An Empirical Analysis of the Entrepreneurial Orientation Scale

Executive Summary The objective of this study is to assess the psychometric properties of the Entrepreneurial Orientation (EO) scale. Factor analysis, F-test, and correlation analysis were employed to assess reliability, dimensionality, and validity. The results suggest that the scale is a relatively stable measurement instrument with two dimensions. High levels of reliability, a stable two factor structure, and evidence of convergent and nomological validity are reported. The results are significant as the dimensionality and application of both the EO construct and scale continue to be debated. Further testing of the instrument, and replication of results, is crucial for further development and refinement so as to better understand implications in research and practice. The present study extends the extant literature by reporting acceptable levels of reliability, replicating and extending Knight's (1997) study, and strengthening support for the validity of the scale. This provides a critical step in specifying and seeking consensus as to the relationships amongst the dimensions of the EO construct and scale. Introduction Firm level entrepreneurial behavior and its link to firm performance continue to generate high levels of interest among scholars, practitioners and educators (Parnell and Lester, 2007). This is due, in part, to the perception that an entrepreneurial orientation - a propensity to engage in relatively high levels of firm-level risk taking, innovative, and proactive behaviors-can lead to favorable organizational outcomes (Covin and Miles, 1999; Wiklund and Shepard, 2003). Barrett and Weinstein (1999) suggest this proliferation of research has served to develop the field in terms of improved conceptualizations, modeling and empirical study. Such research includes the development of measurement scales designed to assess behaviors associated with an entrepreneurial strategic posture. One such instrument, the "Entrepreneurial Orientation" (EO) scale has been used extensively in firm-level entrepreneurship research. Based on measures developed by Miller and Friesen (1982), published by Miller (1983), and refined by Covin and Slevin (1986), the EO scale focuses on three dimensions of the entrepreneurial orientation construct - risk taking, innovativeness, and proactiveness. According to Kreiser, Marino and Weaver (2002) the scale is the most commonly utilized instrument in operationalizing EO. As early as 1999, Wiklund noted that more than a dozen studies had employed this scale or slightly modified versions. According to Zahra, Jennings and Kuratko, (1999, p.54), "There has been an unusually high degree of consistency in the way researchers have measured firm-level entrepreneurship. " They state that this is especially remarkable considering the lack of consistency in defining entrepreneurship and developing the construct. The scale continues to be popular among researchers in the field (e.g., Covin, Green & Slevin, 2006; Kreiser et al., 2002; Richard, Barnett, Dwyer & Chadwick, et al., 2004; Wiklund and Shepard, 2005). While previous studies have reported evidence of reliability, and some types of validity for the EO scale, questions remain as to its appropriate use in entrepreneurship research. For example, Zahra, et al. (1999) state that while the scale has served the field well, researchers may have been too quick to agree on a common measure without firmly establishing dimensionality or thoroughly assessing its psychometric properties. Others have also raised questions concerning dimensionality of the EO scale (e.g., Dess, Lumpkin, 8c McGee, 1999; Knight, 1997; Lumpkin and Dess, 1996; Zahra, 1993). Covin, et al. (2006), acknowledge the debate concerning the dimensionality of the construct and suggest it centers on the question of whether the facets of EO - risk taking, innovation, and proactiveness - "must or simply may vary independently of one another" (p. …