By Sebastian Schuh, Tae-Yeol Kim, Xing Wang and Zhi-Qiang Liu

Keeping up with the never-ending march of emerging technologies and evolving consumer preferences puts pressure on companies of all sizes and sectors to not simply rest on their laurels, but to always be thinking ahead. Entrepreneurial Orientation (EO)—a strategic posture that embraces innovation, risk-taking, and proactiveness – is an important ‘futureproofing’ concept for all manner of businesses. While it is well understood at the firm level, management literature has paid less attention to exactly how and when EO cascades within a given organisation.

Our initial study addressed this gap through a three-source, three-wave study involving 280 supervisors and 1,214 employees across 94 organisations located in six major cities in China. The surveyed firms covered a wide range of industries, including manufacturing, finance and consulting. We conducted a supplementary study involving 238 firm supervisors in the United States. Taken together, these two studies demonstrated that:

• Firm-level EO is significantly and positively related to the creative performance of frontline employees.
• Supervisors’ and employees’ passion for inventing serves as a crucial mediator for EO’s link to creative performance, i.e. successful firm-level EO fosters supervisors’ passion for inventing, which then spills over to their employees.
• These cascading effects of EO do not occur unconditionally; they depend on the boundary condition of how much supervisors identify with their firm.
• The link between firm-level EO and supervisors’ passion for inventing is mediated by perceived normative expectations for creativity, i.e.: a workplace culture where the company expects supervisors and employees to be creative and come up with novel ideas strengthens this link.

To the best of our knowledge, our study is the first to test the idea that the impact of EO on employees is not direct but transmitted through its impact on organisational supervisors. Instead of being a purely top-down strategy dictated purely by executive-level leaders, EO is transmitted throughout an organisation in a much more subtle manner, with the psychological links between supervisors and the firm itself playing a more significant role than previously thought.

On a practical level, these findings emphasise the importance of fostering EO as a macro-enabler of employees’ creative efforts. Firstly, EO needs to be established and signalled from the top, with top-level managers and company figureheads leading the way. This can be done via all manner of methods and can include EO-strengthening company policies, communication efforts, and events that explicitly underscore the importance of innovation, risk-taking, and proactiveness to everyone within the organisation.

However, EO driven from the top isn’t enough. Company leaders must also concentrate on strengthening the bonds between supervisors (who are the crucial link between EO efforts and their intended positive outcomes) and the firm itself. This can be achieved through charismatic leadership, communicating a compelling organisational vision, and including supervisors on important decisions – particularly decisions regarding efforts related to creativity or general EO boosting. Getting supervisors on board with the firm’s broader EO strategy and the specific tactics employed is key to translating a strategic stance into the tangible benefits of better creative performance and a deeper passion for inventing.

Additionally, the cascading effect of supervisors’ passion for inventing spilling over to employees suggests that supervisors should be given even greater attention and support when it comes to EO efforts. Firms can boost supervisors’ passion for inventing by improving their general attitude towards task significance, giving them a greater sense of autonomy, and once again instilling in them a stronger identification with the firm’s vision and mission.

While developing a comprehensive firm-level EO strategy takes time and resources, the benefits are clear. By starting at the top and ensuring supervisors buy into the strategy, firm-level EO can inspire a workplace culture where every member of the organisation not only feels expected to perform creatively and actively seek out novel solutions to workplace challenges, but become actively passionate about doing so.

This article is based on a paper entitled, “Effects of Entrepreneurial Orientation Within Organizations: The Role of Passion for Inventing and Organizational Identification” by Sebastian Schuh, Tae-Yeol Kim, Xing Wang and Zhi-Qiang Liu published in the Journal of Management.

Sebastian Schuh is Professor of Organisational Behaviour and Department Chair of Organisational Behaviour and Human Resource Management at CEIBS. Tae-Yeol Kim is the Philips Chair and Professor of Management at CEIBS. Xing Wang is a Research Associate Professor at University of Illinois Chicago. Zhi-Qiang Liu is a Professor at the Huazhong University of Science and Technology.