The Context Sensitivity of International Entrepreneurial Orientation and the Role of Process and Product Innovation Capabilities
| Published date | 01 October 2023 |
| Author | Md Imtiaz Mostafiz,Mathew Hughes,Nazha Gali,Murali Sambasivan |
| Date | 01 October 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12681 |
British Journal of Management, Vol. 34, 2015–2035 (2023)
DOI: 10.1111/1467-8551.12681
The Context Sensitivity of International
Entrepreneurial Orientation and the Role of
Process and Product Innovation Capabilities
Md Imtiaz Mostaz,1Mathew Hughes,2Nazha Gali3
and Murali Sambasivan4
1Shefeld Business School, Shefeld Hallam University, Shefeld, S1 1WB, UK, 2School of Business and
Economics, Loughborough University, Loughborough, LE11 3TU, UK, 3University of Windsor, Sunset Ave,
ON N9B 3P4, Canada, and 4Thiagarajar School of Management, Madurai, Tamil Nadu, 625005, India
Corresponding author email: i.mostaz@shu.ac.uk
Drawing on a contingency perspective of the resource-based view of the rm, we test the
thesis that a relationship between international entrepreneurialorientation (IEO) and the
international performance of export-manufacturing rms is context-sensitive and con-
tingent on innovation capabilities. Using time-lagged survey data from 369 Bangladeshi
export-manufacturing rms in a least developed country (LDC) as an extremeempirical
context, we predict that process and product innovation capabilities are essential to the
relationship between IEO and international performance among export-manufacturing
rms. We nd that the effect of IEO on international performance is not positive; how-
ever,the relationship becomes positive when moderated by process and product innovation
capabilities. International entrepreneurial rms in an LDC succeed when they can better
align IEO-driven efforts with these capabilities. Our study advances knowledge on the
context sensitivity of IEO and embellishes a resource-based theory of IEO.
Introduction
International entrepreneurial orientation (IEO) is
a vital subset of entrepreneurial orientation (EO)
(Clark and Covin, 2021; Covin and Miller, 2014)
and emphasizes the entrepreneurial attributes
of international ventures. IEO is a composite
construct characterizing an entrepreneurial rm’s
forward-looking and opportunity-seeking be-
haviour distinguished by internationally oriented
proactiveness, innovativeness and risk-taking.
IEO requires capabilities to function successfully
(Gupta, Pandey and Sebastian, 2021). The need to
nurture critical capabilities is especially essential
when a rm originates from an economy with few
resources (Jin and Cho, 2018). Compared to de-
veloped economies, international entrepreneurial
rms from least-developed countries (LDCs)1
suffer from stagnant capacity, knowledge and
resources (Mostaz, Sambasivan and Goh, 2019)
and weak institutional support to remedy these
weaknesses (Ahmed and Brennan, 2019b). Given
the signicant risks of wild swings in rm perfor-
mance made possible by an IEO, variationsin IEO
can (theoretically) lead rms into failure traps,
where high-risk, innovative and proactive efforts
are not matched by a rm’s capability to convert
those IEO-driven initiatives into successful inter-
national performance. In turn, LDC-originating
international entrepreneurial rms (LIFs) grapple
1Least-developed countries are categorized based on the
parameter of low gross national income per capita, weak
human development index and high level of economic
vulnerability (UNCTAD, 2015). Forty-nine countries are
listed as LDC.
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf ofBritish Academy
of Management.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distri-
bution and reproduction in any medium, provided the original work is properly cited.
2016 M. I. Mostaz et al.
with environmental turbulences: they must inter-
nationalize to escape environmental turbulences
(Wu and Deng, 2020), but scholars are yet to
shed sufcient light on the boundary conditions
necessary for their IEO-driven efforts to germi-
nate success in an LDC. A dearth of knowledge
explains the effects of IEO on LIFs, the context
dependence of IEO and the capabilities needed
for success (Chen, Lin and Tsai, 2020). Under-
standing these phenomena is essential for more
targeted theory development for IEO (Covin and
Miller, 2014; Gupta, Pandey and Sebastian, 2021)
and closing the theory chasm between (I)EO
as strategic orientation and the achievement of
(international) performance (e.g. Hughes et al.,
2022). We address this critical research gap.
Covin and Miller (2014) observe that the perfor-
mance benets of IEO are not uniform. The IEO–
international performance relationship is theoret-
ically long-linked, and we predict that this link
is destabilized for LIFs unless essential contin-
gencies are put in place. Because scholars in-
creasingly converge on the idea that a posi-
tive relationship between IEO and international
performance is contingent on rm-specic capa-
bilities (Gupta, Pandey and Sebastian, 2021), we
argue that IEO can generate a range of initiatives,
some of which yield large gains and others signif-
icant losses (Covin and Miller, 2014). This varia-
tion is nihilistic for LIFs, indicating that a theory
for IEO among LIFs must uncover the capabili-
ties needed to match IEO to the requirements of
the business environment.For instance, rms orig-
inating from developed economies are fortunate
with more robust institutional support, an innova-
tion ecosystem, advanced technologies and infras-
tructures and access to richer functioning markets.
Therefore, (I)EO may assume greater prominence.
In contrast, however, LIFs must rely more on
developing in-house capabilities (Mostaz et al.,
2021b) because entrepreneurial tendencies are not
equally effective due to differences in the contexts
in which rms operate (Li et al., 2018). Since LIFs’
opportunity costs are more signicant, it is essen-
tial to identify which capabilities are most urgent
to develop. Therefore, we set conditional bound-
aries for the IEO–international performance rela-
tionship and pose the question: what rm-specic
capabilities impact the relationship between IEO
and international performance among LIFs?
To productively convert IEO into international
performance among LIFs and reduce or terminate
a preponderance of destructive projects, we theo-
rize that process and product innovation capabil-
ities (Nuruzzaman, Gaur and Sambharya, 2018;
Shan, Song and Ju, 2016) are essential and rep-
resent missing contingencies in a resource-based
theory of IEO in an LDC context. Scholars (e.g.
Jin and Cho, 2018; Karami and Tang, 2019) ar-
gue that process and product innovation capabil-
ities play unequivocal roles in optimizing manu-
facturing processes and lead rms to develop new
and improvedproducts, respectively. Therefore, we
propose that the willingness for international en-
trepreneurship exhibited through an IEO will gen-
erate internal performance but only when produc-
tive process and product innovation capabilities
are available to match that willingness with abil-
ity.We expect this among intensive apparelexport-
manufacturing rms to stay competitive in the in-
ternational market (Mostaz et al., 2021a). Draw-
ing on a contingency perspective of the resource-
based view (RBV) (Engelen et al., 2015), given
weak process and product innovation capabili-
ties, IEO-driven efforts will lead rms to use re-
sources unproductively, escalating a failure trap
that causes vulnerable LIFs to fail internation-
ally. Hence, using the RBV (Barney, 1991) along
with its contingency perspective (Engelen et al.,
2015), we test whether processand product innova-
tion capabilities moderate the conversion ofIEO-
driven efforts into successful international perfor-
mance among LIFs, especially for those rms in
an institutionally and environmentally challenged
economy in which environmental turbulence is
commonplace (Bouguerra et al., 2022; Kearney,
Soleimanof and Wales, 2018). Taken together, we
propose that an IEO–performance relationship is
sensitive to rm-specic capabilities essential for
LIFs to succeed in international markets.
Our contributions to the literature are twofold.
First, anticipating that IEO is context-sensitive,
our research offers rich theoretical development
by explaining IEO’s taxonomy in an LDC. With-
out acknowledging the capabilities needed to
bolster the production efciency (i.e. process in-
novation) and market penetration functions (i.e.
product innovation) of export-manufacturing
rms, IEO will manifest aggressive but unpro-
ductive opportunity-seeking behaviour, causing
underwhelming or even negative returns to in-
ternational performance. We propose a novel
solution to this dissension. Second, we theorize a
contingent RBV model and identify rm-specic
© 2022 The Authors.British Journal ofManagement published by John Wiley & Sons Ltd on behalf of British
Academy of Management.
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