trauma surgeons or interventional radiologist aim to respond immediately to the trauma call to deliver consistent quality of trauma care in these hospitals on nights and weekends [16].

Study sample

• The authors obtained annual national meeting dates of two academic organizations—the Japanese Association for Acute Medicine (JAAM) and JAST—from 2004 to 2015.
• The during meeting dates group included patients admitted after traumatic injury during the dates of these meetings.
• Patients in cardiac arrest at the scene or on arrival and those without age, hospital arrival date, and in-hospital mortality data were excluded.

Outcome measures

• The authors primary outcome was post-trauma in-hospital mortality from all causes among patients hospitalized during, before, and after national meeting dates.
• The secondary outcome measure was hospital length of stay.

Statistical analysis

• Comparisons among the three groups were made using the chi-square test for categorical variables and analysis of variance for continuous variables.
• The authors used multiple logistic regression analysis to compare the primary outcomes between the three groups, with the during meeting dates group as the reference category.
• A two-tailed P value of<0.05 was considered statistically significant.
• All analyses were performed using IBM SPSS Statistics 25 (IBM SPSS, Chicago, IL, U.S.A.).

Patient characteristics

• A total of 236,698 trauma patients were registered in the JTDB during the study period.
• Of those, 182,877 adult trauma patients were assessed for eligibility.
• Among the three groups of patients, basic characteristics including severity of trauma and life-saving surgical procedures were similar except for the age category (Table 1).

Subgroup analysis

• In-hospital mortality did not differ among the three groups according to center volume (Table 3).
• Additional analyses were conducted by stratifying patients with or without shock, and polytrauma; no differences in in-hospital mortality were found among the three groups (Table 3).
• The same results were obtained when considering alternative definitions of the before and after meeting dates groups (Table 4).

JAST

• OR: odds ratio; CIs: confidence intervals; ISS: Injury Severity Score; JAAM, Japanese Association for Acute Medicine; JAST, Japanese Association for the Surgery of Trauma.
• January 29, 2019 6 / 11 significant difference in the hospital length of stay between the three groups.

Discussion

• The authors investigated whether there was a difference in mortality among patients admitted due to traumatic injuries during, before, and after dates of national academic acute medicine and trauma meetings.
• Previous studies have not detected the “weekend effect”; admission on nights or weekends for trauma patients was not associated with increased mortality [13–16, 20, 21] or even better outcomes, which was explained by the possibility that the patients could have been immediately accessed to the operation room or resources that might otherwise be occupied during normal working hours [22].
• A previous study regarding national meeting effect, in which results demonstrated better outcomes among high-risk patients with heart failure or cardiac arrest, were possibly explained by declines in intensity of care or volume of less urgent cardiovascular hospitalization during meetings dates [11].
• Second, the influence of national meeting geographical regions and locations was not accounted for, which may have affected their results.

Conclusions

• The authors observed no significant differences in in-hospital mortality after trauma among patients admitted during, before, and after national acute medicine and trauma meeting dates.
• As hospitals are assumed to be struggling to consistently provide optimal care for trauma patients, participating in these meetings is acceptable for sharing and generating new knowledge.
• Further population-based studies are required to validate their results.

Figures

FIGURE 2: Structural Equations Model

FIGURE 1: Conceptual model

TABLE 2: Factor correlations, means, standard deviations, and alpha reliabilities

TABLE 1: Sample firm size and location

Full text

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1
Revealing the Links between Entrepreneurial Orientation and Firm
Performance: The Role of Organizational Learning Capability and
Innovation Performance
Introduction
Entrepreneurship is a young field of research that is attracting the interest of a growing
number of scholars (Ireland, Reutzel, and Webb 2005; Runyan, Dröge, and Swinney 2008).
Sharma and Chrisman (1999: 17) maintain that entrepreneurship encompasses acts of
organizational creation and renewal occurring within or outside an existing organization.
However, management research has mainly focused on the entrepreneurial orientation
(Ireland and Webb 2007) that explains how entrepreneurship is put into practice.
Entrepreneurial orientation (EO) can be considered as a managerial attitude oriented towards
the strategy-making processes that provide organizations with a basis for entrepreneurial
decisions and actions (Lumpkin and Dess 1996; Richard, Barnett, Dwyer, and Chadwick
2004).
Although EO is theoretically beneficial for firms (Ireland and Webb, 2007) and a positive
relationship with performance could be expected (Runyan et al. 2008; Rauch, Wiklund,
Lumpkin, and Frese 2009), some results have not been fully conclusive. For example,
Dimitratos, Lioukas, and Carter (2004) found recently a non significant relationship between
EO and firms’ international performance in a sample of Greek firms. Similarly, George,
Wood and Khan (2001) found no significant correlation between EO and ROA (Return On
Assets) nor ROE (Return On Equity) in the banking industry in the USA. This might be due

2
mainly to the concept of firm performance which can be influenced by many variables both
internal and external to the organization (Thoumrungroje and Tansuhaj 2005) and to the long
time the benefits of EO come to fruition (Zahra and Covin 1995; Madsen 2007). In this line of
thinking, Zahra et al. (1999) suggested that research should focus on identifying the
underlying steps that determine the contribution of EO to firm performance.
Following this research stream, the next step could be to look more deeply into the
EO-firm performance relationship by identifying intermediate steps between these two
variables (Zahra, Sapienza, and Davidsson 2006; Baker and Sinkula 2009). In this vein, Wang
(2008) recently found that the learning orientation of the firm was mediating the link between
EO and firm performance. In this study, we aim to extend this line of work by offering a
wider picture of the EO-firm performance relationship.
On the one hand, there is a growing body of work connecting entrepreneurship and
organizational learning (Cope 2003; Wang 2008; Blackburn and Kovalainen 2009).
Organizational learning is defined as the process through which organizations change or
modify their mental models, rules, processes or knowledge, to sustain or improve their
performance (Dibella, Nevis, and Gould 1996), which is very close to the concept of
entrepreneurship. Organizational learning capability (OLC) is defined as the organizational
and managerial characteristics or factors that facilitate the organizational learning process or
allow an organization to learn (Goh and Richards 1997; Hult and Ferrell 1997). As EO is a
strategic posture (Covin and Slevin 1989) or attitude developed by managers towards
entrepreneurship, OLC might be understood as the organizational characteristics that follow
or are consistent with the previous managerial posture and also sustain entrepreneurship.
Hence, OLC could represent a way through which managers attempt to implement EO.
On the other hand, innovation consists of successful exploitation of new ideas
(Amabile et al. 1996). The effects of entrepreneurial actions are manifested in product,

3
process and administrative innovations (Ireland and Webb 2007; Covin and Miles 1999;
Schumpeter 1934). According to Ireland et al. (2005: 557), the inclusion of innovation as an
indicator of entrepreneurship results, reflecting the views of Drucker (1998: 152), and
Schumpeter (1934), maintains that innovation is an important outcome of the
entrepreneurship function. In fact, Schuler (1986) understands entrepreneurship as the
practice of innovating, and claims that what distinguishes entrepreneurial from non-
entrepreneurial firms is the rate of innovation. The innovation performance of a firm refers to
its product and process innovations. Therefore, EO could be considered as an antecedent of
innovation performance.
The main objective of this paper is to analyze the relationships between EO, OLC,
innovation performance and firm performance. More precisely, we want to examine what is
the role played by important organizational consequences of EO, such as organizational
learning capability (OLC) and innovation performance, within the EO-firm performance
relationship. We propose that organizational learning capability (OLC) and innovation
performance play a mediating role in the EO-firm performance relationship. We suggest that
such mediations are relevant in order to get a better understanding of the EO-firm
performance relationship.
By doing so, we make two contributions: (1) provide a more complete picture of the
EO-firm performance relationship that highlights the role of organizational learning capability
and innovation performance and (2) explain intra-industry performance differences as a
function of EO, OLC and innovation performance. Hypotheses are tested on a database
obtained through a survey on a population of firms that is homogeneous in terms of size (most
of firms are small and medium enterprises), industry and technology: Italian and Spanish
ceramic tile producers.

4
This introduction is followed by the development of a conceptual background and
hypotheses concerning the EO-firm performance relationship. The third section describes the
methodology used to gather our database and to test our hypotheses on data from the Italian
and Spanish ceramic tile industry. We carry out a test through structural equations modeling
and we present the results in section four. Findings provide original empirical evidence of the
relevant role played by OLC and innovation performance in the relationship between EO and
firm performance. These findings are relevant for managers because they provide guidelines
on how to implement the EO attitude and make the most of it. The paper concludes with a
discussion of the results and their implications, and suggestions for further research.
Conceptual Background and Hypotheses
EO is focused on the strategy-making process (Rauch et al. 2009). We conceive EO as
a managerial attitude that will guide this entire strategy-making process following an
entrepreneurial strategic posture (Covin and Slevin 1989). The extensive literature on the
relationship between EO and firm performance suggest a general positive link (Wiklund
1999; Sadler-Smith et al. 2003; Rauch et al. 2009; Baker and Sinkula 2009). We propose that,
between the EO managerial attitude and firm performance, OLC and innovation performance
could play a relevant role.
Furthermore, this is connected to strategic management literature as EO could be an
important managerial choice explaining intra-industry differential firm performance (Zott
2003; Easterby-Smith & Prieto 2008). EO could be regarded as an antecedent of innovation
performance, which could be a useful parameter to explain why firms perform differently
(Nelson 1991; Zott 2003). Furthermore, OLC could reinforce the effect of EO on innovation
performance as it implies that the entrepreneurial posture is having effects within the

Frequently asked questions

Q1. What are the contributions mentioned in the paper "Revealing the links between entrepreneurial orientation and firm performance: the role of organizational learning capability and innovation performance" ?

In this paper, Ireland et al. investigated the relationship between entrepreneurial orientation and organizational learning capability and found no significant correlation between EO and ROA ( Return On Assets ) nor ROE ( Return on Equity ) in the banking industry in the USA. 

Q2. What are the future works in "Revealing the links between entrepreneurial orientation and firm performance: the role of organizational learning capability and innovation performance" ?

Future research is required to further complement the whole picture of the EO-performance relationship. Future longitudinal studies might assess EO outcomes in the long term in both OLC and innovation performance. Nevertheless, future and complementary research could improve these deficiencies by using objective firm performance data. However, further qualitative research would be useful to provide a more in-depth picture of these relationships in a variety of cases within the sample. 

Q3. What other organizational issues could be incorporated in their conceptual model?

other organizational issues related to organizational learning and innovation, such as adaptive and generative learning or human resources interventions (Sadler-Smith and Badger 1998; Wang 2008) could be incorporated in their conceptual model. 

Q4. What do they think of the strategizing activities that organizational learning entails?

Covin et al. (2006) maintain that the strategizing activities that organizational learning entails are critical for maximizing the effect of EO on firm performance. 

Q5. What areas of product improvement have been found by recent studies?

Several recentstudies have analyzed product innovation in the ceramic tile industry and have found enamels and product design to be the most important areas of product improvement. 

Q6. What is the importance of OLC for EO?

Their study contributes to the literature on entrepreneurship by evidencing the importance of certain organizational characteristics, OLC, for EO to be implemented fruitfully. 

Q7. Why is this research based on a single industry analysis?

Because this research is based on a single industry analysis, it has benefited fromdealing with firms that are likely to be economically and technologically homogeneous.