Impacts of proactive orientation and entrepreneurial strategy on entrepreneurial performance: An empirical research

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Technological Forecasting & Social Change journal homepage: www.elsevier.com/locate/techfore

Impacts of proactive orientation and entrepreneurial strategy on entrepreneurial performance: An empirical research ⁎

Yang Gaoa, Baoshan Geb, , Xiangxiang Langa, Xiaobo Xuc a

School of Business, Dalian University of Technology, Panjin 124221, China School of Management, Jilin University, Changchun 130022, China c School of Business Administration, American University of Sharjah, Sharjah, United Arab Emirates b

A R T I C L E I N F O

A B S T R A C T

Keywords: Proactive orientation Entrepreneurial strategy Entrepreneurial performance Industrial pressure

It is controversial whether the first mover can achieve entrepreneurial performance. This study effectively integrated the entrepreneurship theory and the strategy theory to explore the relationship between proactive orientation and entrepreneurial performance, as well as the moderating effect of the entrepreneurial strategy. Using 235 new ventures in China, we found that: under lower level of industrial pressure, the relationship between proactive orientation and entrepreneurial performance is positive, the moderating effect of moderate strategy and competitive strategy is also positive. However, under higher level of industrial pressure, the relationship between proactive orientation and entrepreneurial performance is not a simple linear, the moderating effect is insignificant for moderate strategy and negative for competitive strategy. We concluded that the first mover will not undoubtedly get entrepreneurial performance only if they own the premises such as taking the initiative to raise trade barriers to create a low level of industrial pressure, avoiding negative competition behavior under the high industrial pressure, and etc.

1. Introduction Entrepreneurial firms are different from other traditional ones in terms of innovation, risk taking, and pro-action (Miller, 1983; Miller and Friesen, 1983). Scholars have begun to study the relationship between entrepreneurial orientation and entrepreneurial performance to examine whether these unique characteristics could affect the success of enterprises. However, scholars have drawn mixed conclusions. Some papers found that entrepreneurial orientation can significantly improve entrepreneurial performance, especially in the initial stage and the growth stage (Covin and Slevin, 1989; Wiklund and Shepherd, 2003; Wiklund and Shepherd, 2005). Others concluded that entrepreneurial orientation may have negative or no effect on entrepreneurial performance (George et al., 2001; Runyan et al., 2008; Slater and Narver, 2000; Stam and Elfring, 2008). The dynamic and uncertain industry environment is the main reason for the mixed conclusions (Cope, 2005). Whether entrepreneurial orientation can improve entrepreneurial performance largely depends on the specific strategic behavior of enterprises (Bruton et al., 2015; Shin et al., 2015; Wang and Ahmed, 2007). With different entrepreneurial orientations, overcoming resource constraint and selecting proper entrepreneurial strategy will determine the success of new enterprises (Hitt et al., 2002; Xiao et al.,

⁎

2010). Therefore, the inner mechanism between different dimensions of entrepreneurial orientation and entrepreneurial performance has attracted attentions (Covin and Wales, 2012; Kreiser et al., 2013; Kreiser and Davis, 2010; Rauch et al., 2009). Anderson et al. (2015) pointed out that it is very important to reconstruct the entrepreneurial orientation concept. Understanding the relationship between different dimensions of entrepreneurial orientation and entrepreneurial performance is an important research topic. In fact, different scholars have different opinions about proactive orientation and entrepreneurial performance. Hamel (2001) illustrated that proactive orientation can create the first mover advantage for enterprises. Consequently, enterprises can obtain market resources in advance of their rivals and monopolize their industry rapidly. Cottrell and Sick (2002) found that first movers have a contention-free period to construct valuable network and relationship with customers. Therefore, they can rely on the relational network to build a unique business model which has a positive effect on firm performance. Robinson and Min (2002) concluded that the survival rate is higher for first movers than new entrants (or late comer) and utilized this comparison to reconfirm the advantage of proactive orientation. However, different opinions still exist. Boulding and Christen (2003) suggested that the first-mover advantage does not necessarily exist. If first movers enter an

Corresponding author. E-mail address: [email protected] (B. Ge).

https://doi.org/10.1016/j.techfore.2017.11.019 Received 24 December 2016; Received in revised form 6 November 2017; Accepted 12 November 2017 0040-1625/ © 2017 Elsevier Inc. All rights reserved.

Please cite this article as: Gao, Y., Technological Forecasting & Social Change (2017), https://doi.org/10.1016/j.techfore.2017.11.019

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industry with low barriers, their first-mover advantage may become first-mover disadvantage. Based on first movers' market share, Lopez and Roberts (2002) argued that second movers engaging in market competition with lower risk can finally win most of the market against first movers. Therefore, the relationship between proactive orientation and entrepreneurial performance is not simply linear. The industry environment will determine whether new enterprises could achieve high performance using proactive orientation (Kerin et al., 1992; Suarez and Lanzolla, 2007). Implementing strategy properly can avoid many risks (Boulding and Christen, 2003; Rauch et al., 2009; Suarez and Lanzolla, 2007). Especially, it is not a good choice for enterprises to employ proactive orientation in these industries with high growth rate (Min et al., 2006). Moreover, entrepreneurial strategy become very important under the industrial pressure (Arora and Nandkumar, 2011; Holloway and Sebastiao, 2010). Enterprises employing proactive orientation need to develop proper product or market strategy based on perception about outside chances. Doing so, they can decide how to capture market, which market to capture, and how to maintain the consistent market share (Morris et al., 2010). In this paper, we first classified the industry characteristics. Second, we integrated the entrepreneurship theory and the strategy theory as well as defined the entrepreneurial strategy concept which primarily indicates strategic choices for new enterprises (Bruton and Chen, 2016; Lei et al., 2016). Meanwhile, we divided the entrepreneurial strategy into two dimensions: moderate strategy and competitive strategy. Finally, based on the sample of new ventures, we tested the relationship between proactive orientation and entrepreneurial performance and the moderating effect of the entrepreneurial strategy under different industrial pressures. This study could provide the theoretical guidance for new ventures to make decisions of “whether, when, and how” to employ proactive orientation which is meaningful to both theory and practice.

Christen, 2003; Lumpkin and Dess, 1996). Learning behavior can make first movers to master skills to deal with uncertainty in short term and inhibit followers' interests. However, it's uneasy for first movers to keep the original interests since the learning effect will decline (Eisenbeiss and Knienberg, 2015; Robinson and Min, 2002). Since the proactive orientation is implicit in entrepreneurial orientation, the effect of the proactive orientation on entrepreneurial performance has been ignored in previous studies (Covin et al., 2006; Makadok, 1998). Most studies revealed the relationship between entrepreneurial orientation and entrepreneurial performance and neglected the changing trend of entrepreneurial performance under the single dimension (Kwak et al., 2013; Song et al., 2017). This methodology not only produced mixed results but also caused the contingency theory ineffective in different situations. For instance, most studies confirmed the significant positive effect of entrepreneurial orientation on entrepreneurial performance (Kreiser, 2011; Wiklund and Shepherd, 2005). However, many studies drew the opposite conclusion. Specifically, they found that the relationship between entrepreneurial orientation and entrepreneurial performance is insignificant (Slater and Narver, 2000; Smart and Conant, 1994; Stam and Elfring, 2008). The major reason of this divergence is that the relationship between the single dimension and performance may be complicated and even unpredictable and nonlinear (Covin et al., 2006). This possibility may cause the contingency-theory-based conclusion to be more obscure and fragile. Positive risk taking may fall into risk traps (Daoud et al., 2015; Hvide and Panos, 2014). Hence, different entrepreneurial strategies will produce different influence on entrepreneurial performance for new ventures. Meanwhile, the first mover advantage may be eroded gradually by rivals due to different industry characteristics (Agarwal and Gort, 2001; Loschelder et al., 2014; Min et al., 2006). Therefore, based on the contingency theory, exploring the single dimension mechanism of entrepreneurial orientation and entrepreneurial performance under different situation will reveal the influence pattern of entrepreneurial performance. Furthermore, the conclusion is more convincing.

2. Literature and hypotheses 2.2. Entrepreneurial strategy 2.1. Proactive orientation Thoumrungroje and Tansuhaj (2005) investigated the effect of entrepreneurial strategic posture on firm performance. The effect of entrepreneurial strategies on firm performance has also been examined based on technology-based new ventures (Lin et al., 2006). Acquiring a certain market share for new ventures is the primary concern due to their resource constraint. It is critical to choose effective and feasible strategies during the process (Dess et al., 1997; Lechner and Gudmundsson, 2014). Entrepreneurial strategy is also the main way to integrate individual, organization, and society (Dollinger, 2008; Hitt et al., 2001; Webb et al., 2014). However, existing studies about entrepreneurial strategy of new ventures are obviously insufficient. The strategy management literature has defined firm strategy in three levels: firm level, competition level, and function level (Collis and Montgomery, 1995; Hill et al., 2014). The internal function tends to be inevitably imperfect for new ventures. Highly unambiguous product positioning is needed urgently. Since the existing market is immature, the market penetration strategy, product/market development or diversification suggested by function level strategy and firm level strategy are not suitable for new ventures (Hunter, 2011). Nevertheless, entrepreneurs also need to locate product, define target customer, and participate into industry competition for new ventures (Xu et al., 2014, 2016). Therefore, it is appropriate to define entrepreneurial strategy from competition level (Block et al., 2015; Ghezzi et al., 2015). McDougall and Robinson (1990)summarized competitive behaviors of new ventures into 26 types through a survey of information industry. They also classified these 26 competitive behaviors into 8 factors using the clustering analysis which corresponded to both narrow market and broad market. They finally classified entrepreneurial strategy into proper strategy and positive strategy by defining the market narrow

As the third dimension of entrepreneurship orientation, the proactive orientation primarily reflects new ventures' strategy to exceed rivals. Hence, it can be interpreted as leading behavior and initiative spirit (Morris et al., 2011). Miller (1983) used the proactive orientation as a strategy dimension by connecting initiative spirit to behavior orientation. He also pointed out that entrepreneurial enterprises should affect the environment, rather than be affected by the environment. The passive receivers of environment pressure lost their self-possession function of entrepreneurial enterprise since they will be dominated by the external environment. (Bateman and Crant, 1993). Kickul and Gundry (2002) proposed an entrepreneurial process model to examine the relationship between proactive entrepreneurial personality and small firm innovations. Menguc et al. (2010) studied the mediating effect of proactive environmental strategy on the relationship between entrepreneurial orientation and firm performance. Strategic orientations have also been considered as a critical factor of new product's success or firm performance (e.g., Chou and Yamg, 2011; Hynes, 2009). In the initiative action process, firms need to possess the ability of risk taking, efficient execution, and prompt response (Gallagher et al., 2015; Vecchiato, 2015). Covin et al. (2006) utilized initiative spirit to explain firm behaviors of searching market opportunities and changing with the environment trend. They also defined initiative spirit from three aspects: opportunities searching, product/brand introducing, and strategy recession eliminating. Along with this definition, initiative spirit also reflects a prospective tendency of entrepreneurial enterprise, including accurately predicting the industry trend, avoiding to produce short-life products, leading consumer behaviors and so on. Uncertainty will be brought in by this prospective behavior in abundance (Boulding and 2

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industry barriers. High industry growth rate will produce more market attraction. A large number of new entrants can pose more competitive threat to first movers who view such threat unfavorable to their market penetration. Thus, it is good for first movers if the industries seem unattractive (Hamel, 2001; Min et al., 2006). In summary, enterprises with proactive orientation will not necessarily gain performance advantages. The relationship between proactive orientation and entrepreneurial performance is influenced by industrial pressure. Therefore, we proposed the following hypotheses:

degree. The nature of proper strategy is to control the growth speed, perfect the internal value chain structure, and focus on building new channel and new brand as well as supporting new customer. Meanwhile, the nature of positive strategy is to positively promote growth, focus on the market share through producing standardized products, and attract target customers by competitive price. Carter et al. (1994) broke the single industry constraint and clustered the competitive behaviors of new ventures into 6 types (classification standard of market, technology, product, location, service, and price) to correspond super achievers, price competitors, equivocator, technology value, niche purveyors, and quality proponents, respectively. Based on the technology, product mature, and target market, Park and Bae (2004) examined new ventures in Korea and summarized entrepreneurial strategy into 7 groups, including passive emulation, import substitution, creativity imitation, active localization, internationalization, early market entrants, and global innovators. Therefore, entrepreneurial strategy determines entrepreneurial degree (stable or competitive) of new ventures, the ways of outside competition (price competition or differentiation competition), and the development routes inside firms (forward vertical integration or backward vertical integration). It covers entrepreneurial behaviors throughout the organization (Cassia et al., 2006; Covin and Miles, 2007; Hitt et al., 2001; Hunter, 2011; Ireland et al., 2007).

Hypothesis 1. Under lower level of industrial pressure, the relationship between proactive orientation and entrepreneurial performance is positive. Hypothesis 2. Under higher level of industrial pressure, the relationship between proactive orientation and entrepreneurial performance is negative.

2.4. The moderating effect of entrepreneurial strategy The entrepreneurial strategy is to use the strategic method to manage entrepreneurship (Ireland et al., 2009; Morris et al., 2010). Entrepreneurial orientation reflects unique characteristics of entrepreneurial enterprises. Therefore, it is extremely important to use a strategy to solve behavioral choice problems under different entrepreneurial orientation (Agarwal and Braguinsky, 2015; Filieri, 2015). To study proactive orientation and entrepreneurial performance, entrepreneurial strategy should be a key consideration (Lumpkin and Dess, 2001; Smith and Cao, 2007). In this paper, we defined entrepreneurial strategies from competitive levels. Based on the existing theories of McDougall and Robinson, 1990we divided entrepreneurial strategies into two dimensions: moderate strategy and competitive strategy. The moderate strategy means that the main goal of new ventures is to improve the value chain through forward and backward integrations and increase the brand effect and product differentiation. The competitive strategy reflects the competitive aggression of new ventures. Firms with the competitive strategy acquire the market and achieve the economy of scale through selling standardized products in an absolutely competitive price. Thus, the competitive strategy lies in the low cost structure. It reflects firms' response to the competition environment no matter what kind of strategies they adopt. Proper entrepreneurial strategy has a positive impact on entrepreneurial performance (Ghezzi et al., 2015; Hitt et al., 2001; Murray, 1984). As a moderating variable for proactive orientation and entrepreneurial performance, entrepreneurial strategy is also influenced by situational factors. Under different industrial pressure, different entrepreneurial strategies have different moderating effects. When industrial pressure is low, the number of followers is small and industry barriers are high. Thus, enterprises with proactive orientation will not influenced by situational factors. In this situation, both moderate strategy and competitive strategy have a positive effect on the relationship between proactive orientation and entrepreneurial performance. Contrarily, the number of followers tends to increase rapidly when industrial pressure is high. Accordingly, industry barriers are low and market potential is great. Enterprises with competitive strategy may be beat by rivals due to low product barriers and little differentiation (Hill and Jones, 2013). In this situation, it may be more effective to build both value chain and business model which are hardly to replicate, win the customer brand loyalty, and achieve high switching costs using first mover advantages during the monopoly period (Barnett et al., 2013; Hamel, 1991; Hamel and Prahalad, 2013; Markides and Sosa, 2013). Furthermore, under high industrial pressure, first movers will easily lose first mover advantages because they attract customers through competitive prices and their original market shares can go down due to low product differentiation and industry barriers. Therefore, we proposed below hypotheses:

2.3. Industrial pressure, proactive orientation, and entrepreneurial performance New ventures adopt proactive orientation for acquiring first mover advantages and demand premium (Alonso-Almeida et al., 2015; Boulding and Christen, 2003). These advantages include lasting customer impression, strong brand recognition, and high switch cost (Capone et al., 2013; Lumpkin and Dess, 2001; Morris et al., 2000; Wright et al., 1995). Thus, proactive firms seek to be the first organization to formulate and implement strategic approaches in the existing market environment, such as identifying changing market conditions which competitors have not yet recognized or capitalized upon (Covin et al., 2000; Dess et al., 2003; Lieberman and Montgomery, 1988). Meanwhile, early entrants will make the learning curve down because of their leading technology. Hence, they can obtain the low cost advantage (Cottrell and Sick, 2002; Lopez and Roberts, 2002). However, due to the influence of industrial pressure, enterprises with proactive orientation are more likely to get first mover disadvantages. These disadvantages include free-riding opportunities for followers, decision losses under the uncertain market demand, and the low product acceptance, and investment failure due to discontinuity of internal product technology (Schnaars, 1994). Consequently, these disadvantages will bring different benefits to later entrants such as avoid unwanted products and lower imitation cost than the R&D cost of first movers. Additionally, later entrants can catch up with first movers via marketing and even abolish the industry standards established by first movers (Gal-Or, 1985; Lieberman and Montgomery, 1998; Lopez and Roberts, 2002). Therefore, industrial pressure has a great influence on the success of first movers (Suarez and Lanzolla, 2007). Similar as Robinson and Min (2002), we measured industrial pressure levels by the number of early followers, high technology levels of industries, potential growth rate of industries, and capital density of industries. Industrial pressure represents the competition degree in industries. The greater the competition is, the more pressure enterprises have. Under different industrial pressure, enterprises with proactive orientation may have different entrepreneurial performance. Since first movers during the monopoly period will build higher technical barriers in the process of learning curve (Agarwal, 1996; Cleff and Rennings, 2012; Pinkse and Groot, 2015), high technology industries have higher first mover survival rate than other industries. High capital density of industries will make potential entrants to give up because of limited resources and high 3

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Hypothesis 3.1. Under lower level of industrial pressure, the positive relationship between proactive orientation and entrepreneurial performance is stronger for enterprises with higher levels of moderate strategy than lower levels of moderate strategy.

entrepreneurial performance. Adapted from Chandler and Hanks (1993), six indicators were used to measure the entrepreneurial performance, including (1) the main business has maintained a high market share; (2) the profit margin keeps high; (3) the investment return maintains its leading position in the industry; (4) employees are growing rapidly in the industry; (5) the sales growth is relatively fast in the industry; (6) the firm scale is growing rapidly in the industry. The principal component analysis was conducted for the factor analysis. The factor eigenvalues needs to be > 1. We extracted one factor which explains 66.29% of the total variance. The KMO value of six items is 0.894. The approximate chi-square value in Bartlett spherical test is 787.706 (df is 15, p is 0.000). The Cronbach'α value is 0.898 which means good reliability. To reflect the degree of industry competition pressure faced by enterprises, Robinson and Min (2002) utilized four indicators to measure the industry characteristics, including the number of early followers, the potential growth rate of industries, the high technology level of industries, and the capital density of industries. In order to guarantee the quality of questionnaire results, we reduced the reaction bias of the individual test to improve the test validity. The latter two indicators are designed to the reverse test questions. Therefore, we used four indicators to measure the industry stress levels, including: (1) when enterprises produce new products or services, many others follow; (2) there are many untapped markets in the industry which the enterprise belongs to; (3) the industry which the enterprise belongs to require high technology level; (4) the industry which the enterprise belongs to need to invest many fixed assets to enter. The principal component analysis was conducted for the factor analysis. The factor eigenvalues needs to be > 1. We extracted one factor which explains 73.128% of the total variance. The KMO value of six items is 0.829. The approximate chi-square value in Bartlett spherical test is 472.720 (df is 6, p is 0.000). The Cronbach'α value is 0.878 which means good reliability. Adapted from McDougall and Robinson (1990), entrepreneurial strategies include 8 factors for 8 strategic behaviors of new ventures in different markets. Three strategic behaviors are defined as competitive strategy related to firms' low cost competition, including: (1) actively promote growth, pay attention to market development, provide common products to a wide range of customers; (2) actively promote growth, offer specific products by competitive prices in a small range of market; and (3) actively promote growth, provide competitive price products to big customers. The principal component analysis was conducted for the factor analysis. The factor eigenvalues needs to be > 1. We extracted one factor which explains 73.718% of the total variance. The KMO value of three items is 0.713. The approximate chi-square value in Bartlett spherical test is 251.512 (df is 3, p is 0.000). The Cronbach'α value is 0.821 which means good reliability. Additionally, other five items are defined as the moderate strategy for brand building, differentiation, and vertical integration, including: (1) robustly control the growth speed, pay attention to the construction of the new brand; (2) robustly control the growth speed, pay more attention to the cooperation with upstream suppliers; (3) robustly control the growth speed, pay attention to provide high quality products and services to downstream customers; (4) robustly control the growth speed, pay attention to directly provide products to small range of customers; and (5) robustly control the growth speed, pay attention to the establishment of multiple distribution channels. The principal component analysis was conducted for the factor analysis. The factor eigenvalues needs to be > 1. We extracted one factor which explains 61.131% of the total variance. The KMO value of five items is 0.810. The approximate chi-square value in Bartlett spherical test is 447.369 (df is 6, p is 0.000). The Cronbach'α value is 0.840 which means good reliability. Appropriate control variables should be adopted in order to avoid the deviation of the performance measurement for entrepreneurial performance (Murphy, 1996). Enterprise scale, establishment years,

Hypothesis 3.2. Under lower level of industrial pressure, the positive relationship between proactive orientation and entrepreneurial performance is stronger for enterprises with higher levels of competitive strategy than lower levels of competitive strategy. Hypothesis 4.1. Under higher level of industrial pressure, the negative relationship between proactive orientation and entrepreneurial performance is weaker for enterprises with higher levels of moderate strategy than lower levels of moderate strategy. Hypothesis 4.2. Under higher level of industrial pressure, the negative relationship between proactive orientation and entrepreneurial performance is stronger for enterprises with higher levels of competitive strategy than lower levels of competitive strategy. 3. Methodology 3.1. Sample and data We conducted a questionnaire survey. According to Li and Atuahene-Gima (2001), we defined new ventures as < 8 years old. Our questionnaire survey was conducted from March 2016 to June 2016. The data collection process was mainly divided into three stages. In the first stage, we sent out questionnaires to enterprises through e-mail and the internet platform. 120 questionnaires were received. In the second stage, we sent out 110 questionnaires to MBA and EMBA students who mainly are senior managers, general managers, and CEOs. We provided a live Q&A support when they filled in questionnaires. In the third stage, we interviewed top managers① of enterprises located in Dalian High Technology Industrial Park. Meantime, we also surveyed enterprises in other cities such as Shenyang, Panjin, Changchun, and Beijing in China. We collected 67 questionnaires in this stage. Finally, 297 responses were received. 62 questionnaires were eliminated because of invalid or low quality, including 41 invalid questionnaires which were retrieved from the internet platform. We finally received 235 useful questionnaires. We conducted a t-test for 62 invalid questionnaires and 235 valid questionnaires to test the non-response bias (Lambert and Harrington, 1989). All t-value are extraordinarily insignificant. Thus, the non-response bias is not serious. At the same time, Harman's single factor method was used to extract the first factor for testing common method biases. Specifically, the first factor explained 22.91% of the variance. Therefore, we found that there is no single factor to explain most of the variance. 235 responses satisfy the standard which the sample should at least 10 times of the variable numbers (21) (Bentler and Chou, 1987). Finally, we conducted t-test for firm size, setting up years, industry, business scale, and ownership among three groups. We found that there is no significant difference among three groups. 3.2. Variables Adapted from Covin and Slevin (1989), the proactive orientation scale includes (1) go first and force rivals to response; (2) take the lead in offering new product, service, management skills, and product technologies; (3) tend to take the strategic attitude to compete with rivals. The principal component analysis was conducted for the factor analysis. The factor eigenvalues needs to be > 1. We extracted one factor which explains 71.84% of the total variance. The KMO value of three items is 0.711. The approximate chi-square value in Bartlett spherical test is 222.873 (df is 3, p is 0.000). The Cronbach'α value is 0.803 which means good reliability. The subjective measurement index was used to measure 4

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performance under low industrial pressure. Specifically, first movers will acquire leading entrepreneurial performance compared to their rivals along with the moderate strategy implementation. These results supported Hypothesis 3.1 as shown in Fig. 2. (See Fig. 1.) The interaction of “proactive orientation × competitive strategy” has a positive effect on entrepreneurial performance because the correlation coefficient is 0.234 (p = 0.005). Therefore, the competitive strategy has a positive effect on the relationship between proactive orientation and entrepreneurial performance under low industrial pressure. Specifically, first movers will acquire leading entrepreneurial performance compared to their rivals along with the competitive strategy implementation. As shown in Fig. 3, Hypothesis 3.2 is supported. The effect of proactive orientation on entrepreneurial performance declines when we added interaction items (the beta value declined from 0.502 to 0.429). However, these results' significance is not changed. In high pressure groups, the relationship between proactive orientation and entrepreneurial performance is significantly negative in Model 5. Therefore, Hypothesis 2 is not supported. However, the relationship between proactive orientation and entrepreneurial performance is not significantly positive (beta = 0.119). It implied that the theoretical basis of Hypothesis 2 is not incorrect. Under high industrial pressure, first movers will not necessarily achieve the entrepreneurial performance. It is not a simple linear relationship between proactive orientation and entrepreneurial performance. We joined the independent variables and interactions with two moderating variables in Model 6. It is not a significant relationship between entrepreneurial performance and the interaction of “proactive orientation × moderate strategy”. The beta value of the regression coefficient is 0.001. Therefore, Hypothesis 4.1 is not supported. Under high industrial pressure, a moderate strategy will not help enterprises to achieve entrepreneurial performance. Meanwhile, it will not have a negative effect on entrepreneurial performance. In contrast, the relationship between entrepreneurial performance and the interaction of “proactive orientation × competitive strategy” is significantly negative. The beta value of the regression coefficient is − 0.264 (p = 0.028). Thus, the competitive strategy has a negative effect on the relationship between proactive orientation and entrepreneurial performance under high industrial pressure. First movers will lose the entrepreneurial performance compared to rivals along with the competitive strategy implementation. Consequently, there is no significant linear relationship between proactive orientation and entrepreneurial performance under high industrial pressure. The negative effect of proactive orientation on entrepreneurial performance is mainly achieved by the interaction of “proactive orientation × competitive strategy”. Therefore, Hypothesis 4.2 is partially supported. Fig. 4 indicated the negative moderating effect of competitive strategy on the relationship between proactive orientation and entrepreneurial performance under high industrial pressure.

industry, business scale, and ownership form will affect entrepreneurial behaviors under different stages and further affect the entrepreneurial strategic choice of the new enterprise. Therefore, we utilized the above five variables as control variables. 4. Empirical results The hierarchical multiple regression method was used for data analysis. In order to test our hypotheses, we gradually added the control variables, the independent variables, moderating variables, and the interaction composed of independent variable product items to the hierarchical regression models (Hierarchical Linear Modeling, HLM). We observed the standardized regression coefficients and its significance in each step. To avoid the multicollinearity problem of the moderating effect, we implemented a mean-centered processing to the latent variables according to the traditional practice. We also added the interaction items to the relevant regressions to minimize errors. 4.1. Correlation coefficient test We tested the variable correlations before the regression analysis. As indicated in Table 2, the correlation between each variable is less than the critical value of 0.7. Additionally, the Max 2 VIF is 2.153 which is far < 10. Thus, the multicollinearity problem is not serious. (See Table 1.) 4.2. Data analysis and results We divided our sample into two groups for the comparative analysis. According to the industrial pressure median (3.629), 105 high industrial pressure groups (hereinafter referred to as “high pressure groups”) and 130 low industrial pressure groups (hereinafter referred to as “low pressure groups”) were identified. The hierarchical regression results of proactive orientation, entrepreneurial strategy, and entrepreneurial performance were shown in Table 3. Model 1, Model 2, and Model 3 used low pressure groups. Model 4, Model 5, and Model 6 used high pressure groups. Model 1 and Model 4 are the regressions of control variables on the dependent variable. Model 2 and Model 5 are the regressions of control variables and the independent variable on the dependent variable. Model 3 and Model 6 are regressions of each variable on the dependent variable after interaction items join. Based on the F value in Table 3, results are significant in Model 1, Model 2, Model 3, Model 5, and Model 6. There is a significant positive correlation between proactive orientation and entrepreneurial performance in low pressure groups because the correlation coefficient is 0.502 (p = 0.000). Thus, Hypothesis 1 is supported. Independent variables and interactions with two moderating variables were added in Model 3. The interaction of “proactive orientation × moderate strategy” has a positive effect on entrepreneurial performance. The correlation coefficient is 0.206 (p = 0.012). Thus, the moderate strategy has a positive effect on the relationship between proactive orientation and entrepreneurial Table 1 Characteristics of survey sample. ES (people)

%

YE

%

Se

%

Se (continued)

%

BS (million)

%

Ow

%

1–50 50–100 100–300 300–500

17.9 23.4 17.4 20.0

1 year or less 1–3 years 3–5 years 5–8 years

11.5 40.4 31.1 17.0

3.0 4.7 21.6 6.8

Logistics Manufacturing Education and training Agriculture, forestry and livestock

6.0 21.7 3.0 3.8

1or less 1–3 3–5 5–10

34.0 19.6 15.3 8.5

Foreign investment Private Joint venture Stateowned

40.9 26.8 24.7 7.7

> 500

21.3

Finance Communication Software New materials Energy Real estate Consultation

2.6 6.8 10.2

Wholesale Other else

6.4 3.4

10–30 30–50 > 50

6.8 11.1 4.7

Note: Enterprise Size (ES), Year Established (YE), Sectors (Se), Business Size (BS), Ownership (Ow), Industrial Pressure (IP)·N = 235.

5

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Table 2 Descriptive statistics and correlation matrix.

ES YE Se BS Ow IP PO EP MS CS

Median

SD

ES

YE

Se

BS

Ow

IP

PO

EP

MS

CS

3.031 2.990 6.667 2.860 2.540 3.629 3.189 3.850 3.731 3.238

1.417 0.993 3.325 1.912 0.907 0.999 0.966 0.849 1.030 1.099

N/A 0.544⁎⁎ −0.375⁎⁎ 0.683⁎⁎ 0.292⁎⁎ 0.067 0.070 −0.038 −0.092 0.026

N/A − 0.194⁎⁎ 0.568⁎⁎ 0.539⁎⁎ − 0.059 − 0.129⁎ − 0.090 − 0.057 0.037

N/A − 0.295⁎⁎ − 0.067 − 0.096 − 0.102 − 0.039 − 0.015 − 0.094

N/A 0.306⁎⁎ 0.072 0.102 0.014 − 0.113 0.049

N/A − 0.126 − 0.129⁎ − 0.203⁎⁎ − 0.164⁎ 0.099

0.801 0.537⁎⁎ 0.186⁎⁎ 0.006 −0.165⁎

0.760 0.344⁎⁎ 0.276⁎⁎ − 0.109

0.773 0.120 −0.231⁎⁎

0.719 0.126

0.780

N/A indicates analysis not applicable; the diagonal line lists root square values of average. Proactive Orientation (PO), Entrepreneurial Performance (EP), Moderate Strategy (MS), Competitive Strategy (CS). ⁎ p < 0.05. ⁎⁎ p < 0.01.

5. Discussion

Third, this paper emphasized that studying the single dimension of entrepreneurial orientation is the key to reveal the nature of new ventures. We investigated the relationship between proactive orientation and entrepreneurial performance by introducing two key elements in terms of industrial pressure and entrepreneurial strategy. Furthermore, we provided clear answers to these questions of “when, how, whether first movers gain entrepreneurial performance” as useful supplements for the previous entrepreneurial orientation theory and the integration of entrepreneurship theory and strategic theory. This paper also made important practical implications. New ventures should correctly evaluate the objective factors of industrial pressure for being first movers. Meantime, first movers should take the initiative to create friendly factors of industrial pressure, rather than passively accept industrial pressure. Friendly factors include few early followers, high industry technology level, low potential growth rate of industries, and high density of capital. It will be conducive to acquire first-mover advantages by introducing revolutionary products with advanced technology and improving industry barriers continuously. Additionally, moderate strategy and competitive strategy can help enterprises to obtain entrepreneurial performance after first movers have first mover advantages in a short period of time. However, industrial pressure is increasing as rivals join. First movers should gradually pay attention to the moderate strategy implementation, including improving the level of product differentiation, strengthening the construction of brand, and carrying the vertical integration. Moreover, first movers cannot take competitive strategy as their main strategy because competitive strategy is not suitable for them.

5.1. Theoretical contribution and managerial implications We mainly made three theoretical contributions. First, this paper proposed a new research paradigm to examine the relationship between entrepreneurial orientation and entrepreneurial performance. Tested under different industrial pressures among different groups, the relationship between proactive orientation and entrepreneurial performance is positive under low industrial pressure. However, there is no significant linear relationship between proactive orientation and entrepreneurial performance under high industrial pressure. Since the entrepreneurial orientation theory needs further revision and improvement, introducing industrial pressure once again confirms the importance of the contingency theory. The relationship between entrepreneurial orientation and entrepreneurial performance will change according to different situations. Second, we systematically explored the moderating effect of entrepreneurial strategy on the relationship between proactive orientation and entrepreneurial performance by integrating theories of entrepreneurship and strategy. On the one hand, this study improved the dimension framework of entrepreneurial strategy and contributed to the integration of entrepreneurial theory and strategic theory. On the other hand, this study also provided several strategic guidelines to new enterprises. Especially, entrepreneurial strategy is critical to new ventures which have the short growth cycle, unstable resource structure, and high decision-making risk. Table 3 Logistics regression analysis. Lower industrial pressure Model (Constant) ES YE Se BS Ow PO MS CS PO × MS PO × CS Adjusted R square R square change F change

Higher industrial pressure

Model 1 0.769⁎⁎ 0.031 − 0.026 − 0.054 0.142 − 0.376⁎⁎⁎

Model 2 0.494 0.018 0.080 0.006 0.073 −0.298⁎⁎ 0.502⁎⁎⁎ 0.124 −0.104

0.097 0.132 3.784⁎⁎

0.368 0.275 18.715⁎⁎⁎

Model 3 0.439 0.046 0.075 0.029 −0.034 −0.245⁎⁎ 0.429⁎⁎⁎ 0.256⁎⁎ −0.027 0.206⁎⁎ 0.234⁎⁎ 0.454 0.089 10.566⁎⁎⁎

⁎

p < 0.1. p < 0.05. ⁎⁎⁎ p < 0.001. ⁎⁎

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Model 4 0.487 −0.173 0.048 −0.043 0.052 −0.044

Model 5 0.363 − 0.186 0.062 − 0.084 0.040 − 0.003 0.119 − 0.053 − 0.275⁎⁎

−0.032 0.018 0.354

0.021 0.079 2.802⁎⁎

Model 6 0.516 − 0.194 0.089 − 0.106 0.034 − 0.048 0.090 − 0.082 − 0.138 0.001 − 0.264⁎⁎ 0.053 0.048 2.625⁎

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Fig. 1. The research model.

Entrepreneurial Stategy Competitive Strategy

Moderate Strategy

Entrepreneurial Entrepreneurial Performance f rmance Perfo

Proactive Proactive Orientation Orientation

The Level of Industrial Pressure (Low

High)

Fig. 2. The positive moderating effect of moderate strategy. (Lower industrial pressure)

2

Lower level of industrial pressure

Entrepreneurial Performance

1.5 1 0.5 0

Lower moderate strategy

Low

High

Higher moderate strategy

-0.5 -1 -1.5 -2

Entrepreneurial Performance

Proactive Orientation Fig. 3. The positive moderating effect of competitive strategy. (Lower industrial pressure).

Lower level of industrial pressure

2

1 Lower competitive strategy

0

Low

High

Higher competitive strategy

-1

-2

Proactive Orientation proactive orientation and entrepreneurial performance under high level of the industrial pressure. However, cannot first movers really obtain entrepreneurial performance? This is not true. We didn't shed lights on moderating factors between proactive orientation and entrepreneurial performance. Thus, it could be one future research. In fact, no matter what industrial pressure is, the first mover will be a monopoly for a short period of time. The point is whether the first mover can quickly build a complex network during this period (Kreiser, 2011). Therefore, the network capacity may become one of the key moderating variables. Finally, we measured entrepreneurial strategy using the competition level of new ventures. However, the entrepreneurial strategy variable's measurement is not consistent. Therefore, we may further study the

5.2. Limitation and future studies This paper has several research limitations as future studies. First, we carried out the grouping test and used the median of industrial pressure to divide the sample into two groups (130 low industrial pressure and 105 high industrial pressure). Although the grouping test can be specified to show that there is not a simple linear relationship between proactive orientation and entrepreneurial performance, it may cause the number of samples within each group relatively small. Therefore, further research needs to increase the sample size and uses plus or minus one of standard deviation as the grouping method. In addition, there is no significant linear relationship between 7

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Fig. 4. The negative moderating effect of competitive strategy. (Higher industrial pressure).

1.5

Higher level of industrial pressure

Entrepreneurial Performance

1 0.5 0

-0.5

Lower competitive strategy

Low

High Higher competitive strategy

-1

-1.5 -2 -2.5

Proactive Orientation entrepreneurial strategy's measurement items and expand its connotation and denotation.

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Yang Gao is the Doctor in School of Business at the Dalian University of Technology in China. He has researched in the field of strategy management and entrepreneurship for 8 years. He has presided over multiple projects at the national level of China. As a research author, he has published many academic papers. He is also the reviewers of several international journals.

Baoshan Ge is a senior professor in School of Management at the Jilin University in China. He has researched in the field of strategy management and entrepreneurship for > 30 years. He is continuously trying to find an effective method to integrate the entrepreneurship education and entrepreneurial practice. He is the author of over 10 books and 100 scholarly papers such as “ETP”. He has presided > 20 national projects at the level of China. He is also the reviewers of many international journals.

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Y. Gao et al. Xiangxiang Lang is the Doctor in School of Business at the Dalian University of Technology in China. She has researched in the field of international combines and enterprise financial management for 6 years. As a research author, she has published many academic papers. She is also the reviewers of several international journals.

Xiaobo Xu has taught fundamentals of MIS, systems analysis and design, and operations management at the University of Mississippi and AUS. Prior to his PhD program, he worked for two years as project manager and department manager in the first listed company in China. He currently conducts research in the areas of IS project success, virtual teams and virtual worlds, e-commerce adoption and success, supply chain management, and social networks. His research papers have been published in refereed journals such as PMJ, DATABASE, IT&M, IJITDM and EIS among others.

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