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Entrepreneurship has been studied by scholars in various disciplines including anthropology (e.g., Steward, 1991), psychology (e.g., Shaver & Scott, 1991), sociology (e.g., Reynolds, 1991), economics (e.g., Kirchhoff, 1991) and management (e.g., Stevenson, 1985). As a result, the conceptualizations of entrepreneurial orientation have been varied. The central issue, however, remains the same in all, that is to understand what causes entrepreneurs to achieve successful growth. But, this is also the central issue of strategic management research that brings a unique focus on the availability of resources.

The purpose of this paper is to expand upon past behavioral research by adding the resource based view of strategic behavior as a significant variable to the popular conceptualization model (Covin & Slevin, 1986, 1988) and by demonstrating that this revised model is valid. When evaluated relative to two hard measures of firm growth, the evidence shows resource based variables contribute to our understanding of entrepreneurial motivations towards firm growth.

The paper begins with a description of the entrepreneurship conceptualization and then develops the logic for adding resource acquisition actions of entrepreneurs as contributors to firm growth. Next, the results of a large survey of small business owners are reported. The paper concludes with confirmation of its expectations that resource acquisition is an important component of entrepreneurial behavior.


The ultimate dependent variable in strategic and entrepreneurial research is firm performance (Covin & Slevin, 1991). Covin and Slevin (1991), Sexton and Bowman-Upton(1991) and Zahra (1991) pointed to the lack of systematic empirical evidence that entrepreneurial orientation leads to firm performance, despite substantial anecdotal evidence. One explanation for this is that prior to Covin & Slevin (1986) there were few methodologically sound ways to measure firm level entrepreneurial activity. However, researchers continue to suggest that firm-level entrepreneurial orientation leads to improved performance (Covin & Slevin, 1991; Peters & Waterman, 1982), high performance (Bailey, 1986) and competitive advantage and financial rewards (Scholhammer, 1982).

Accordingly, empirical evidence does continue to mount (e.g., Covin and Slevin, 1986; Naman and Slevin, 1993; Zahra, 1986; Zahra and Covin, 1995). While the above studies support the idea that entrepreneurial orientation does positively impact firm performance, these studies did not examine entrepreneurial orientation in the small firm using the most commonly used measures of firm performance such as rate of growth (Brush & Vanderwerf, 1992). If entrepreneurial orientation does influence firm performance, such influence is through the small business owner. Thus, this research suggests the following hypothesis:

H1: A small business owner's entrepreneurial orientation has a positive influence on the small firm's rate of growth.

Entrepreneurial Performance and the Environment

Several empirical research studies examining the entrepreneurial orientation-performance linkage suggest that this relationship is moderated by environmental conditions. For example, in environments characterized as more turbulent (i.e., hostile and/or dynamic, Khandwalla, 1976/77; Naman & Slevin, 1993), entrepreneurial orientation was found to lead to higher levels of firm performance (Covin & Slevin, 1989; Naman & Slevin, 1993). Conversely, in environments characterized as not turbulent (i.e., benign and/or stable, Khandwalla, 1976/77; Naman & Slevin, 1993), entrepreneurial orientation was found less related or perhaps negatively related to firm performance (Miller & Freisen, 1983; Naman & Slevin, 1993). To replicate these results and be consistent with past research, the following is proposed:

H2: Entrepreneurial orientation will be more positively related to small firm growth in turbulent environments than in less turbulent environments.

Antecedents of Entrepreneurial Orientation

The antecedents of firm-level entrepreneurial orientation can be broadly divided into external factors (e.g., industry life cycle, government regulation, environmental hostility and dynamism, etc.) and internal factors (e.g., organizational resources and competencies, organizational structure, top management philosophy and values, strategy, etc.) (Covin & Slevin, 1991; Naman & Slevin, 1993). The external environment has been examined, especially as a moderating factor between firm performance and degree of entrepreneurial activities (Covin & Slevin, 1989,1991; Miller, 1983; Miller & Freisen, 1983; Naman & Slevin, 1993). Researchers have also examined entrepreneurship's effect on outcomes such as firm performance (Covin & Slevin, 1986, 1988, Naman & Slevin, 1993; Zahra & Covin, 1995).

Regarding internal factors, the one warranting the greatest attention currently is resources because the lack of access to or availability of resources can be seen as perhaps the most important constraint of firm-level entrepreneurial activity, e.g., growth and survival (e.g., Bruno & Tyebjee, 1982; Kirchhoff, 1994; Penrose, 1959; Vesper, 1980). The role of resources has begun to be more thoroughly examined in the strategic management literature at the population level of analysis, i.e., resource dependency (Pfeffer & Salancik, 1978) and population ecology (Hannan & Freeman, 1977), and at the firm level of analysis, i.e., the resource-based view of strategy. More recently, these three views have moved into the entrepreneurial literature.


While resources have been defined from many different perspectives by researchers, for the purpose of this paper, resources are defined as any thing or quality that is useful (Barney, 1986). Theoretical models of resources have begun to move from the strategic management literature to the entrepreneurship literature on resource dependency (e.g., Bruno and Tyebjee, 1982; Bygrave, 1986; Pfeffer and Salancik, 1978) and population ecology (e.g., Aldrich, 1979; Aldrich, Rosen & Woodward, 1987; Hannan and Freeman , 1977).

Resource-Based View of Strategy

Although both resource dependency and population ecology are concerned with resources at the population level of analysis, nowhere can the relationship of resources and firm-level behavior be better seen than in the resource-based view of strategy. The resource-based approach can be viewed as a continuing search for competitive advantage by the creation, acquisition and utilization of unique firm resources (Barney, 1991). This is reinforced by the underlying assumption that resource heterogeneity exists across firms. However, heterogeneity by itself is not sufficient for sustained competitive advantage (Petraf, 1991), unless resources are also imperfectly mobile across firms (Barney, 1991). It is this heterogeneity that creates the need for emphasis upon resources in strategic management research. The resource-based strategic research emphasizes that valuable, rare, inimitable, or non-substitutable firm-specific capabilities (e.g. tangible and intangible assets, skills, routines, competencies and learning mechanisms) are the fundamental determinants of performance (Barney, 1991; Teece, Pisano & Shuen, 1992) and sustainable competitive advantage (Lado, Boyd & Wright, 1992).

Ultimately, the resource-based view of strategy is an introspective approach whereby firms seek to sustain competitive advantages by developing their internal strengths and/or acquiring complementary resources that are both imperfectly mobile and imperfectly imitated. However, this approach may not be suited to examining the more externally oriented small, growing firms.

Entrepreneurial Orientation and the Resource-Based View

One shortcoming of the resource-based view is how strategic choice and entrepreneurial orientation are handled. This failing rests on two key points. First, although Penrose's (1959) work on firm growth is at the heart of the resource view, much of the subsequent literature has ignored her until recently. Penrose (1959) believed that its internal management resources limited growth of a firm. In her view, management was the key limited resource. In fact, the managerial constraint on firm growth has been dubbed the "Penrose effect" (Marris, 1963).

Second, even though Rumelt clearly states that "entrepreneurship is intimately connected with the appearance and adjustment of unique and idiosyncratic resources " (1984:560), the resource-based view of strategy rarely addresses entrepreneurship and small firm behavior. Although resource ownership and the efficient use of resources tend to be the driving forces of organizational activity within the resource-based view, these driving forces may only be appropriate for large firms and not small, growing firms.

Entrepreneurial Orientation and an Alternative View of Resources

The traditional view of entrepreneurship stresses the importance of having resources (Covin & Slevin, 1991; Gartner, 1984; Vesper, 1980). Swift (1989) citing Burns stated clearly that inadequate financing (resources) is a serious constraint on the firm's growth potential. Much of the focus of the entrepreneurship literature is on the difficulty in obtaining resources, especially financial.

Thus, the traditional view of entrepreneurial orientation (e.g., Covin and Slevin, 1991; Gartner, 1984; Gasse, 1984; Vesper, 1980; Yasai-Ardevkavni, 1986) focuses on the importance of resources in determining entrepreneurial orientation. In fact, some (e.g., Covin & Slevin, 1991; Kirchhoff, 1994; Penrose, 1959) claim that the lack of resources not only constrains growth, but also limits entrepreneurial activity that leads to growth. Others claim that access to resources is also important (Chandler & Hanks, 1994; Star & MacMillan, 1990; Stevenson, 1985). In fact, Bruno and Tyebjee (1982) argue that resource availability and access were important contextual factors that stimulated entrepreneurial orientation, especially of high growth potential firms.

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