Strategic orientation and firm risk

Document Type

Article

Publication Date

12-1-2019

Abstract

Entrepreneurial orientation (EO) and market orientation (MO) have received substantial conceptual and empirical attention in the marketing and management literature and both orientations have consistently been linked to stronger financial performance. Yet the way in which market-oriented firms seek to achieve superior rents is substantively different from that of entrepreneurially oriented firms which could lead to differential impacts of EO and MO on firm risk. In this study, the authors employ a text mining technique to assess firms' EO and MO and examine the impact of these two strategic orientations on shareholder risk outcomes. The results show that while EO increases idiosyncratic risk, MO decreases it. However, only EO decreases systematic risk. Overall, the results of this study demonstrate that a firm's decisions regarding strategic orientation should be examined in light of both likely risks and returns in order to make appropriate resource allocation decisions.

Publication Title

International Journal of Research in Marketing

Volume

36

Issue

4

First Page

509

Last Page

527

Digital Object Identifier (DOI)

10.1016/j.ijresmar.2019.01.004

ISSN

01678116

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