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Article
The Complementary Effect of Market Orientation and Entrepreneurial Orientation on Innovation Success and Profitability
Journal of Small Business Management
  • William Baker, The University of Akron
  • James M. Sinkula
Document Type
Article
Publication Date
10-1-2006
Disciplines
Abstract
Market orientation (MO) and entrepreneurial orientation (EO) are correlated, but distinct constructs. MO reflects the degree to which firms' strategic market planning is driven by customer and competitor intelligence. Entrepreneurial orientation reflects the degree to which firms' growth objectives are driven by the identification and exploitation of untapped market opportunities. When modeled separately, research has reported direct effects of both constructs on firm profitability. When modeled simultaneously, however, the direct effect of EO has disappeared. This has led some scholars to postulate that EO is an antecedent of MO. The results of this study contradict this presumption and suggest that EO and MO complement one another, at least in small businesses, to boost profitability. The major difference between this and previous studies is the inclusion of innovation success, which captures an indirect effect of EO on profitability. At least in small firms, the results suggest that EO complements MO by instilling an opportunistic culture that impacts the quality and quantity of firms' innovations.
Citation Information
William Baker and James M. Sinkula. "The Complementary Effect of Market Orientation and Entrepreneurial Orientation on Innovation Success and Profitability" Journal of Small Business Management Vol. 47 Iss. 4 (2006) p. 443 - 464
Available at: http://works.bepress.com/william_baker/68/