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CORPORATE ENTREPRENEURSHIP AS A DETERMINANT OF LARGE FIRM PERFORMANCE: HypothesisTherefore, it can be hypothesised that, Hypothesis 1: Innovativeness is positively related to firm performance.
Proactive behaviour is the ability of an organisation to introduce new products or services ahead of the competitors and the ability to anticipate the future demand to create change and to shape the environment. This behaviour enables firms to be opportunistic and to look forward to introducing newness in the market to outperform industry rivals and to remain adaptable (Lumpkin & Dess, 2001). Besides, this first mover approach allows firms to exploit emerging opportunities in the market and thus creating superior competitive advantage. The proactive firm is a leader rather than a follower since it has the determination and insight to seize new opportunities. The proactiveness facilitates firms to respond faster to market signals, to make them able to access to scarce resources, to continually introduce new products and services, and to consistently improve business performance. With these characteristics, high performance returns will be achieved. Therefore, it can be hypothesised that, Hypothesis 2: Proactiveness is positively related to firm performance.
The foundation of risk taking comes from early definition of entrepreneurship by Cantillon, who was the first to argue that the entrepreneurs are the persons who are able to take risk by set up his own business. Numerous empirical researches have supported that the risk taking are the characteristic of entrepreneurs. Depending on the context in which it is applied, risk has various meanings. Current literature defines risk taking behaviour as the willingness of firms to make huge and risky resource commitments on venture opportunity even though they do not know whether it will be successful or not. Boldness and tolerance for risk are the characteristics of entrepreneurial firms. The purpose of the risk taking at the firm level including the opportunity seeking and decision making. There are three dimensions of risk taking, which are venturing into unknown markets, committing a relatively large portion of assets to venture with uncertain returns, and borrowing heavily. An empirical research has found that higher risk taking profile would lead to higher performance for the firms. This is due to fact that firms that have the courage to make a significant resource commitment to high-risk projects with the high returns would definitely have the advantage to boost their firms’ income. Therefore, it can be hypothesised that, Hypothesis 3: Risk taking is positively related to firm performance.
Corporate venturing is one of the CE components that emphasises on the creation of new business inside or outside existing organisation (Sharma & Chrisman, 1999). Among the corporate venturing activities are entering new industries, acquisition, sponsoring new venture activities, and launching new business (Dalziel, 2005; Zahra, 1991). The purpose of corporate venturing launched in established firms is varied. Generally, firms frequently use corporate venturing to gain access to ideas, discoveries, technologies, innovations, and business practices, and to enhance business growth and profitability (Narayanan, Yang & Zahra, 2009). Previous research has shown that corporate venturing activities generate economic benefits for the parent corporation and improve its financial performance (Antoncic & Hisrich, 2001). The research by Antoncic and Hisrich showed a strong relationship between corporate venturing and financial performance (return on assets, return on equity, and relative profitability). Corporate venturing is also often used as a strategy in the declining businesses whereby their corporation is transformed into new core businesses with better opportunities for growth (Donahoe, Schefter & Harding, 2001). In this situation, Nokia is the best example as they have successfully transformed their core business from manufacturing to telecommunications. Thus, it can be hypothesised that, Hypothesis 4: Corporate venturing is positively related to firm performance. credit