Entrepreneurial Orientation in Family Firm - Research Paper Example

Corporate entrepreneurship is an important factor in establishing the success of family firms. Family firms are those firms in which one or more members of one or more families have a significant interest in ownership. The present study aims towards creating a relationship between entrepreneurial orientation with generational involvement and internationalization. The study suggests that entrepreneurial orientation within the organization increases its performance. Entrepreneurial orientation has a significant role in increasing the acquisitive and experimental learning in an organization which in turn increases its performances but the case is different for family firms.

The long term success of the family firm will be not always dependent upon the five dimensions of entrepreneurial orientation. It has been found that there lies a positive relationship between entrepreneurial orientation and the survival of the family firms. When a relationship between entrepreneurial orientation and generational involvement is established it is seen that the entrepreneurial orientation has a positive impact on the growth of second-generation family businesses. On the other hand, firms having high family ownership are expected to internationalize more as compared to the firms having low family ownership.

Finally, the firm’s entrepreneurial orientation is seen to have a positive relation with internationalization. 1. Introduction A family business is identified as a commercial activity that involves the influence or control of one or more families. With the advent of industrialization, the increase in professionalization and progress in the economy has made commercial activities take place outside the private sphere of family or home. With the growth of family businesses, several researchers have shifted their attention towards how these firms secure continuity, manage their legacy and ensure survival (Kontinen & Ojala, 2012).

Succession is an event while running the family business, signifies the transfer of management and ownership to the next generation. Little importance was provided towards understanding the families and the way in which they conduct their business activities, innovation and strategic renewal. The family business is seen as an organization in its conservative form, infrequently surrounding entrepreneurial dynamics (Nordqvist & Melin, 2010). Corporate entrepreneurship is an important factor behind the long term or short term success of the firm whether family firm or non-family firm.

Entrepreneurial orientation (EO) is defined as the presence of organizational level entrepreneurship that has been explained using five dimensions namely autonomy, innovation, competitive aggressiveness, proactiveness and risk-taking. The main assumption behind entrepreneurial orientation is the entrepreneurial business that shows unique and different characteristics that vary from others. The strength of the entrepreneurial orientation of the firm shows a vigorous positive effect on the performance.

Therefore, the presence of Entrepreneurial Orientation leads to the accomplishment of the success of the firm (Yildirim & Saygin, 2012). Family firms are established due to the entrepreneurial behaviour of one or more founders who realize and take advantage of opportunities. In order to survive and grow in their business, they need to retain and increase their entrepreneurial orientation over generations.