Goal Orientation as Shaping the Firm's Entrepreneurial Orientation and Performance
Webb, Justin W.
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Firms? top decision makers cannot possibly know what decisions to make. Rather, decision makers must interpret their situations and make the best possible decision based upon their interpretation of their situations. In this dissertation, I examine decision-makers? goal orientations as influencing how they interpret their situations and then respond through making decisions in terms of their firms? entrepreneurial orientations. I also examine whether these decisions influence firm performance. I surveyed top firm decision makers in the Association of Former Students? database at Texas A and M University. The hypotheses were tested using a structural equation modeling. Using a sample of 273 firms, I find that decision-makers? goal orientations shape their firm?s entrepreneurial orientations, which in turn influence firm growth, relative performance, and expected future performance. Possessing a learning goal orientation was found to be positively related to innovativeness, proactiveness, and risk taking. A performance prove goal orientation was positively related to innovativeness, whereas a performance avoid goal orientation was negatively related to innovativeness and risk taking. Only a proactive firm posture was found to be positively related to firm performance. The results for this dissertation provide compelling support for upper echelons theory. Decision-makers? finer-grained personal attributes are found to shape firm-level outcomes. More specifically, decision-makers? goal orientations are found to shape the firm?s entrepreneurial orientation and, to some extent, performance. Interestingly, coarse-grained personal attributes captured in demographic proxies and used as control variables in the analyses did not provide consistent support for upper echelons theory. The results suggest that scholars need to take a finer-grained perspective of upper echelons theory. A substantial amount of research has established the link between individuals? goal orientations and how they interpret and respond to their situations. The research here has extended this relationship to the top decision-making context in firms where individuals face strong situational forces caused by uncertainty, complexity, and dynamism. I hope that this research encourages other scholars to (1) examine more complex models of how decision-makers? personal attributes influence their entrepreneurial decisions in terms of both recognizing and exploiting opportunities, and (2) examine other finer-grained attributes of top decision makers within a finer-grained framework of the decision-making process.