The Relevance of Slack Resource Availability and Networking Effectiveness for Entrepreneurial Orientation

Abstract

Motivated by the resource-based view of the firm and its Penrose-inspired views on resource orchestration, we seek to disentangle how resource availability might affect the emergence of an entrepreneurial orientation within firms, and how firms might redress the resource absorption effects of EO to enhance firm performance. Using a sample of 607 German small and medium-sized enterprises (SMEs), we investigate: 1) the influence of slack resource availability on the EO of SMEs, 2) the mediating effect of networking effectiveness on the relationship between EO and firm performance, and 3) the influence of firm performance on slack resource availability. The results suggest that slack resource availability positively influences EO, networking effectiveness partially mediates the relationship between EO and firm performance, and the firm performance achieved to date positively influences slack resource availability. Our work reconciles EO with the RBV and contributes new knowledge to understand the resource absorption effects and resource refuelling needs contained within the EOperformance relationship a hitherto ignored consideration.