Entrepreneurial orientation as a driver of brokerage in external networks: Exploring the effects of risk taking, proactivity, and innovativeness

• Date: 01 December 2018
• Published date: 01 December 2018
• Author: Olaf N. Rank,Michael Strenge
• DOI: http://doi.org/10.1002/sej.1290

RESEARCH ARTICLE

Entrepreneurial orientation as a driver of

brokerage in external networks: Exploring the

effects of risk taking, proactivity, and

innovativeness

Olaf N. Rank

1

| Michael Strenge

2

1

Institute of Economics, Chair of Organization

and HRM, Albert-Ludwigs-University of

Freiburg, Germany

2

Capgemini Consulting, Cologne, Germany

Correspondence

Olaf N. Rank, Institute of Economics, Chair of

Organization and HRM, Albert-Ludwigs-

University of Freiburg, Germany, Platz der

Alten Synagoge 1, 79098 Freiburg, Germany.

Email: olaf.rank@vwl.uni-freiburg.de

Research Summary:In this article, we examine to what extent a

firm's propensity to acquire brokerage positions in its external

knowledge networks is driven by its entrepreneurial orientation.

Specifically, we compare the influence of a firm's overall entrepre-

neurial orientation (EO) to the effects that the individual EO dimen-

sions (i.e., risk taking, proactivity, and innovativeness) have on

brokerage. Using a case study design, survey data was gathered

from a company cluster in the German photonics industry. Applying

a class of exponential random graph models, our results suggest

that a firm's overall level of EO does not affect its propensity to

obtain a brokerage position. In contrast, brokerage is positively

influenced by a firm's willingness to take business-related risks,

whereas a pronounced orientation toward innovation seems to

reduce brokerage.

Managerial Summary:While it has often been claimed that a pro-

nounced orientation toward entrepreneurship helps firms succeed,

the results of our study suggest that the individual dimensions of

entrepreneurial orientation in fact differently influence the ability

of firms to obtain brokerage positions in their external collabora-

tion networks with partners. Specifically, obtaining brokerage posi-

tions seems to depend on the willingness of firms to take business-

related risks. In contrast to our theoretical considerations, we were

unable to find empirical support for our assumption that proactivity

would be a similarly important antecedent to network brokerage.

Finally, firms should be careful with respect to an extensive orien-

tation toward innovativeness, as they run the risk of neglecting the

importance of an advantageous strategic position in their external

networks.

Received: 1 August 2015 Revised: 27 November 2017 Accepted: 24 January 2018 Published on: 7 May 2018

DOI: 10.1002/sej.1290

Copyright © 2018 Strategic Management Society

482 wileyonlinelibrary.com/journal/sej Strategic Entrepreneurship Journal. 2018;12:482–503.

KEYWORDS

brokerage, entrepreneurial orientation, exponential random

graph models, knowledge networks

1|INTRODUCTION

Adopting a strong entrepreneurial orientation (EO) is considered to be increasingly important for companies in order

to pursue new opportunities. EO refers to a company's strategy-making processes, management philosophies, and

company-level behaviors that can be described as innovative, proactive, and risk taking (Covin & Slevin, 1989; Miller,

1983). Most prior studies have directly linked EO to increased company performance (e.g., Rauch, Wiklund, Lump-

kin, & Frese, 2009; Wiklund & Shepherd, 2005), whereas less academic attention has been paid to examining the

managerial processes that allow entrepreneurial companies to be ahead of competitors. There is evidence that com-

panies are often unable to translate their EO into better performance because of a lack of strategic resources

(e.g., Hitt, Ireland, Camp, & Sexton, 2001). Some have argued that EO will contribute to performance only when com-

panies strategically acquire, develop, and leverage resources that enhance both opportunity-seeking and advantage-

seeking activities (e.g., Ireland, Hitt, & Sirmon, 2003).

A growing body of research has suggested that if adequately designed and used, a firm's external collaboration

network may represent an important strategic resource (e.g., Lavie, 2006; Stam & Elfring, 2008), one that is unique to

each company, largely invisible, and difficult for competitors to imitate (Galaskiewicz & Zaheer, 1999). Collaborative

interfirm networks are useful channels for firms to acquire knowledge and learn about new business practices, tech-

nological advancements, and market opportunities. Having access to this kind of information improves a company's

ability to make strategic decisions that capitalize on new opportunities and simultaneously mitigates external threats

(McEvily & Zaheer, 1999; Vissa & Chacar, 2009; Watson, 2007). While the effects of network position on firm per-

formance have been investigated intensively (e.g., Batjargal & Liu, 2004; Hoang & Antoncic, 2003; Shane & Cable,

2002), “researchers have paid less attention to examining social networks as a dependent variable”(Fang, Chi, Chen, &

Baron, 2015, p. 176).

Although external networks have been found to promote the success of EO-related activities, it is unlikely that

networks per se will have a universally beneficial effect because not all positions within a network can be expected to

equally support a company's strategic moves (Stam & Elfring, 2008). With respect to the question of what kind of

positions may be particularly beneficial for entrepreneurial firms, several studies have shown that brokerage is espe-

cially important to the extent that brokers gain first access to resources such as information and knowledge

(e.g., Burt, 1992; Stuart & Sorenson, 2007). Koka and Prescott (2008) have consequently characterized brokerage as

an entrepreneurial position allowing a firm to benefit from access to nonredundant and diverse resources. Broker

firms occupy intermediate positions between otherwise disconnected partners, thereby being able to influence the

flow of resources between these partners. The argument that brokerage creates a competitive edge for entrepre-

neurial companies is no longer novel since a plethora of studies have found empirical evidence for the positive

effects of brokerage on company performance (e.g., McEvily & Zaheer, 1999; Stam & Elfring, 2008; Vissa & Chacar,

2009). However, while the drivers of network position in general and brokerage in particular at the level of entrepre-

neurs' interpersonal networks have been investigated quite extensively (e.g., Baron, 2007; Oh & Kilduff, 2008; Vissa,

2012), our knowledge about how entrepreneurial companies come to be brokers in their external networks with

other firms is still limited (Miller, 2011; Stuart & Sorenson, 2007).

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