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The relationship between entrepreneurial orientation and firm performance in China.

Analyzing relationships in China can be tricky because it is a transitional economy and has a mixture of state-owned and non-state-owned firms. Nevertheless, the broad-based study here (over 3,500 firms) sheds light on factors influencing entrepreneurial orientation and how entrepreneurial characteristics may affect profitability. All but one of the hypotheses were supported by the study. As would be expected, an entrepreneurial orientation does affect performance; a more highly educated workforce enhances entrepreneurial behavior and performance; non-state-owned firms are more entrepreneurial than state-owned, and this orientation is more apt to affect performance; but the business environment does not weaken the relationship between entrepreneurial orientation and performance.

Introduction

The contribution of entrepreneurship to national growth has been documented in the literature (Carree and Thurik, 2003; Reynolds, et al., 1999). The Global Entrepreneurship Monitor (GEM) provides empirical data investigating the impact of entrepreneurial firms on the level of economic growth in 37 countries (Reynolds et al., 1999). One of the important measures in the GEM study is the total entrepreneurial activity (TEA) score, which is measured by the proportion of working-age adults in the population who are either involved in the process of starting a business or are active as owner-managers of enterprises less than 42 months old. According to GEM, the total entrepreneurial activity (TEA) score is much higher in emergent economies. These transitional economies seek to loosen restrictions on the private sector, resulting in an initial wave of entrepreneurship.

Entrepreneurs seek to identify new opportunities, respond to environmental changes, and take appropriate actions to achieve performance. Most often, entrepreneurship is interpreted as business ownership or self-employment. Carree et al. (2002) posit that business ownership is not synonymous with entrepreneurship, but the trend of business ownership level is a fair reflection of the development in entrepreneurship level. Adopting the definition of Covin and Miles (1999), entrepreneurs are individuals who champion product ideas within a corporate context, whereas firm-level entrepreneurship is defined as entrepreneurial philosophy that permeates an entire organization's outlook and operations. In other words, corporate entrepreneurship refers to the firm's actions per se. Finn-level entrepreneurial behaviors include product or process innovation, the risk-taking propensity of the firm's key decision-makers, and evidence of proactiveness (Miller, 1983). This level of analysis is also known as entrepreneurial posture (Covin and Slevin, 1991) and entrepreneurial orientation (Lumpkin and Dess, 1996). Entrepreneurial orientation refers to the processes, practices, and decision-making activities that lead to new entry (Lumpkin and Dess, 1996). Essentially, it refers to a firm's strategic orientation, capturing the specific entrepreneurial aspect of decision-making styles, methods, and practices.

Given the growing importance of entrepreneurial firms in transitional economies like China, in particular, a more in-depth analysis will provide a better understanding of their entrepreneurial activities. China's entrepreneurs were able to make a comeback after the chaos of Mao's rule because of recognition and encouragement by Deng Xiaping. Private entrepreneurship flourished starting in the 1980s. Entrepreneurial spirit sprang up and contributed to the subsequent high economic growth (Malik, 1997). Entrepreneurs have stimulated economic performance by introducing innovations, creating change, and stimulating competition. They seek opportunity to create both private wealth and social benefit by adopting new production techniques, reallocating resources to new opportunities, diversifying output, and penetrating new markets (Venkataraman, 1997). Entrepreneurship and new firm formation are the driving forces in stimulating economic growth and employment. The private sector took up growth and employment and at the same time, reducing some of the burden of mass layoffs from state-owned enterprises (Peng, 2001).

The new generation of entrepreneurs is more dynamic and innovative. They are important components of economic systems and contribute to their adaptability, dynamism, and ability to create wealth and prosperity (Peng, 2001). Facing competition from the private (non-state) sector, state-enterprises are encouraged to set up profit-seeking and risk-taking businesses. To survive, state-run enterprises are beginning to operate on a profit-oriented basis, like individually owned firms. With China joining the World Trade Organization (WTO), it is necessary to reform state-owned firms to more autonomous and dynamic in responding to market competition. On the other hand, entrepreneurial firms are expected to expand rapidly.

Despite the growing importance of entrepreneurial activities in China's economy, large-scale investigations on this topic are scarce. It would be interesting to find out the changes in institutional environment and their impact on entrepreneurial activities. Most existing research on entrepreneurship in China uses case-oriented or small-sample qualitative studies (Ahlstrom and Bruton, 2002). The present study fills the gap by examining the relationship between entrepreneurial orientation and firm performance from a national survey of organizations in a variety of industries from 31 regions throughout China. China was chosen as an appropriate research setting for its high economic growth and increasingly important entrepreneurial activities. Existing literature consistently shows a positive influence of entrepreneurial activities on firm performance. However, the environment may influence the entrepreneurial orientation-performance relationship. Therefore, this study investigates the possible moderating effect of environmental variables on such relationship. The results of this study will contribute to a better understanding of research in entrepreneurship in a transitional economy.

The following section is a review of relevant studies on entrepreneurial orientation and factors that affect the relationship between entrepreneurial orientation and firm performance. The institutional environment and its impact on entrepreneurial activities will also be elaborated, followed by results from the data analysis. The paper concludes with a discussion on the implications of the findings for theory, research, and practices.

Theory and Hypotheses

* Relevant studies on entrepreneurial orientation and firm performance

The conceptual framework highlights factors that may influence a firm's entrepreneurial orientation performance (Figure 1). Based on a thorough review of the broadly defined corporate entrepreneurial literature, Lumpkin and Dess (1996) identified five dimensions of entrepreneurial orientation: autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness. Even though risk taking, responding in competitively aggressive and proactive manners, or frequent and extensive product or technology innovation capture the level of entrepreneurship, it is not necessary for all five dimensions to be present in an entrepreneurial firm. However, all these factors are critical to the understanding of the entrepreneurial process, as they may occur in different combinations, depending on the type of entrepreneurial opportunity a firm pursues.

[FIGURE 1 OMITTED]

Synthesized from various studies, innovation seems to be a common factor among all firms that could reasonably be described as entrepreneurial (Venkataraman, 1997). Innovation is the core of entrepreneurship and takes many forms, such as the introduction of a new product, process, technology, system, and technique (Covin and Miles, 1999). The capacity to innovate has the greatest impact on business performance and offers a source of competitive advantage. The capacity to introduce new process, product, and ideas is not exclusive to start-up firms. In fact, a large proportion of research and development (R&D) resources is provided by established firms to create breakthrough inventions by using new and pioneering technologies (Ahuja and Lampert, 2001). Therefore, studying entrepreneurial behavior in large corporations is warranted.

Risk-taking behavior dominates the entrepreneurial literature. It represents a firm's propensity to take calculated business-related chances with regard to strategic actions in the face of uncertainty. Entrepreneurial firms are characterized by boldness and tolerance for risk that leads to new opportunities. Proactiveness is the propensity to take initiatives to compete aggressively so as to outperform industry rivals. It suggests a forward--looking, opportunity-seeking perspective. Proactive tendency gives a firm the ability to anticipate changes or needs in the market and be among the first to act on them, and such first-mover advantage translates into superior performance (Lumpkin and Dess, 2001).

A study by Lumpkin and Dess (1996) claimed that entrepreneurial orientation was a multidimensional measure, and each sub-dimension had a different impact with key outcome variables (Kreiser, Marino, and Weaver, 2002). In assessing the entrepreneurial orientation scale, Kreiser, Marino, and Weaver (2002) assert that the sub-dimensions of entrepreneurial orientation may vary independently, but aggregated measures of entrepreneurial orientation may still be useful when a differential relationship is not expected. On the other hand, a combination of the sub-dimensions of entrepreneurial orientation may provide a more precise explanation of the entrepreneurial orientation-performance relationship (Lumpkin and Dess, 1996).

The increasing interest in the study of entrepreneurship reflects the belief that such activity leads to improved firm performance. Past research efforts have attempted to explain firm performance by investigating a firm's entrepreneurial orientation. Research studies consistently showed support for a positive relationship between entrepreneurial orientation and firm performance and sales growth (Zahra, 1991; Zahra and Covin, 1995). Covin and Slevin (1989) reported a positive relationship between entrepreneurial posture (defined as top management risk taking, product innovation, and aggressive or proactive competitive stance) and multivariate index of firm performance. Additional empirical results provided evidence of a strong relationship between entrepreneurial orientation and profitability and revenue generated by the firm (Smart and Conant, 1994; Zahra, 1993), and such relationships increased over time (Wiklund, 1999). Thus,

Hypothesis 1: Entrepreneurial orientation is positively associated with firm performance.

Knowledge, or the perception of opportunity, and entrepreneurial intention (propensity) are important underpinnings of entrepreneurial capability. From the resource-based view, human capital is rare and valuable, not easily imitated or replaced, so human capital is the most important resource for gaining competitive advantage and consequently greater financial return (Barney, 1991). Education and training play a vital role in fostering an entrepreneurial spirit, particularly in knowledge-based and high-technology firms. Entrepreneurs with new ideas or knowledge intend to commercialize the value of their knowledge. Professionals with prestigious occupational and educational backgrounds would bring in more intellectual ability, knowledge, and social contacts that allow them to make strategic choices leading to performance (Becker, 1993; Hitt, Bierman, Shimizu and Kochhar, 2001). A firm's ability to engage in entrepreneurial activities depends on its human capital and competences, so human capital is central for explaining firm performance. Hence,

Hypothesis 2: Human capital in terms of education will enhance entrepreneurial orientation and firm performance.

* Institutional environment and its impact on entrepreneurial activities

Institutional theory views organizations as social entities that seek approval for their performance in socially constructed environments (Scott, 1995). The institutional environment creates constraints on firms and guides their action. Organizations not only conform to institutionalized rules but also proactively shape their environment (Ahlstrom and Bruton, 2002). In response to institutional pressure, firms adopt appropriate strategies to gain legitimacy and acceptance for survival (Powell and DiMaggio, 1991). Embedded institutionalized elements greatly influence the policies and strategies that lead to performance.

The general environment in transitional economies, characterized by policy instability and regulatory chaos, is not conducive to capital investment (Tan, 2002). Nevertheless, environmental turbulence seems to be a major driver for entrepreneurial activity in transitional economies (Smallbone and Welter, 2001). Institutional elements such as laws, regulations, and government policies in China reflect historical, political, and socio-economic conditions. In the Chinese context, the entrepreneurial sector has developed rapidly as a result of the transition from a centrally planned to a market-based economy. Such environmental changes can have a strong impact on the formation and incidence of entrepreneurial activities (McGrath, MacMillian, Yang and Tsai, 1992).

Government policies facilitate or hinder entrepreneurship. On one hand, entrance barriers, red tape, and tax burdens can hamper entrepreneurs. On the other hand, the government can foster entrepreneurship by removing regulatory barriers, increasing venture capital supply, reforming bankruptcy provisions, and strengthening stock markets. It is important to know how entrepreneurial firms navigate the institutional environment of a transitional economy. Because the legal environment in transition economies is less developed, protection of property rights, patents, and other inventions is insufficient. Nevertheless, the Chinese business environment is changing rapidly and showing signs of improvement. Now, entrepreneurs are officially accepted and included in the constitution, and their personal assets have legal protection. The status of entrepreneurs is improved and they can be admitted into the Communist Party. These changes encourage entrepreneurship. Getting rich is allowed and glorified. The political climate is increasingly supportive. Entrepreneurship and the risk-taking spirit are valued. Having successful, visible models is critical for nurturing and encouraging individuals to become entrepreneurs. Since state-owned firms face a more constrained institutional environment than non-state owned firms, it is hypothesized that

Hypothesis 3a: Non-state-owned firms tend to have a higher level of entrepreneurial orientation than state-owned firms.

Hypothesis 3b: Entrepreneurial orientation will have a more significant impact on performance for non-state-owned firms than state-owned firms.

* The moderating effect of environment

The external environment has long been investigated as the contingency variable in organization studies. Certain environmental characteristics, such as a dynamic environment, may elicit and encourage entrepreneurial behavior. Lumpkin and Dess (2001) explored the independent effect of entrepreneurial orientation sub-dimension factors on performance and their contingent relationship with the external environment. These factors vary independently, depending on the environmental and organizational context. Their effects may be contingent on external influences, such as their industry or their business environment, or on internal influences, such as organizational structure and characteristics of the founder or top management. Therefore, environmental factors have a strong influence on the effectiveness of entrepreneurial activity and affect the relationship between entrepreneurial orientation and performance (Dess, Lumpkin, and Covin, 1997).

Numerous researchers have investigated the relationship between the environment and entrepreneurial activities. Environmental uncertainty was positively associated with strategic product innovation (Miller, Droge, and Toulous, 1988). Environmental dynamism and heterogeneity were positively related to a firm's entrepreneurial posture and innovation (Miller and Friesen 1982). Environmental heterogeneity, dynamism, and hostility were significantly and positively related to pioneering, innovation, and risk taking (Miller, 1983). In a competitive, hostile environment, firms using an entrepreneurial posture were more likely to achieve superior performance (Covin and Slevin, 1989). Becherer and Maurer (1997), and Zahra and Covin (1995) found that environmental hostility moderated the corporate entrepreneurship-performance relationship, i.e., the more dynamic, hostile, and complex the environment, the higher the level of innovation, risk taking, and proactiveness among successful entrepreneurial firms. Entrepreneurial orientation was positively associated with increases in environmental hostility (Zahra, 1993). A volatile or hostile environment is effective in promoting corporate entrepreneurship. All these studies suggest that corporate entrepreneurship influenced firm performance depending upon the external environmental context. Zahra (1993) provided evidence that environmental hostility has a moderating effect on the association between entrepreneurial orientation and financial performance. However, Becherer and Maurer (1997) found no evidence at all. This lack of consensus and the moderating influence of environmental variables need more investigation, particularly in the context of a transitional economy. Therefore, it is hypothesized that the relationship between entrepreneurial orientation and performance is likely to be moderated by the conditions faced by the organization.

Hypothesis 4: The business environment will moderate the relationship between entrepreneurial orientation and firm performance.

Methods

* Data and sample

The data used to test the hypotheses were obtained from the China Entrepreneur Survey System 1999-2000. The profile of the respondents and their firms' characteristics are given in Table 1. The sample consisted of 3,562 enterprises located in 31 cities throughout China, in which 52.3% of the enterprises were from the east coast, 25.6% were from the central region, and 22.1% were from the western part. Of these, 45.7% were state-owned. The sample was heterogeneous in terms of firm size, industry, and ownership. The responding firms, on the average, had 2,335 employees, of which about 34.8% were university graduates. These firms have been in operation for 24 years on average. The average profit to sales revenue was 5.75%, and the debt/equity ratio was 51.75% in mid-1999.

One respondent from each participating firm completed the survey questionnaire. The respondents of the present study held the following positions: managing directors (1,518), general managers (2,144), plant managers (935), and communist party secretaries (89). Some of them had overlapping titles. The respondents were predominantly male (96.7%), which reflects the reality of the business environment in China. The average age was 47.8, with 27.6 years of work experience. A majority of them reached junior college (40%) or obtained a college degree (34.8%).

* Measures

The variables in the present study include ownership, firm size, firm age, industry, and entrepreneurial orientation. In terms of ownership type, the state-owned enterprises were coded 1, and all others were 0. Size was measured by the number of employees. There were two industry classifications: manufacturing and nonmanufacturing (dummy coded as 1 and 0). Since length of operation is an important indicator of the firm's embeddedness in its institutional environment, the firm's age was measured by the number of years since it started operations. Human capital was measured by the percentage of employees with college education.

The degree of entrepreneurial orientation could be referred to as the extent to which firms innovate, take risks, and are proactively. Entrepreneurial orientation was measured by six items that tap into attitudes toward innovativeness, risk-taking propensity, and proactiveness using a 7-point Likert scale (Alpha=.78; mean=3.58). The present study utilized the aggregated measures of entrepreneurial orientation, with a higher score meaning a higher level of entrepreneurial orientation.

The business environment was measured with six items that had three response categories, i.e., favorable ("1"), neutral ("2"), and unfavorable ("3"). Examples include current and near future business prospects, availability of financial resources, and projected sales revenue. (Alpha=.80, mean=2.12). A higher score indicates a less favorable business environment.

* Dependant variables

Financial data in emerging economies are characterized by insufficiency and inaccuracy due to various institutional voids (Khanna and Rivkin, 2001). The use of objective financial figures turned out to be not directly comparable in a study covering a wide variety of different types of organizations in different industries and in different regions. In the absence of objective data, self-reported measures become the acceptable substitute. Firm performance in the present study was measured by self-reported sales profit (%). In addition, an overall evaluation of firm performance was gauged by three categories: profitability, balance, and deficit. The correlation between these two measures was. 19 (p<.001).

Organizational factors such as firm size, length of operations (firm age), industry type, and ownership structure may affect the relationship between entrepreneurial orientation and firm performance (Zahra, 1991). To reduce potential confounding, these variables were used as controls during the data analysis.

Results

The descriptive statistics and correlations among variables are given in Table 2. Gender has a marginal negative effect on entrepreneurial orientation, while age has a marginal positive effect. Entrepreneurs with higher education have a highly significant correlation with entrepreneurial orientation. Gender and education had no significant correlation with profitability.

In terms of organizational characteristics, entrepreneurial orientation shows significant negative correlation with ownership type, firm age, firm size, and environment. It is obvious that non-state owned, smaller, and younger firms tend to be associated with a higher level of entrepreneurial orientation. The highly significant correlations among industry, firm age, and firm size reflect the long history of large manufacturing firms. Ownership shows significant correlation with firm size, industry, firm age (length of operations), unfavorable environment, and entrepreneurial orientation. It should be noted that the highly significant negative correlation with the environment and entrepreneurial orientation confirms that a favorable environment is effective in promoting corporate entrepreneurship.

Firm performance is closely linked to organizational characteristics, such as ownership (state owned vs. non-state owned) and the size of the firm. Non-state enterprises established in recent years remain small. Ownership types, firm size, firm age, and business environment are all negatively associated with profitability. Entrepreneurial orientation is significantly related to profit.

Regression analysis was conducted to examine the differential impact of predictors on firm performance, with results in Table 3. State-owned and the non-state sector differ in terms of industry, firm size, length of operations, and profitability, so, it is logical to run a separate regression analysis for state and non-state firms.

Firm size had a significant negative impact, while firm age had a significant positive effect on firm profitability for state-owned firms, but no significant effect was observed for non-state firms. Firm size and years of operations among state-owned enterprises are clear indicators of embeddedness in the institutional environment that caused the low performance, as measured by sales profit. Firms with shorter years of operation and are smaller but perform better. No significant industry effect on firm profit was observed.

As hypothesized, entrepreneurial orientation had a significant effect on firm profitability, confirming Hypothesis 1. The percentage of employees with college education yielded a highly significant effect on entrepreneurial orientation and firm profitability, supporting Hypothesis 2. In addition, entrepreneurial orientation had a significant effect on non-state firms but less for their state-owned counterparts, lending support to Hypotheses 3a and 3b. The business environment showed a highly significant effect on entrepreneurial orientation but a significant negative effect on firm performance. There was a highly significant negative effect of environmental factors on profitability, which implies that a favorable environment is more conducive to firm performance. Unfavorable environment was negative for profitability. The mean centering procedure was applied to all independent variables that constitute interaction terms to mitigate the potential threat of multicollinearity (Aiken and West, 1991). Multicollinearity was not a problem using the variance inflation factor (VIF) check. When the interaction term of entrepreneurial orientation and environment was entered into the regression, no significant effect was observed. Thus, Hypothesis 4 was rejected.

Discussion and Conclusion

In the existing literature, entrepreneurial orientation can be captured by the propensity to act autonomously, the willingness to innovate and assume risk, and the tendency to be aggressive toward competitors and to pursue market opportunities proactively (Covin and Selvin, 1991). The present study investigated entrepreneurial orientation by using the aggregated measure of innovation, risk taking, and proactiveness. A more detailed breakdown of the sub-dimensions revealed that 47.7% of the respondents, the highly educated in particular, considered innovation very important. Only 20.8% of the respondents, particularly the younger respondents, indicated a willingness to take risk.

The findings provided support for some of the existing literature. As expected, the present study confirms the link between entrepreneurial orientation and performance. The business environment showed a significant impact on entrepreneurial orientation and a significant negative effect on firm performance. Contrary to our prediction, the interaction of the environmental variable and entrepreneurial orientation had no significant influence on firm performance. One may argue that the environment in the Chinese context is unique in its transitional stage, suggesting that a prior theory may not apply universally across different research sites. It also highlights the need to be cautious when interpreting research findings in different institutional settings. More studies and theories are needed. Another possible explanation may be the measurement issue. The environmental measure may not capture all the different aspects of the complex business environment.

Based on a large sample in China, the present study helps to integrate and conceptualize the antecedents of entrepreneurial orientation and the significance of entrepreneurial orientation to firm performance. The results advance our understanding of the institutional business environment and offer updated knowledge about entrepreneurship in the world's largest transitional economy. Despite the perceived unfavorable business environment, such as poor future prospects and difficulty in generating sales and obtaining financial resources, entrepreneurial activities flourish in China. However, such hostile factors hurt firm performance.

The empirical results of the present study refute the conventional wisdom that the relationship between educational level (college education) and entrepreneurial orientation is weak. The results from Global Entrepreneurship Monitor's 2003 study revealed that those who are university educated were the most entrepreneurial in Hong Kong, while the post-graduates were most active in Shenzhen, a high-technology-based entrepreneurship hub. In the present study, human capital, in terms of the percentage of employees with college education, had a significant impact on firm performance. The emphasis on education is apparent. Building up entrepreneurial capacity and investing in education is warranted. Improvements should be made in education and training, particularly those related to entrepreneurship.

It is important to maintain an institutional and regulatory framework that gives innovative entrepreneurs a fair access to markets and the possibility to profit from their invention. China lags behind in laws, government institutions, and regulatory agencies. Additional efforts are needed to promote property rights, government efficiency, transparency, and honesty. Other recommendations include simplifying administrative procedures, reducing regulatory barriers, relaxing constraints on private companies, and enhancing efficient market operations (Global Entrepreneurship Monitor: Hong Kong and Shenzhen 2003).

The findings of our study offer some practical implications to those who wish to invest in China. Having joined the WTO, China is eager to integrate into the global environment. Institutional change is associated with a higher level of entrepreneurial orientation. Investors and policy makers are encouraged to be more entrepreneurial in launching their business and more innovative in delivering products and services. The effect of entrepreneurial orientation on financial performance may require a longer time horizon to be fully apparent. Organizations should use a longer-term perspective in nurturing and judging corporate entrepreneurship. In conclusion, developing human capital and creating a corporate culture and environment that nurtures and supports entrepreneurial behaviors will inspire corporate entrepreneurship.

Limitations

The study has some limitations. A high percentage of the sampled firms are state owned, which means their performance can be influenced by nonmarket factors, and their firm size in the sample is relatively large. These firms are becoming more entrepreneurial due to competition with foreign firms and private sectors. Another limitation relates to the use of self-reported performance measure from only one individual in each organization. This is because Chinese informants consider financial figures very sensitive and are unwilling to reveal them (Takeuchi, Wakabayashi, and Chen, 2003). In the absence of objective data, self-reported measures were the acceptable substitute, yet they were equally reliable. Prior research by Dollinger and Golden (1992) showed that organizational performance rated by self-reported measures was positively correlated with objective performance indicators. Previous research showed that self-reported data from the owner or general manager of small firms were highly correlated with archival data, supporting the accuracy and reliability of founder-reported performance data (Chandler and Hanks 1993, p.405). Nevertheless, future research utilizing objective measures are still needed. Responses from multiple informants would allow us to cross-check data accuracy. Future research is also needed to track the performance of entrepreneurial firms over time. Despite these limitations, the present study used a large survey dataset to examine the relationships between entrepreneurial orientation and firm performance in China. The sample was heterogeneous in terms of firm size, location, and type of ownership, which increases the applicability of the findings.

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Irene Hau-siu Chow, The Chinese University of Hong Kong, Hong Kong

Dr. Chow's academic experience includes appointments in Hong Kong, Singapore, and the U.S. She has published widely in international journals, focusing on gender and cultural issues in Chinese societies, networks, and human resources management practices.
Table 1. Sample Characteristics

 Frequency %

Respondents
 Gender Male 3428 96.7
 Female 116 3.3

Educational level
 High school and below 541 15.3
 Junior college 1420 40.1
 College degree 1231 34.8
 Post-graduate 349 9.9

Average age 47.8
Years of work experience 27.64

Position#
 Managing director 1518
 General manager 2144
 Plant manager 935
 Party secretary 89

Firm Characteristics
 Number of employees 2335
 Net asset ([yen] million; US$1 = [yen] 8) 279.5
 Years of operation 23.9
 Ownership State-owned 1607 45.7
 Non-state-owned 1910 54.3

# Some of the respondents held more than one position.

Table 2. Mean, Standard Deviation and Correlations among Variables

 Profit Ownership Size (log)

Mean 5.75 .53 6.48
Std. Dev. 20.03 .50 1.65

Ownership -.08
Size (log) -.08 *** .19 ***
Industry .003 -.15 *** .17 ***
Firm age -.10 *** .36 *** .40 ***
Environment -.12 *** .13 *** -.02
Entrepre .12 *** -.11 *** -.07 **
Orientation

Gender .03 -.05 ** -.09 ***
Age .002 .05 ** .18 ***
Education .032 .021 .23 ***

 Industry Firm age Environment

Mean .56 23.91 2.13
Std. Dev. .50 17.73 .44

Ownership
Size (log)
Industry
Firm age .07 ***
Environment -.05 ** .05 **
Entrepre -.02 -.02 *** -.38 ***
Orientation

Gender -.03 * -.05 ** .02
Age .04 * .11 *** .03 (+)
Education .02 .06 *** -.04 *

 Entrepre
 Orientation Gender Age

Mean 5.17 1.03 47.82
Std. Dev. .95 .18 7.45

Ownership
Size (log)
Industry
Firm age
Environment
Entrepre
Orientation

Gender -.03 (+)
Age .03 (+) -.05 **
Education .08 *** -.O1 -.11 ***

*** Correlation is significant at the 0. 001 level; ** p <. 01;
* p < 0. OS; (+) p < .1

Table 3. Regression Results in Predicting Firm Performance

 Entrepreneurial
 Orientation

 All firms

 1 2

Industry -.015 -.002

Size (log) -.094 *** -.075 ***

Firm age .122 *** .043 *

Environment .361 ***

Entrepreneurial Orientation

Percentage of Employees with -.061 ***
college education

Environment x entrepreneurial
orientation

Adj [R.sup.2] .014 -.146

[DELTA] [R.sup.2] .015 *** .133 ***

F 14.33 *** 99.54 ***

 Firm Performance (Profit %)

 Non-state-owned firms

 3 4 5

Industry -.016 .0 .0

Size (log) -.047 -.032 -.032

Firm age -.047 -.012 -.017

Environment -.067 * -.070 *

Entrepreneurial Orientation .085 ** .082 **

Percentage of Employees with .118 *** .118 ***
college education

Environment x entrepreneurial .024
orientation

Adj [R.sup.2] .004 .033 .033

[DELTA] [R.sup.2] .006 * .032 *** .001

F 2.83 * 8.88 *** 7.72 ***

 Firm Performance (Profit %)

 State-owned firms

 6 7 8

Industry -.008 .010 .008

Size (log) -.058 * -.054 (+) -.056 *

Firm age .062 * .025 .024

Environment -.10 *** -.10 ***

Entrepreneurial Orientation .052 (+) .065 *

Percentage of Employees with .11 *** .11 ***
college education

Environment x entrepreneurial -.032
orientation

Adj [R.sup.2] .008 .035 .035

[DELTA] [R.sup.2] .01 ** .029 *** .001

F 4.86 ** 9.96 *** 8.74 ***

* p < .1; * p <.05; ** p < .01; *** p < .001

Standardized beta coefficients are reported in the table.
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Author:Chow, Irene Hau-siu
Publication:SAM Advanced Management Journal
Geographic Code:9CHIN
Date:Jun 22, 2006
Words:5775
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