The role of entrepreneurial orientation on firm performance and the potential influence of relational dynamism

This study examines the usefulness of Lumpkin and Dess' (1996) Entrepreneurial Orientation (EO) construct in measuring performance. A review of four previous exploratory research projects covering different industries in Australia found that the importance of EO dimensions and their relationship with business performance varied between industries. There was a positive correlation between business performance and the dimensions of innovation and proactiveness in all studies. However, the dimensions competitive aggression, risk taking and autonomy varied in importance and over time. The variation in results was partly attributed to the researchers using different definitions for each EO dimension. There was also some contextual bias in dealing with entrepreneurial terms that appeared industry based. All projects identified some limitations in using the EO construct to explain business performance and highlighted issues outside the current dimensions. This review identified that the incidental factors found influencing performance could be categorised as relational in nature and were defined under a construct titled "Relational Dynamism". It is argued that this construct is the conduit between EO and the firm's internal and external environments, assisting in identifying and exploiting opportunities that can improve performance.