Entrepreneurial Orientation and Second-order Competences: The Moderating Role of Environmental Hostility and Organizational Structure

Abstract

The influence of Entrepreneurial Orientation (EO) on a firm’s performance and success is broadly recognized. Similarly, second-order competences—defined as the firm’s competence to build new competences—as a critical resource of a firm’s competitive advantage are also important to a firm’s success. However, the direct association between EO and second-order competences remains largely elusive. Our study investigates in what ways and how EO associates with second-order R&D and Marketing competences while accounting for specific contingencies. We mainly argue that a firm’s manifestation of EO behavior benefits second-order competences; yet, while such gained effects are enhanced as environment hostility increases, these benefits are diminished by organizational structure. Analysis of data, collected using a web-based survey from executives of firms from different industries, using regression modeling, provide support to our main arguments and some support to the contingency factors. Important and novel theoretical and managerial implications emerge from this study.