The Mediating Roles Of Hrm And Social Climates Between Entrepreneurial Orientation And Firm Performance: Examining Initiating And Imitative Firms
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Entrepreneurial Orientation (EO) is a multi-dimensional construct that focuses on processes that lead a firm to new entry. It has been linked to firm performance, but research has consistently sought to better understand the relationship between EO and performance. In this dissertation, I explore additional constructs that may be mediating the EO-firm performance relationship. More specifically, it is suggested that a firm's Human Resource Management (HRM) climate and social climate mediate this relationship. In addition, I incorporate EO-initiating firms (firms that seek out Schumpeterian opportunities) and EO-imitative firms (firms that seek out Kirznerian opportunities) into the analyses. Including these two types of firms into the EO-performance framework has further helped bring more clarity to its impacts on performance. While this study focused on the mediating relationships between both climates for EO-imitative firms and EO-initiating firms, and resulting performance implications, this dissertation also compares how each type of firm impacts other aspects within the model differently. Following an introduction and literature review, 16 hypotheses were developed. The hypotheses were tested using a sample of 499 firms. Computer Aided Text Analysis (CATA) was used to analyze 10-K reports from the sample firms. More specifically, PROCESS Macro (Model 6) was used to assess whether the 16 hypotheses were supported through Path Analysis. Support was found for 13 of the 16 hypotheses; three hypotheses were not supported. Overall, HRM climate and social climate were found to be mediators for both initiating and imitative firms in their pursuit of higher firm performance. While the majority of the results show a positive relationship, social climate resulted in a negative relationship with firm performance. Further, when comparing the impact of EO on HRM climate and social climate, results showed that EO-imitative firms had more of an impact on HRM climate and EO-initiating firms had more of an impact on social climate, as theorized and hypothesized. However, while it was suggested that HRM climate would have more of an impact on firm performance for EO-imitative firms, the opposite was the case. The potential reasoning for all relationships is discussed. The need for a clearer understanding of the EO-firm performance relationship is in high demand, but research has continued to find varying results. Separating EO into two focuses – EO-imitative and EO-initiating – allows for more refined analysis since firms will generally focus on either competing within a market or creating a new market at any given time. Further, within every firm exists both a firm's formal and informal environment. As HRM climate relates to the firm's formal environment and social climate relates to the firm's informal environment, this must be accounted for in looking closely at what is affecting the relationship for EO-imitative and EO-initiating firms and their resulting firm performance. Firms are better able to assess not only their specific focus (EO-imitative or EO-initiating), but also how both climates mediate that relationship differently. Since there was an unexpected inverse relationship between social climate and firm performance for both types of firms, future research should look more closely at the dimensions and how they affect performance separately. Given that CATA analysis is a conservative study, future research should look at other options, such as surveys. This study focused on 10-K reports from companies identified on the R1000 index. Future should not only look at other indexes, but also compare the results with the results of this study. Even with these limitations, this study adds to the entrepreneurship literature by advancing our understanding of the EO-firm performance relationship.