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A curvilinear relationship between entrepreneurial orientation and firm performance: The moderating role of employees’ psychological safety

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  • Jeewhan Yoon

    (Korea University, Graduate School of Management of Technology)

  • George T Solomon

    (George Washington University)

Abstract

While many studies on the relationship between entrepreneurial orientation (EO) and firm performance suggested a considerable variation in size and direction of the relationship, our study tested a model that considered the drawbacks of a high EO. We identified that EO has a curvilinear relationship with firm performance and analyzed how the psychological safety of employees can mitigate the negative effects of high EO on firm performance. We tested our model on 157 enterprises comprising 1633 employees and 157 managers. After taking a longitudinal approach with objective financial outcome data, our results showed that EO has an inverted U-shaped effect in predicting firm performance and that employees’ psychological safety moderates the relationship between EO and firm performance, mitigating the negative effects. This study has theoretical implications related to the potential negative impact of excessive EO and practical implications for companies in mitigating this drawback by increasing employees’ psychological safety.

Suggested Citation

  • Jeewhan Yoon & George T Solomon, 2017. "A curvilinear relationship between entrepreneurial orientation and firm performance: The moderating role of employees’ psychological safety," International Entrepreneurship and Management Journal, Springer, vol. 13(4), pages 1139-1156, December.
    • Handle: RePEc:spr:intemj:v:13:y:2017:i:4:d:10.1007_s11365-017-0448-5
    DOI: 10.1007/s11365-017-0448-5
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    Cited by:

    1. Jeewhan Yoon & Kevin May & Jae H. Kang & George T. Solomon, 2019. "The impact of emotional self-management on benefit offerings and employment growth: an analysis of the fastest growing businesses in the United States," International Entrepreneurship and Management Journal, Springer, vol. 15(1), pages 175-194, March.
    2. Dirk Clercq & Eugene Kaciak & Narongsak (Tek) Thongpapanl, 2022. "When does market hostility curtail competitive performance through diminished entrepreneurial efforts? Buffering effects of women entrepreneurs’ family business support," Small Business Economics, Springer, vol. 59(3), pages 827-844, October.
    3. Ayman Abu-Rumman & Ata Shraah & Faisal Al-Madi & Tasneem Alfalah, 2021. "Entrepreneurial networks, entrepreneurial orientation, and performance of small and medium enterprises: are dynamic capabilities the missing link?," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-16, December.
    4. Eduardo Sánchez-García & Bartolomé Marco-Lajara & Pedro Seva-Larrosa & Javier Martínez-Falcó, 2022. "Driving Innovation by Managing Entrepreneurial Orientation, Cooperation and Learning for the Sustainability of Companies in the Energy Sector," Sustainability, MDPI, vol. 14(24), pages 1-17, December.
    5. Dirk De Clercq & Eugene Kaciak & Narongsak (Tek) Thongpapanl, 2023. "Full circle support: unpacking the relationship between women entrepreneurs’ family-to-work support and work interference with family," International Entrepreneurship and Management Journal, Springer, vol. 19(1), pages 343-367, March.
    6. Huseyin Arasli & Hasan Evrim Arici & Ezel Kole, 2020. "Constructive Leadership and Employee Innovative Behaviors: A Serial Mediation Model," Sustainability, MDPI, vol. 12(7), pages 1-17, March.
    7. Nadeem Khalid & Leila Salykova & Nejat Capar, 2020. "The Contribution of Environmental Strategies, Entrepreneurial Innovation and Entrepreneurial Orientation in Enhancing Firm Environmental Performance and Energy Efficiency," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 282-288.
    8. Umair Ahmed & Soleman Mozammel & Fazluz Zaman, 2020. "Impact of Ecological Innovation, Entrepreneurial Self-Efficacy and Entrepreneurial Orientation on Environmental Performance and Energy Efficiency," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 289-295.

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