Entrepreneurial Orientation and Environmental Hostility: A Threat Rigidity Perspective
Abstract
We posit that environmental hostility exhibits an inverse U-shaped relationship with a firm’s entrepreneurial orientation. We suggest a nuanced perspective on the threat rigidity argument that firms generally retrench from entrepreneurial capital allocation behaviors as hostility increases. We argue that firms are likely to act opportunistically and increase EO, but only to the point where the marginal costs of such activity outweigh the marginal benefits, at which point EO drops precipitously. Analyzing 60,440 observations from 6,481 firms across 373 industries from 1998 through 2017, our results indicate that EO exhibits a generally negative relationship with environmental hostility. Further, we examine a potential moderating influence of recoverable slack on the hostility–EO relationship, arguing that recoverable slack represents a meaningful buffer on behavioral change stemming from changing environmental hostility.
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Biographies
Patrick M. Kreiser is the Rile Endowed Chair in Entrepreneurship and Leadership at the College of Business, University of Wyoming, Laramie, Wyoming.
Brian S. Anderson is an Associate Professor of Entrepreneurship at the Henry W Bloch School of Management, University of Missouri, Kansas City.
Donald F. Kuratko is the Jack M. Gill Distinguished Chair of Entrepreneurship & Professor of Entrepreneurship at the Kelley School of Business, Indiana University, Bloomington, Indiana.
Louis D. Marino is the Frank Mason C&BA Faculty Fellow in Family Business and Professor of Entrepreneurship and Strategic Management at the Culverhouse College of Commerce, University of Alabama, Tuscaloosa, AL.
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Article first published online: December 11, 2019
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