Relationship between Entrepreneurial Orientation and Business Performance : A Review of Literature

The purpose of this paper is to provide a review of literature on developments in entrepreneurship theory and emergence of Entrepreneurial Orientation (EO) construct. It also explores and presents the literature on the relationship between entrepreneurial orientation and business performance. Three models — the construct model, the EO-Strategy model and the performance model — were identified as the lines of research on EO. The paper reviews a range of publications describing the methodology, findings and alternative approaches to study the performance model. It suggests that a strong entrepreneurial orientation results in high business performance. EO is a multidimensional construct operationalized in terms of variables ‘innovativeness’, ‘risk-taking’, ‘proactiveness’, ‘autonomy’ and ‘competitive aggressiveness’. A combination of subjective and objective measures of performance should be used for accurate measurement of performance. Various organizational and environmental elements should be introduced as moderating and mediating variables while studying the relationship of EO with performance