Explicit strategy articulation and entrepreneurial orientation in dynamic and hostile environments

Abstract

The resource-based view sees entrepreneurial orientation (EO) as channeling strategic resources that are valuable, rare, and difficult to imitate or substitute to achieve superior firm performance. However, scholars argue that, on its own, EO struggles to sustain performance amid today’s hostile and dynamic environments. Turning to the attention-based view, which emphasizes the focus and structuring of attention in a demanding environment, we argue that explicit strategy (ES) positively moderates the effect of EO on firm performance, contingent on the environment (ENV). Testing our theoretical framework on 167 large companies in the Netherlands, we find that a high level of ES positively regulates the focus of EO on certain opportunities, stimuli, and decisions, improving firm performance in highly dynamic and hostile environmental contexts. Less regulation due to lower ES nullifies the effectiveness of EO for large firms in both environmental contexts.