The role of the institutional environment in determining firm orientations towards entrepreneurial behavior

This research suggests that an entrepreneurial orientation may be to an important extent a strategic response to institutional forces. Small to medium-sized firms are assumed to be more likely to adopt an entrepreneurial orientation when it is seen as a legitimate response and aligned with the normative, regulative and cognitive aspects of the institutions that make up the environment of the firm. This assumption is first supported by a review of the prescriptions of institutional theory regarding strategic choices available to firms and then tested through the analysis of a survey of 1621 firms from seven countries and multiple manufacturing and service industries. The findings of the research indicate that the choice of an entrepreneurial orientation may be significantly motivated by drives for legitimacy through alignment with the normative, regulative and cognitive forces in the institutional environment of the firm. © 2008 Springer Science + Business Media, LLC.