Abstract

Given the dire current economic conditions, what enables certain firms to effectively navigate through powerful economic headwinds and remain successful? Is a high entrepreneurial orientation of the firm enough to overcome economic challenges or are successful firms led by self efficacious leaders who “will” their respective organizations through times of great environmental hostility? In this paper we argue that orientation (EO) and entrepreneurial self-efficacy (ESE) are both important contributors to performance. Indeed, we demonstrate that an entrepreneur’s level of self-efficacy is important, but insufficient, by itself, to overcome the challenges of an economic recession. Rather, we predict and show that ESE serves as a mediator which changes the EO-performance relationship. We theorize that although entrepreneurs are important, it is not their level of self efficacy that helps firms to respond to environmental hostility. Rather, it is the ability of self-efficacious entrepreneurs to channel the entrepreneurial orientation of their firms that allows their organizations to perform in the face of environmental turbulence.

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