Entrepreneurial Orientation, Agglomeration, Networks and Firms' Performance Empirical Evidence from the Italian Wine Sector

(ProQuest: denotes formulae omitted.)INTRODUCTIONThe wine industry in Italy, more specifically in the North Eastern Italian Regions, can be considered one of the most important sectors for national economy. Over the past two decades, Italian winemakers, (for the vast majority small, independent producers) have experienced a number of economic, social and political challenges. These include, for example, changes in worldwide production and consumption patterns, fiercer competition, (particularly from the "New World" producers) and an increasing number of regulations. The Italian wine industry is now characterized by high competition, high barriers to entry, sophisticated consumers and overproduction (Beverland and Lockshin, 2006; Montaigne, 2010; Terblanche et al. 2008) The implications of these trends are of particular significance for the Italian wine sector, given the crucial role of winemaking for the Italian agricultural economy.The Italian wine industry comprises a number of regional clusters, i.e. groups of firms from the same or from related industries, located in geographical proximity (Bell, 2005) Networks can be established as a form of entrepreneurial marketing cooperation, in the attempt to acquire social capital within industry clusters (Casson and Guista, 2007; Felzensztein and Gimmon, 2009).As it is well pointed out in literature firms in territorial based networks develop a set of relationships in the form of "untraded interdependencies" which benefit their innovation and improved exploitation of knowledge as it is transferred more easily through proximity where these local firms are embedded (Bell, 2005; Shaw, 2006;  2008) However, more recently, it has been suggested that entrepreneurial marketing cooperation might transcend regional clusters to tap industry specific knowledge at the international level (Felzensztein and Gimmon, 2009; Morrison and Rabellotti, 2009) Given the current context of the Italian wine industry, the challenge for small wineries is therefore double sided: to defend current positioning through brand differentiation, and the exploitation of product market development opportunities, through engaging in cooperative business relationships and networks.This study contributes to research on the effect of Entrepreneurial Orientation (EO) on business performance, by investigating the integrative mechanisms that ensure complementarity among a firm's various aspects (Black and Boal, 1994; Miller, 1996).Literature on EO, which has confirmed the positive relationship between EO and firm performance, depends on several contingencies (e.g. Ireland et al. 2003).EO addresses entrepreneurial strategy making, and focuses on the extent to which firms are characterized by a decision making style that is proactive, risk taking and innovative, as they pursue business opportunities (Miller, 1983; Covin and Slevin, 1989, 1991) Regarding the determinants of EO, research has revealed the importance of both the environment in which the firm operates (i.e. external factors, e.g. Lumpkin and Dess, 2001; Zahra, 1991) and organizational variables (i.e. internal factors, e.g. Wiklund and Shepherd, 2003).This suggests a configurational approach that involves the simultaneous and joint consideration of strategy, organizational and environmental characteristics. From this perspective, the present research tries to provide a better understanding of the EO performance link, by considering simultaneously agglomeration and network as moderators. The findings of this first analysis make several contributions to the entrepreneurship literature, by investigating together the role of agglomeration and network in a configurational model, for small firms in the wine sector.Following Lumpkin and Dess (1996) the aim of this paper is to empirically verify the relevance of the configurational approach by comparing a configurational model of EO and performance to contingency models and a universal (direct effect) model.