419024.Linking_entrepreneurial_orientation_with_the_performance_of_Croatian_hotel_industry.doc

419024.Linking_entrepreneurial_orientation_with_the_performance_of_Croatian_hotel_industry.doc

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Linking entrepreneurial orientation with the performance of Croatian hotel industry Fran GALETIĆ Faculty of Economics and Business J.F.Kennedy Square 6 10 000 Zagreb, Croatia Bojan MORIĆ MILOVANOVIĆ Faculty of Economics and Business J.F.Kennedy Square 6 10 000 Zagreb, Croatia Abstract The term entrepreneurial orientation has been used to refer to the strategy-making processes and styles of firms that engage in entrepreneurial activities. A popular model of entrepreneurial orientation (EO) suggests that there are five dimensions of EO - autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness. This paper reports on three of those dimensions - innovativeness, risk taking and proactiveness. Innovativeness is the predisposition to engage in creativity and experimentation through the introduction of new products/services as well as technological leadership via R&D in new processes. Risk taking involves taking bold actions by venturing into the unknown, borrowing heavily, and/or committing significant resources to ventures in uncertain environments. Proactiveness is an opportunity-seeking, forward-looking perspective characterized by the introduction of new products and services ahead of the competition and acting in anticipation of future demand. Therefore, the purpose of this paper is to link dimensions of entrepreneurial orientation of Croatian hotels and show a positive correlation with their performance which is measured by the following performance criteria: sales level, sales growth rate, cash flow, net profit and ability to fund business growth from profits. Keywords: Entrepreneurial orientation, Business performance, Hotel industry Introduction In today’s turbulent and highly competitive business environment general tendency is the shortening of product and business model life cycles, therefore future profits that will come from current business operations are uncertain and the firms are forced to constantly be involved in seeking out new opportunities. In this manner firms have to be innovative, involving concepts or activities that represent a departure from what is currently available concerning innovations of products, services or processes, have to be risk oriented, to try out new and uncertain products, services and markets and have to be more proactive then competitors toward new marketplace opportunities (Covin and Slevin, 1991). 1
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Literature regarding entrepreneurial orientation states that if a firm adopts entrepreneurial strategic orientation it will achieve higher performance then a firm that adopts a bureaucratic or centralized management system to exercise control over as many variables as possible. This argument has received empirical support in the literature (Zahra, 1991; Zahra and Covin, 1995). Although, it sounds like an easily comprehensive relationship it is actually much more complex. Literature also mentions that some empirical research have not found any relation between firms entrepreneurial orientation and the firms performance (Smart and Contatnt, 1994).
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