Abstract

Entrepreneurial orientation (EO), reflecting the strategic orientation with regard to innovation, proactiveness, and risk-taking, continues to be an important and timely topic (e.g. Rauch et al., 2009; Rosenbusch et al., 2011). An EO-driven strategy involves enduring innovation-related efforts and resource allocations, which need to be committed organization-wide, that is, communicated to its members and sanctioned in order to promote desired behavior (Russell & Russell, 1992).

The question whether or not an EO-driven strategy should be explicitly formulated in the organization remains vastly unexplored. Some scholars argue that, in principle, strategy should be explicit in order to facilitate its implementation, enhance organizational consistency and unity of direction. Love, Priem, & Lumpkin (2002) argue for instance, based on their empirical findings, that in more decentralized firms, explicit strategy may improve performance. However, this would contrast with arguments postulating that in entrepreneurially oriented companies, which oftentimes are decentralized (Miller, 1983), explicit strategy leads to organizational inertia, creates rigidity and inflexibility (Mintzberg, 1990). We suggest that it might depend on the contingencies of strategy explicitness and environmental hostility. Building on entrepreneurship and strategic management literatures, we develop a contingency framework, which can explain both positive and negative effects of explicit strategy under different contingencies.

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