The moderating effect of environmental scanning on the relationship between entrepreneurial orientation and firm performance : a study with Hong Kong travel agencies

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The moderating effect of environmental scanning on the relationship between entrepreneurial orientation and firm performance : a study with Hong Kong travel agencies

 

Author: Chiang, Hok Lai
Title: The moderating effect of environmental scanning on the relationship between entrepreneurial orientation and firm performance : a study with Hong Kong travel agencies
Degree: DHTM
Year: 2013
Subject: Travel agents -- China -- Hong Kong.
Entrepreneurship.
Hong Kong Polytechnic University -- Dissertations
Department: School of Hotel and Tourism Management
Pages: xiv, 180 p. : ill. ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2673129
URI: http://theses.lib.polyu.edu.hk/handle/200/7334
Abstract: In this increasingly globalized and uncertain market, firms are facing tremendous competitive pressures never like before. To develop a competitive advantage, firms may adopt an entrepreneurial strategic posture whereby new business opportunities are explored and exploited through innovations. Given the impact of environmental conditions on strategy formation, firms which engage in frequent environmental scanning may obtain more strategically valuable external information which should help enhance the effectiveness of an entrepreneurial posture. Therefore, it is of theoretical and practical importance to assess the synergistic effect of entrepreneurial orientation (EO) and environmental scanning (ES) on firm performance (FP), and suggest how this synergistic effect may be influenced by certain scanning characteristics, such as scanning emphasis and information source. The objectives of this paper are two-fold. First, it aims to develop a theoretical model which describes the moderating effect of ES on the EO-FP relationship in consideration of scanning emphasis and information source, based on the EO models established by Covin and Slevin (1991) and Lumpkin and Dess (1996). Second, it aims to empirically test this newly developed theoretical model. The paper poses three specific research questions: (1) Do firms gain additional performance benefits by simultaneously being more entrepreneurial and scanning their total environment more frequently? (2) Are the levels of such additional performance benefits affected by the environmental-sector scanning emphases placed by firms? (3) Are the levels of such additional performance benefits affected by the information sources utilized by firms?
A cross-sectional questionnaire-based study was conducted with Hong Kong travel agencies. The research questionnaire was intended to be completed by a senior executive of a firm who was responsible for strategic decision making, and was mailed to the total population of 1,631 licensed travel agencies in Hong Kong. Eventually, 187 adequately completed questionnaires were received on which statistical analyses were based. Data analysis was conducted in two phases. In the first phase, an exploratory factor analysis was used to examine the distinctions between different dimensions of EO. Autonomy, risk taking, and competitive aggressiveness emerged as three separate factors while innovativeness and proactiveness as one single factor. However, autonomy was found to be uncorrelated or negatively correlated with other EO factors and FP measures. Therefore, given its questionable validity in the Asian context, autonomy was excluded from subsequent statistical analyses. In the second phase, the moderating effect of ES on the EO-FP relationship was investigated in various contexts formed by different combinations of EO factors, ES components, and FP measures, using the technique of moderated hierarchical regression analysis. In line with the general proposition of the paper, the findings suggested that ES moderated the EO-FP relationship positively under certain circumstances. Specifically, Hong Kong travel agencies which scanned the general environment more frequently were found to enjoy greater performance benefits by simultaneously being more entrepreneurial in general or more risk-taking. Also, Hong Kong travel agencies which scanned the total environment with internal information sources more frequently tended to enjoy greater performance benefits by simultaneously being more entrepreneurial in general, or more risk-taking, or more competitively aggressive. Unfortunately, the moderating effect of ES could not be identified in other circumstances. Nevertheless, the paper should have filled a knowledge gap and generated findings with significant implications for business practitioners.

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