Entrepreneurial orientation, strategic planning and firm performance ...

European J. International Management, Vol. 11, No. 3, 2017

Entrepreneurial orientation, strategic planning and firm performance: the impact of national cultures J.P. Coen Rigtering* Utrecht University School of Economics, Utrecht University, Kriekenpitplein 21-22, 3584 EC Utrecht, The Netherlands Email: [email protected] *Corresponding author

Fabian Eggers Department of Marketing, Menlo College, 1000 El Camino Real, Atherton, CA 94027, USA Email: [email protected]

Sascha Kraus Institute for Entrepreneurship, University of Liechtenstein, Fürst-Franz-Josef-Strasse, 9490 Vaduz, Principality of Liechtenstein Email: [email protected]

Man-Ling Chang Department of Leisure and Recreation Management, Asia University, No. 500, Lioufeng Rd., Wufeng, Taichung 41354, Taiwan Email: [email protected] Abstract: How can firms achieve high performance in different cultural settings? We use a contingency perspective to explore how configurations of entrepreneurial orientation and strategic planning lead to high firm performance and contrast these results between cultural contexts. Fuzzy set qualitative comparative analysis is used as a statistical technique that can detect combinations of independent variables that lead to similar outcomes. The results derived from a data set of 2506 firms from seven countries show that a combination of innovativeness and strategic planning activities leads to high performance regardless of cultural context. A strong orientation towards specialised and innovative offerings therefore needs to be combined with strategic planning activities. The impact of proactiveness varies across cultural contexts and leads to high performance when combined with strategic planning in high uncertainty avoidance and long-term oriented cultural contexts that favour the development of bureaucratic structures.

Copyright © 2017 Inderscience Enterprises Ltd.

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J.P.C. Rigtering et al. Keywords: entrepreneurial orientation; national culture; strategic planning; firm performance; fsQCA; corporate entrepreneurship; culture; firm size; proactiveness; innovativeness; risk-taking. Reference to this paper should be made as follows: Rigtering, J.P.C., Eggers, F., Kraus, S. and Chang, M-L. (2017) ‘Entrepreneurial orientation, strategic planning and firm performance: the impact of national cultures’, European J. International Management, Vol. 11, No. 3, pp.301–324. Biographical notes: J.P. Coen Rigtering holds a Master’s degree (cum laude) in Policy, Communication and Organisation from the VU University in Amsterdam and a PhD in Corporate Entrepreneurship from the Utrecht University School of Economics (U.S.E.). Currently, he works as an Assistant Professor at U.S.E. specialising in corporate entrepreneurship, strategic management, and intrapreneurship. He has been a guest lecturer at the Nelson Mandela Metropolitan University in 2009 and Stellenbosch University in 2010 and 2012. Fabian Eggers is Associate Professor of Marketing at Menlo College (CA), USA. Prior to joining Menlo, he worked as Visiting Professor at San Jose State University. He received his PhD in Entrepreneurship and Entrepreneurial Marketing from the University of Lüneburg, Germany. His research focuses on entrepreneurial marketing and innovation management as drivers of strategic marketing decisions. He is Director/Chair of the Global Research Symposium on Marketing and Entrepreneurship. Sascha Kraus is Full Professor and Chairholder in Strategic Management and Entrepreneurship at the University of Liechtenstein. Next to that, he is Visiting Professor at Copenhagen Business School, Denmark. He holds a doctorate in Social and Economic Sciences from Klagenfurt University, Austria, a PhD degree in Industrial Engineering and Management from Helsinki University of Technology and a Habilitation (Venia Docendi) from Laapeenranta University of Technology, both in Finland. Man-Ling Chang is Associate Professor at the Department of Leisure and Recreation Management at Asia University, Taiwan. She holds a PhD from the Department of Business Administration at National Cheng Kung University, Taiwan.

1

Introduction

Since its introduction just over 30 years ago, entrepreneurial orientation (EO) has become one of the most important research foci in the entrepreneurship domain (Covin and Lumpkin, 2011). The majority of EO research revolves around the question whether EO improves firm performance, and a meta-analysis by Rauch et al. (2009) confirms this relationship for firms of different sizes and that operate in different industries. Important questions regarding the EO-performance relationship nevertheless remain; they focus on developing more contextualised insights into how EO enhances firm performance (Miller, 2011).

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A number of studies (e.g. Covin and Miller, 2014; Fayolle et al., 2010; Kreiser et al., 2010) have recently begun to address how national cultures influence EO and the way EO manifests itself within an organisation. The influence of national cultures is of particular relevance to EO research because national cultures influence managerial decision-making, leadership styles, and management practices (House et al., 1999). This implies that strategic orientations and managerial decision-making processes associated with EO (e.g. risk-taking, innovation, proactiveness) are more prevalent and socially acceptable in some cultures than in others. In addition, cultures can shape the behaviours of buyers in national markets either towards conservative or novel products and/or services (Saeed et al., 2014), making the outcomes of EO (e.g. innovation, strategic repositioning, and new venturing, see Morris et al., 2011) more desirable in some countries than in others. Previous literature, however, is typically limited to the influence of culture on the level of EO (e.g. Lee et al., 2011; Lee and Peterson, 2000), and neglects that culture can influence the EO-performance relationship. Two rare exceptions to this rule are the recent studies by Saeed et al. (2014) and Semrau et al. (2016) that show that national cultures not only affect the level of EO within a firm, but also moderate the EO-performance relationship. Our study investigates the relationship between three Hofstede (1980, 1991) dimensions of national culture (uncertainty avoidance index, power distance index, and long term orientation), as well as EO and firm performance at the level of the individual sub-dimensions of EO: innovativeness, proactiveness, and risk-taking. More specifically, we use a configuration approach (Harms et al. 2007; 2009) and aim to identify different configurations of innovativeness, proactiveness, risk-taking, and strategic planning that lead to high firm performance in different cultural contexts. A configuration is a conceptual model that specifies the interrelations between a set of interrelated variables that can strengthen or hinder each other (see Kraus et al., 2011). As such, configurations allow researchers to establish complex models with complex interrelations between variables. A focus on the sub-dimensions of EO and a configuration approach hold extensive promise in providing a deeper contextualised understanding of the EO-performance relationship (Covin and Lumpkin, 2011; Covin and Wales, 2012; Kraus et al., 2012; Miller, 2011; Wiklund and Shepherd, 2005). In the context of national cultures, focusing on the sub-dimensions of EO is of particular relevance in how national cultures might influence these sub-dimensions in different ways. However, from a theoretical perspective, the approach is different than the dominant research stream within EO literature where scholars (e.g. Covin and Slevin, 1989; Miller, 1983; Rauch et al., 2009) typically attempt to capture the (net) effect of EO on firm performance. Examining the effect of the individual sub-dimensions of EO implies that innovativeness, proactiveness, and risk-taking function as specific manifestations of EO (see Covin and Lumpkin, 2011) and that not all sub-dimensions directly or positively affect business performance under all circumstances (see Lumpkin and Dess, 1996; Slevin and Terjesen, 2011). We offer a new perspective on the topic by adding the notion of equifinality (Katz and Kahn, 1966) which puts forth that: “a system can reach the same final state from different initial conditions and by a variety of different paths” (p.30). Equifinality thus suggests that a variety of strategies and designs can lead to optimal firm performance, and directs attention to the different configurations that can be used to predict variance in a dependent variable (Payne, 2006; Fiss, 2011). In addition, we contrast an entrepreneurial approach, characterised by a behavioural disposition towards

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acting on opportunities, purposeful risk-taking, and innovation (see Covin and Slevin, 1989) with strategic planning. Strategic planning implies the careful consideration of risks and alternative causes of action (see Collier et al., 2004). Strategic entrepreneurship scholars (e.g., Hitt et al., 2002; Wickham, 2004; Kuratko and Audretsch, 2009) argue that a combination of strategic management and entrepreneurship is necessary to maximise the benefits of an entrepreneurial approach, and we explore under which circumstances such activities may complement innovativeness, proactiveness and risk-taking. In order to achieve our goal, we make use of a large dataset (n = 2506) on EO and strategic planning that contains survey data from seven different countries. Fuzzy set qualitative comparative analysis (fsQCA) is used as an exploratory analytical technique that can identify sets of configurations observed across cases that lead to high firm performance. fsQCA complements traditional regression-based approaches by assuming that different combinations of independent variables can lead to the same outcome (see Ragin, 2008, Woodside, 2013) and is a useful tool to improve existing theories as it provides sets of conditions that can co-exist side by side (Fiss, 2011). Because previous research (e.g., Carrier, 1994) has shown that entrepreneurial processes differ between firms of different sizes, firm size is included as a grouping variable in the analysis.

2

Literature review

2.1 Entrepreneurial orientation During the last three decades, EO has become one of the most extensively researched topics in the entrepreneurship and strategic management literature, with more than a hundred studies exploring the concept (Wales et al., 2011). The significant impact of EO within the literature may be traced to the observation that at its most basic level, EO represents what it means for a firm to possess an entrepreneurially strategic posture (Covin and Lumpkin, 2011). EO may be characterised as a firm’s “strategy-making practices, management philosophies, and firm-level behaviours that are entrepreneurial in nature” (Anderson et al., 2009, p. 220). Although additional aspects of EO have been suggested in the literature (most notably autonomy and competitive aggressiveness, see Lumpkin and Dess, 1996), a general commonality among conceptualisations is the inclusion of innovativeness, risk-taking, and proactiveness as central dimensions to define entrepreneurial strategic processes and firm-level behaviours (Covin and Slevin, 1991; Lumpkin and Dess, 1996; Miller, 1983). Innovativeness reflects a firm’s willingness to support new ideas, creativity, and experimentation in the development of internal solutions or external offerings (Bouncken et al. 2014a; Covin et al., 2016). Proactiveness represents a forward-looking and opportunity-seeking perspective that provides an advantage over competitors’ actions by anticipating future market demands (Bouncken et al. 2014b). Risk-taking is associated with a firm’s readiness to make bold and daring resource commitments towards organisational initiatives with uncertain returns. EO can be studied as a collective strategic construct in which the simultaneous manifestation of innovativeness, risk-taking, and proactiveness typifies an entrepreneurial approach, or where scholars can analyse the impact of the individual dimensions separately (Covin and Lumpkin, 2011). Most studies take the position that it is the shared co-variance among the three dimensions that defines EO as an overall strategic posture


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(Covin et al., 2006; Rauch et al., 2009). However, utilising the construct at lower levels of abstraction (i.e. its separate dimensions) is appropriate if the research question necessitates such an approach (Covin and Wales, 2012). Miller (2011) puts forth that these kinds of research questions mainly relate to generating a more contextualised understanding of the EO-performance relationship and the extent to which the three dimensions interact to generate optimal performance outcomes (also see Slevin and Terjesen, 2011). Despite the dominant approach in EO literature of studying the aggregated construct, a study of the individual dimensions and their interrelations can thus enhance our understanding of how EO leads to high firm performance and how this relationship is influenced by the context in which a firm operates (see Lumpkin and Dess, 1996; Dess et al., 1999; Hughes and Morgan, 2007; Kraus et al., 2012).

2.2 Strategic planning Strategic management research is concerned with identifying performance differences between business enterprises by analysing their efforts to develop sustainable competitive advantages (Ireland et al., 2003). Strategic management focuses on matching the activities of the company with its resources and to the environment in which it operates, with the aim of maximising opportunities while minimising threats (Tapinos et al., 2005; Deimel and Kraus 2008). A principal element of strategic management is strategic planning. Strategic planning is a detailed process which aims to explicate strategy through the analysis of various alternative strategic options (Collier et al., 2004; Hutzschenreuter and Kleindienst, 2007; Kraus and Schwarz 2007). It is concerned with managing the complexity and the dynamics of the business environment (Eisenhardt and Sull, 2001), and can promote long-term thinking, help to focus on the big picture rather than on operational details, provide a structure for the identification and evaluation of strategic alternatives, and contribute to a reduction of uncertainty for the firm (Schwenk and Shrader, 1993). In general, strategic planning is regarded as long-term oriented (time span of three years or more); directed towards future potentials; substantial and holistic in nature; all while being predominantly associated with the highest management level determining the vision, mission, and culture of the company (Kraus, 2007; Kraus et al. 2008). The performance impact of strategic planning is largely confirmed (e.g. Bracker et al., 1988; Lyles et al., 1993; Rue and Ibrahim, 1998). Schwenk and Shrader (1993) showed in their meta-analysis that the existence of strategic planning correlates significantly and positively with a business enterprise’s financial success. At the same time, studies suggest that although the impact of strategic planning is not direct, the contribution of planning relies on the organisational integration that it generates. Participative strategic planning in particular facilitates strategic interactions, increases personnel comprehension about strategy, facilitates strategy implementation, and hence enables the company to align its strategic targets and resources with the changing business environment (Collier et al., 2004). Moreover, the process of planning itself seems to have a positive effect in that it leads to a better understanding of the business and to the recognition of a broader range of strategic alternatives (Lyles et al., 1993). One of the ways that firms can cope with rapid and continuous environmental changes is strategic entrepreneurship (SE), a combination of strategic management and entrepreneurial, innovation-oriented behaviour (e.g. Hitt et al., 2001; 2002; Wickham,

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2004; Kuratko and Audretsch, 2009). SE is based on the tight connection between strategic planning and EO. Not only is EO considered to be a strategic orientation (Covin and Slevin, 1989), but according to Lumpkin and Dess (1996), there is a fundamental set of strategy-making process dimensions that underlies nearly all entrepreneurial processes. To act entrepreneurially, a firm needs to employ organisational processes, methods, and styles, all of which can be considered part of strategic planning (Stevenson and Jarillo, 1990). EO itself can also be regarded as a source of competitive advantage or strategic renewal (see Lumpkin and Dess, 1996). Previous empirical research within the SE domain indicates strategic planning as one of the major constituents of SE (e.g. Kraus et al., 2011).

2.3 Culture and the relationships with EO and strategic planning Hofstede (1980) defines culture as: “the collective programming of the mind which distinguishes the members of one human group from another…and includes systems of values” (p.25). The cultural values of a society are reflected in national cultures and are used by societal members to understand interactions and behaviours in organisations, the environment, and their relationships with one another (Geletkanycz, 1997). At the national level, these cultures are understood as being homogenous, while they typically vary from nation to nation (Minkov and Hofstede, 2012). National cultures have been linked to the strategic decision-making processes within organisations through their influence on the beliefs and assumptions of key decision makers (Busenitz and Lau, 1996; Hofstede, 1991; Mitchell et al., 2000). Theoretically, cultures have been linked to the level of EO within firms in different countries by Lee and Peterson (2000) and Fayolle et al. (2010). A study by Kreiser et al. (2010) confirms this relationship, but also shows that the impact of culture may differ per EO dimension. Studies on the influence of culture on the EO-performance relationship are very rare. The dominant perspective is that the EO-performance relationship is similar for firms operating in different cultural settings (see Rauch et al., 2009). One exception is a study by Saeed et al. (2014) who use meta-analytical techniques to test if the EO-performance regression parameters of samples that originate from different cultural contexts are significantly different from each other. According to the authors, national cultures impact the behaviours of buyers and individuals within firms, leveraging the benefits from EO in cultures that are more likely to buy the products of entrepreneurial firms, making firms in some countries more suitable for the implementation of entrepreneurial strategies as a result. Another noteworthy exception is the recent study by Semrau et al. (2016) which finds from a sample of 1248 SMEs from seven countries that the EO-performance relationship holds true across all investigated countries, but also that a more “performance-based culture”, i.e. cultures that value individual achievement, encourage competition, and reward initiative and innovation (see House et al., 2004) strengthen this relationship. Our study builds upon the works of Hofstede (1980, 1991) to explore how configurations between EO and strategic planning that lead to high performance differ across cultural contexts. Hofstede’s (1980) original work suggests that a national culture can be accurately captured by four cultural dimensions: uncertainty avoidance index (UAI), power distance index (PDI), masculinity versus femininity (MAS), and


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individualism versus collectivism (IDV). In 1991, Hofstede extended his model with the “long term versus short term orientation” (LTO) dimension, and in 2010 Hofstede et al. added the sixth dimension of “indulgence versus restraint” (IDN). We build upon the meta-analytical results by Saeed et al. (2014) in order to decide which Hofstede dimensions to include in our study. Saeed et al. (2014) tested the effect of the four original dimensions of Hofstede (UAI, PDI, MAS, and IDV) on the EOperformance relationship and concluded that only UAI and PDI significantly moderate the relationship in all models. UAI and PDI are therefore included in our study. From the LTO and IND dimensions that Hofstede added in 1991 and 2010 respectively, we selected LTO. LTO describes a culture in terms of the strength of the connection between present events, future expectations, and the past. This orientation resonates with EO because the consequences of EO in terms of performance (i.e. the impact of risky R&D investments, innovation, or proactive firm behaviour) are most likely to impact a firm in the mid or long run. We decided not to include IND because it describes a society’s overall stance towards happiness and anticipates less profound implications for the EO-performance relationship. PDI refers to the extent that individuals within a country accept hierarchical relationships and how power is distributed among members of a society (Hofstede, 1980). In high PDI countries, hierarchies are established and seldom questioned, while in low PDI countries people are more likely to question hierarchies and distribute power more equally among organisational members. According to Saeed et al. (2014), high PDI cultures supposedly have lower adoption rates of new technologies (see van Everdingen and Waarts, 2003), limit the responsiveness of organisations due to less flexibility in decision-making at lower organisational levels, and hinder the implementation and commercialisation of innovations due to more hierarchical structures that inhibit crossfunctional communications (also see De Clercq et al., 2010). In high PDI countries, the importance of strategic planning activities as complementary to EO may increase. Strategic planning facilitates strategy implementation (Collier et al., 2004), and can therefore overcome the downsides associated with the hierarchical structures that prevent the rapid implementation of new technologies and innovations that result from EO. UAI refers to the extent to which people deal with ambiguous and unknown situations (Hofstede, 1980). In high UAI countries, behavioural guidelines and institutions are installed to minimise uncertainties (Hofstede, 1980). Low UAI countries, on the other hand, show more acceptance of different thoughts, uncertainty, and ambiguous situations. They therefore also have a lower tendency to install institutions or guidelines to regulate behaviour under uncertainty. High UAI countries tend to inhibit the adoption of new innovations by potential buyers and favour the creation of formalised bureaucratic structures that inhibit the implementation of entrepreneurial strategies, including the launch of innovations (Saeed et al., 2014). In addition, Shane (1994) suggests that a high UAI prevents individuals within organisations from effectively championing their ideas due to stricter rules and regulations, resulting in lower levels of EO. As a managerial activity associated with uncertainty reduction (Schwenk and Shrader, 1993), strategic planning will likely be more frequently applied within high UAI countries. In environments that promote the development of bureaucratic structures, the knowledgesharing and coordination associated with strategic planning (Collier et al., 2004) might be crucial to maintain a proactive and innovative strategic stance. However, since it is the goal of strategic planning to reduce risks, a risk-taking strategic stance and strategic planning might contradict one another (Schwenk and Shrader, 1993).

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A culture with a low LTO score prefers to maintain time-honoured traditions and norms while viewing societal change with suspicion. A high LTO score denotes a societal view that favours adaptation and pragmatic problem-solving as a necessity (Hofstede, 1991). LTO is positively associated with the level of EO within a firm (Lumpkin et al., 2010) and entrepreneurship in general (Mueller and Thomas, 2001). In a society with a high level of LTO, both buyers and individuals are more willing to accept change and innovation (Hofstede, 1991). We therefore expect that firms can adapt proactive strategies more easily and effectively in countries that score high on LTO. We can assume that in low LTO countries strategic planning activities are less likely to result in a shift in strategic orientations because steadfastness and traditions are honoured there. Firms in low LTO countries that have a strong emphasis on strategic planning may therefore be less likely to successfully combine strategic planning with EO, and in particular proactiveness, as it denotes a forward-looking perspective and implies the anticipation of future market demands (Covin and Slevin, 1989). Below we explain our data collection, methods, and results, and discuss the outcomes of the fsQCA for each of the three Hofstede dimensions (PDI, UAI, and LTO).

3

Methods

3.1 Data collection The data was collected by means of an online questionnaire. A large international market research company with offices in several countries assisted us in collecting the data and made use of an existing database with the names and email addresses of owners and employees in higher managerial positions within medium-sized and large firms. In doing this, this study follows a key-informant approach (Kumar et al., 1993) and regards the (top) management level and firm owners as the most suitable for judging the strategic activities and orientations of a firm. The questionnaire contained questions relating to EO, strategic planning, and firm performance. A professional translation agency translated the questionnaires from English into Chinese, Dutch, German, Malaysian, and Spanish. These translations were then checked by independent translators. Sampling continued until we reached about 400 respondents per country. 2907 cases were originally collected. Among others, 491 cases with missing values for the items of critical variables were deleted from the analyses. In addition, 68 cases were removed because they came from duplicate firms in the same country. The cases that were deleted had missing data and/or the respondent had less tenure as compared to the duplicate case(s). In total, there are 2438 cases including 311 cases from the Netherlands, 277 from Germany, 280 from Spain, 381 from the USA, 407 from China, 402 from India, and 380 from Malaysia. We used criteria set by the United States International Trade Commission (Hammer et al., 2010) in casu quo firms employing less than 500 employees to group the sample according to firm size (medium-sized versus large enterprises). Firms with fewer than 50 employees were regarded as small enterprises and excluded from the study. Culture served as the second grouping variable. We formed two groups per cultural dimension (i.e. PDI, UAI and LTO). Group 1 has the countries that score above the average Hofstede cultural index on that particular cultural dimension, while Group 2 has the countries that score below the average. The average score is calculated as the average of


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the seven countries within our database, creating two distinct groups that score relatively high or low on each cultural dimension respective to one another. This pairing of the different groups and the number of cases (N) per group are depicted in Table 1. Table 1

Sample size for each group based on cultural dimension and organisational size

Cultural dimension

Groups

N

G1. High PDI

Malaysia, India, China

G2. Low PDI

USA, Germany, Spain, Netherlands

1249

G3. High UAI

Spain, Germany, Netherlands

868

G4. Low UAI

USA, China, India, Malaysia

1570

G5. High LTO

Germany, China, Netherlands

995

G6. Low LTO

India, Spain, Malaysia, USA

1443

PDI

UAI

LTO

1189

Org. Size

N

G1-1. 500

569

G2-1. 500

628

G3-1. 500

411

G4-1. 500

786

G5-1. 500

511

G6-1. 500

686

3.2 Measures In order to asses a firm’s level of EO, we used the original nine-item measurement scale developed by Covin and Slevin (1989). Our decision to use the original threedimensional conceptualisation (Covin and Slevin, 1989; Miller, 1983) instead of the fivedimensional scale as developed by Lumpkin and Dess (1996) was informed by the fact that the three-dimensional measurement scale has been used in numerous studies, showing to be reliable in different cultural contexts (Runyan et al., 2012). In addition, many studies that investigate the effect of the individual sub-dimensions of EO use the three-dimensional measurement scale (Rauch et al., 2009). Consistent with the original scale, respondents were asked to choose between opposing statements. Their answers were measured on a 5-point Likert scale. Strategic planning was operationalised by means of a measurement scale by Collier et al. (2004). It measures the extent to which firms engage in strategic planning activities and make use of strategic plans on a 5-point Likert scale ranging from “completely disagree” to “completely agree.” Consistent with performance measurements developed by Wiklund (1999), a firm’s performance was measured by asking the respondent to compare the performance of their firm on a 5-point Likert scale ranging from “much worse” to “much better” performance relative to direct competitors. We included five dimensions of firm performance in this measurement (gross margin, profitability, increase in cash flow, increase in revenues, and increase in number of employees). The use of subjective performance measures that compare performance relative to direct competitors is very common in research areas were respondents are unlikely to divulge such information (Bamford et al., 2000). Studies (e.g. Dess and Robinson, 1984; Sarkar et al., 2001) have shown that there are strong associations between these kinds of subjective and objective performance measures. In

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addition, the meta-analysis by Rauch et al. (2009) shows that the EO-performance relationship does not differ between studies that make use of subjective or objective performance measurements. This study employed exploratory factor analysis with the whole cases (n = 2438) to examine the data structure. Table 2 reveals a three-factor solution with eigenvalues greater than 1 (accumulated variance explained = 66.65%) for EO and one-factor solutions for strategic planning (accumulated variance explained = 61.00%) and performance (accumulated variance explained = 67.44%). One of the items for innovativeness and one of the items of proactiveness failed to achieve the critical level of factor loadings, and was therefore removed from the analysis. The remaining items have loadings greater than .70. Cronbach’s alpha of each factor was greater than .60, suggesting sufficient internal consistency reliability. Thus, the dimensionality and reliability of all constructs are acceptable (Hair et al., 2010). Table 3 displays the descriptive statistics for each variable. Table 2

Results of exploratory factor analysis Factor loadings

Construct/Factor

Accumulated explained variances

Entrepreneurial orientation

Cronbach’s alphas

66.65

Innovativeness

.79–.81

.63

Proactiveness

.70–.81

.60

Risk-taking

.70–.80

.67

Strategic planning

.74–.81

61.00

.89

Performance

.76–.86

67.44

.88

Table 3

Descriptive statistics for variables

PDI group

G1-1. (n=620)

G1-2. (n=569)

G2-1. (n=621)

G2-2. (n=628)

Mean

Std. D.

Mean

Std. D.

Mean

Std. D.

Mean

Std. D.

EO: Innovativeness

3.76

0.86

3.99

0.79

3.53

0.86

3.56

0.87

EO: Proactiveness

3.57

0.72

3.70

0.76

3.39

0.71

3.43

0.83

EO: Risk-taking

3.24

0.84

3.34

0.84

3.08

0.81

3.02

0.85

Strategic planning

4.23

0.53

4.34

0.54

4.01

0.64

4.00

0.66

Performance

4.13

0.56

4.20

0.58

3.75

0.70

3.57

0.76

UAI group

G3-1. (n=457)

G3-2. (n=411)

G4-1. (n=784)

G4-2. (n=786)

Mean

Std. D.

Mean

Std. D.

Mean

Std. D.

Mean

Std. D.

EO: Innovativeness

3.56

0.82

3.59

0.83

3.69

0.89

3.85

0.86

EO: Proactiveness

3.38

0.66

3.41

0.82

3.54

0.75

3.64

0.80

EO: Risk-taking

3.13

0.78

3.02

0.83

3.18

0.86

3.25

0.86

Strategic planning

3.96

0.64

3.93

0.66

4.21

0.55

4.28

0.58

Performance

3.78

0.67

3.55

0.74

4.03

0.64

4.04

0.70

Entrepreneurial orientation, strategic planning and firm performance Table 3

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Descriptive statistics for variables (continued)

LTO group

G5-1. (n=484)

G5-2. (n=511)

G6-1. (n=757)

G6-2. (n=686)

Mean

Std. D.

Mean

Std. D.

Mean

Std. D.

Mean

Std. D.

EO: Innovativeness EO: Proactiveness EO: Risk-taking Strategic planning

3.68 3.49 3.13 4.01

0.84 0.69 0.82 0.63

3.76 3.52 3.08 4.03

0.82 0.79 0.84 0.65

3.62 3.47 3.18 4.19

0.88 0.74 0.83 0.57

3.76 3.59 3.24 4.26

0.89 0.83 0.87 0.60

Performance

3.84

0.63

3.75

0.73

4.00

0.67

3.96

0.75

3.3 Analytic approach This study utilises fsQCA for recognising causal configurations leading to high performance using fsQCA 2.0 software (Ragin, 2008). This method has several advantages that help to identify cause-and-effect relationships. fsQCA operates the analysis based on set relations. Almost all social science theory is formulated in terms of set relations that allow asymmetrical relationships (Ragin, 2008, Woodside, 2013). In this regard, fsQCA is an appropriate tool to analyse theories in the social sciences and explain realities (Berg-Schlosser et al., 2009, Woodside, 2013). FsQCA combines advantages of both qualitative and quantitative techniques (BergSchlosser et al., 2009). It permits systematic cross-case comparisons based on levels of critical variables (Rihoux and Ragin, 2009). Its application results in a logical statement describing combinations of conditions sufficient for the outcome (Ragin, 2008). Moreover, while conventional statistical methods assume that each independent variable influences the level of the outcome regardless of other variables (Ragin, 2008, Woodside, 2013), fsQCA allows a determination of the number of different causal models across observed cases (Berg-Schlosser et al., 2009). This means that different combinations of factors may lead to the same outcome. Identifying configurations of sufficient conditions by conducting a fsQCA is an important way to improve existing theories because the approach embraces the notion of equifinality and provides a theoretical underpinning for the variety of design choices that can lead to similar outcomes (Fiss, 2011). In addition, most theories allow for causal asymmetry, although the results of a correlation analysis are symmetric (Ragin, 2008). However, “the set of causal conditions leading to the presence of the outcome may frequently be different from the set of conditions leading to the absence of the outcome” (Fiss, 2011, p.394). Innovativeness in combination with proactiveness may, for example, lead to high firm performance, even though this does not necessarily suggest that an absence of innovativeness and proactiveness will lead to low performance. Instead, risktaking and strategic planning might compensate for the absence of innovativeness and proactiveness; correlation-based approaches are unable to incorporate these more complex interrelations. Four major steps are necessary to conduct fsQCA analyses. First, all interval-scale variables are required to calibrate to fuzzy variables, representing the degree of membership of cases in sets, with scores ranging from 0.0 to 1.0 (Ragin, 2008). Starting with our 5-point scales, we specified the values of 5.0, 3.0, and 1.0 to create three qualitative breakpoints to structure a fuzzy set: full membership, full non-membership, and the crossover point (Chang and Cheng, 2014; Cheng et al., 2013; Ragin, 2008). After this, the software automatically creates a truth table that represents the data and


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lists all logically possible combinations of conditions associated with the outcome (Ragin, 2008). The third step is to select a number-of-cases threshold for classifying some configurations as relevant and others as irrelevant (Ragin, 2008.) The larger the sample size, the higher the threshold should be, and the remaining configurations should cover at least 75–80% of the cases (Ragin, 2008; Ragin, 2008; Ragin, 2009). Accordingly, we used 10 as the threshold in our analyses. The next step is to distinguish configurations that meet a sufficient consistency threshold from those that do not. The threshold should not be less than .75, and is ideally greater than .85 (Ragin, 2008). We selected a strict threshold of .95 to enhance the robustness of the results. Finally, the truth table is developed and analysed.

4

Results

This study conducted several fsQCA analyses for 12 groups, and its results are shown in Table 4, Table 5, and Table 6 respectively. These tables reveal two solution configurations with satisfactory consistency levels (consistency > .90) for each group. Therefore, all causal combinations demonstrate significant sufficient conditions leading to high firm performance according to Ragin (2008). Coverage assesses the proportion of memberships in the outcome explained by a solution. A configuration with a unique coverage greater than zero can explain a certain outcome in the dependent variable (Bell et al., 2014). Tables 4, 5, and 6 show that the unique coverage for each configuration ranges from .02 to .59, confirming that each causal combination offers a unique contribution to the explanation of high performance. Most values of raw coverage and total solution coverage are above .50, indicating that most causal combinations are able to account for a large proportion of high performance. The results provide evidence that all solution configurations are strongly sufficient conditions leading to high performance. Table 4

Causal configurations for PDI groups G2: Low PDI (USA, Germany, Spain, and Netherlands)

G1: High PDI (Malaysia, India, China) G1-1: Medium firms Conditions

S1-1-1 S1-1-2

EO: Innovativeness

G1-2: Large firms S1-2-1

●

EO: Proactiveness

●

EO: Risk-taking

○

Strategic planning

●

S1-2-2

S2-1-1

●

S2-1-2

●


●

○

S2-2-2 ●

●

○ ●

G2-1: Medium firms

○

○

●

●

●

●

●

Raw coverage

.50

.73

.31

.87

.58

.81

.54

.84

Unique coverage

.08

.31

.02

.59

.07

.30

.03

.33

Consistency

.98

.99

.99

.97

.92

.94

.95

.90

Solution coverage

.81

.89

.88

.87

Solution consistency

.98

.97

.91

.90

Notes:

Black circles ‘●’ indicate the presence of causal conditions. White circles ‘○’ indicate the absence or negation of causal conditions. The blank cells represent ‘don’t care’ conditions, meaning that the causal path always leads to the outcome variable without regard to the levels of the ‘don’t care’ conditions.

Entrepreneurial orientation, strategic planning and firm performance Table 5

313

Causal configurations for UAI groups G3: High UAI (Spain, Germany, Netherlands) G3-1: Medium firms

Conditions

S3-1-1 S3-1-2

EO: Innovativeness

S3-2-1

●

EO: Proactiveness

●

EO: Risk-taking

○

Strategic planning


G4: Low UAI (USA, China, India, Malaysia) G4-1: Medium firms S4-1-1

●

S4-1-2


●

S4-2-2 ●

● ●

○

○

○

●

●

●

●

●

●

●

●

Raw coverage

.51

.65

.55

.84

.53

.82

.49

.86

Unique coverage

.12

.25

.03

.32

.06

.35

.04

.41

Consistency

.96

.97

.96

.90

.96

.97

.95

.96

Solution coverage

.77

.87

.88

.90


.96

.90

.95

.94

Notes:


Table 6

Causal configurations for LTO groups G5: High LTO (Germany, China, Netherlands) G5-1: Medium firms

Conditions

S5-1-1

EO: Innovativeness

S5-1-2


●

EO: Proactiveness

●

EO: Risk-taking

○

Strategic planning

●

S5-2-2

G6: Low LTO (India, Spain, Malaysia, USA) G6-1: Medium firms S6-1-1

●

S6-1-2


●

S6-2-2 ●

● ○ ●

●

○

○

●

●

●

●

●

Raw coverage

.50

.83

.52

.87

.53

.80

.50

.85

Unique coverage

.04

.37

.02

.37

.06

.34

.05

.40

Consistency

.96

.97

.97

.93

.95

.96

.94

.94

Solution coverage

.87

.89

.86

.89


.95

.93

.94

.93

Notes:


The results all demonstrate that the presence of strategic planning is a critical condition for high firm performance across cultures and firm sizes. Nevertheless, dimensions of EO play different roles for distinct groups with different cultural dimensions and firm sizes. An integration of all solution configurations reveals that three major configurations are


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the key paths for most situations. Table 7 summarises the situations to which these three configurations are applicable. It is obvious that the solution combining the presence of innovativeness and strategic planning (No. 3) is the primary causal recipe that helps to steer most firms towards high performance. In addition, this causal configuration accounts for a higher percentage of membership in the outcome, that is, higher performance, as compared to other causal configurations without the presence of innovativeness. Table 7 also demonstrates that solutions No. 1 and No. 2 only occur in distinct situations. Put differently, there is no overlap between the check marks in Table 7 for solutions No.1 and No. 2. A comparison of solutions No.1 and No. 3 reveals that innovativeness and risk-aversion appear to be substitutes for one another because they do not co-occur in any situations. In some situations firms that are equipped with either innovativeness or risk-aversion can achieve high performance when they perform strategic planning. Finally, we found three unique solutions that lead to high firm performance (see Table 7): the presence of innovativeness, proactiveness, and strategic planning for medium-sized firms in countries with high PDI (S1-1-2); the absence of proactiveness and risk-taking and the presence of strategic planning for large firms in countries with high PDI (S1-2-1); and the presence of innovativeness, risk-taking, and strategic planning for medium firms in countries with high UAI (S3-1-2). The latter also indicates that among all 24 combinations, risk-taking is only a necessary condition for medium-sized firms in countries with high UAI. Table 7

A comparison of causal configurations cross cultures and firm sizes

No. Innovativeness Proactiveness

High Low High Low High Low Risk- Strategic PDI PDI UAI UAI LTO LTO taking planning a M L M L M L M L M L M L Common solutions

1. 2.

●

3.

●

S1-1-2

●

○

●

○

●

✓b

✓

✓✓ ✓✓✓

●

✓✓✓

✓ ✓ ✓✓

✓✓✓✓✓✓ ✓

Unique solutions S1-2-1

○

S3-1-2 Notes:

●

●

● ○

●

●

●

✓ ✓ ✓

a

M denotes medium firm size, whereas L denotes large firm size. The cell with a square represents that the solution is capable of leading to high performance for the situation in terms of a specific cultural dimension and firm size.

b

5

Discussion of results

We found only one configuration that leads to high firm performance and that is not affected by national cultures: innovativeness in combination with strategic planning. This configuration also accounts for the highest change in firm performance, making in the


315

context of our study innovativeness the most critical dimension among the three EO dimensions. Previous research, e.g. Rosenbusch et al. (2011) proposes that cultural differences influence the innovation-performance relations because “cultural differences affect innovation input, the innovation process, and the commercialization of innovations” (p.447). We suggest that the combination of innovativeness and strategic planning is particularly useful for overcoming cultural barriers that prevent the successful application of innovation within firms and/or markets because of the ability of strategic planning to deal with the complexities and dynamics that consummate with an innovative approach (also see Eisenhardt and Sull, 2001; Hitt et al., 2001; Wickham, 2004; Kuratko and Audretsch, 2009). Firms that simultaneously apply an innovative strategic orientation with careful strategic planning will scrutinise the internal innovation processes and the commercial potential of their innovations. They are therefore more likely to successfully develop new products/services and are more likely to successfully commercialise their innovations. In addition, developing a strategic plan might facilitate the cross-functional coordination and communication needed for developing innovations because different departments would here be more aware of the long term strategic goals and areas in which the firm wants to innovate. Interestingly, there are some situations where risk-aversion combined with strategic planning can act as a substitute for the combination of innovativeness and strategic planning. As risk-taking is associated with a firm’s readiness to make bold and daring resource commitments (Covin and Slevin, 1989), and strategic planning aims to explicate strategy through a careful and detailed analysis of various alternative options (Collier et al., 2004), risk-taking may be incompatible with strategic planning and can lower its effectiveness as a result. In contrast to innovation, this kind of conservative approach can be equally successful in particular situations (low UAI, low LTO, and low PDI for medium-sized firms). Turning to the effects of culture, we observe that the role of proactiveness differs within different cultural contexts. In high UAI and high LTO countries, firms need to combine their risk-aversion and strategic planning activities with proactiveness. High UAI countries are characterised by the development of institutions and behavioural guidelines that minimise uncertainties (Hofstede, 1980). Saeed et al. (2014) hypothesise a negative moderating effect of UAI on the EO-performance relationship because individuals are likely to avoid risks and prefer structures and stricter regulations. When adopting a risk-averse strategic stance combined with strategic planning activities that within this kind of context are likely to be designed to further reduce business related risks, the result may be a too passive strategic posture. Proactiveness is then needed to prevent a real “wait and see” posture (see Covin and Slevin, 1989) and to retain a certain level of competitiveness and flexibility within countries with relative high UAI scores such as Germany or The Netherlands. In high LTO countries, where the societal view favours adaption (Hofstede, 1991), firms can more easily apply proactive strategies because the organisational members are more open to adaptation. As a result, organisational members are more willing to quickly adapt their routines if the firm’s management deems it necessary to quickly act upon opportunities, or will take action themselves to introduce products or services to the market ahead of competition (also see Covin and Slevin, 1989). In addition, buyers are more accepting of change and more likely to buy novel products or services. We observe no difference in these benefits between large and medium-sized firms.

316


With regard to PDI, the role of proactiveness becomes more complex, as the effects are moderated by firm size and represent unique configurations of EO and strategic planning within our analysis. In high PDI countries, a combination of innovativeness, proactiveness, and strategic planning leads to high firm performance in medium-sized firms, while large firms do not need to add this proactive element to their innovative strategic stance and strategic planning activities. In addition, in the absence of innovation, strategic planning only leads to increased firm performance for large firms when risk-taking and proactiveness is minimised. Saeed et al. (2014) hypothesise a negative effect of PDI on EO due to lower adoption rates of new technologies, less flexibility in decision-making at lower levels, and the development of hierarchical structures (also see van Everdingen and Waarts, 2003; De Clercq et al., 2010). These effects of bureaucratisation and flexible decision-making are, however, less prevalent in medium-sized firms than in large firms, making it possible for medium-sized firms to effectively adopt a more proactive strategy in high PDI countries. In low PDI countries, where bureaucratisation is less pushed onto organisations, large firms yield similar benefits, making it possible to combine strategic planning with a more proactive entrepreneurial approach. We identified one particularly unique performance configuration: medium-sized firms in high UAI countries that are not risk-taking can be successful when being innovative and applying strategic planning practices. It is possible that in countries that are characterised by uncertainty avoidance, medium-sized firms that combine innovation with risk-taking are able to differentiate themselves from their direct competitors that would typically adopt a risk-averse posture within the same context. When used in combination with innovation, risk-acceptance allows firms to invest more heavily in innovation and uncertain technologies. The outcomes of innovativeness combined with risk-taking are therefore likely to be more radical, offering a stronger basis for differentiating an innovative firm from a non-innovative firm within high UAI countries. This might explain why medium-sized firms in Germany (a country with a higher level of UAI) that adopt a risk-taking and innovative strategic stance in combination with strategic planning can reap the benefits in terms of differentiation while firms in India (a country with a low level of UAI) experience fewer benefits. Here, many firms are expected to embrace risk-taking. Large firms within high PDI countries would be less likely to successfully adopt this unique configuration, as they have even stronger tendencies to develop formal (bureaucratic) institutions that prevent risk-taking. Large firms that still try to adopt this configuration might therefore experience internal conflicts between managers that favour risk-taking and formal institutions that prevent such behaviour, leading to average or below-average firm performance.

6

Implications

Organisation theory and culture theory intersect at different issues in organisation and management research. Organisations are among other things themselves cultureproducing phenomena. Whereas the main purpose of a business is to produce goods and services, they can also as a by-product produce distinctive cultural artefacts such as rituals, legends, and ceremonies. Put another way, organisations are themselves embedded within a wider cultural context and have the potential to develop socio-cultural qualities (Smircich, 1983). This interplay between ‘external’ and ‘internal’ culture is


317

addressed here. The different EO dimensions and the role of strategic planning activities can influence a company’s culture (Dess and Lumpkin, 2005) and are, as this study shows, impacted by cultural factors that reside outside the firm. The results of the fsQCA analysis have implications for future EO studies and especially for future studies focusing on the impact of culture on EO. Meta-analytical results by Saeed et al. (2014) show that the EO-performance relationship is less strong in high UAI and PDI countries while Semrau et al. (2016) show that when firms operate within performance-based cultures, this increases the likely impact of EO. Rather than concentrating on these main effect estimations, we examine how configurations of innovativeness, proactiveness, risk-taking, and strategic planning affect the performance of firms in different cultural contexts. Our study provides insights into how firms can successfully adapt their EO and strategic planning processes, activities, and strategies to achieve high financial performance within cultural settings. The configurations leading to high firm performance thus provide unique insights into the interrelations between the different sub-dimensions of EO and strategic planning. Overall, the results show that different cultural contexts allow for different combinations of innovativeness, proactiveness, risk-taking, and strategic planning that can be equally successful in terms of firm performance. Previous empirical EO studies using a multidimensional EO model have typically neglected this, which is why we urge EO researchers to incorporate the notion of equifinality when using a configuration approach or multidimensional model of EO. Our results suggest that the combination of strategic planning and innovativeness is an important causal configuration for high firm performance regardless of the cultural context in which a firm operates. This combination between an entrepreneurial approach and more formalised strategic management practices is central to foundational research on SE (see e.g. Hitt et al., 2001), although only a few studies actually combine EO measurement scales with measurement scales on strategic planning (see e.g. Rauch et al., 2009). In addition, while innovativeness and proactiveness need to be combined with strategic planning, strategic planning can result in high firm performance in and of itself. But such strategic planning activities benefit from an absence of risk-taking and/or proactiveness, indicating the complexity of successfully implementing an entrepreneurial strategy. The results furthermore indicate that the proactive and risk-taking components of EO are subject to cultural influences. Studies that consider the effect of the individual EO dimensions instead of the aggregated concept of EO often report that the impact of a particular EO dimension is not significant or can vary (e.g. Hughes and Morgan, 2007; Kraus et al., 2012; Rigtering et al., 2013). Our findings suggest that proactiveness can be effectively applied in cultural settings that favour the development of bureaucratic structures or that have a long term orientation. However, our fsQCA also provides more in-depth insights and shows that the benefits of such a proactive stance originate from the combination of proactiveness and strategic planning in the absence of risk-taking, while risk-taking can have positive effects for medium-sized firms in high UAI countries. More specific combinations between the sub-dimensions of EO and strategic planning are applicable when it comes to high versus low PDI countries. Previous studies have typically neglected such complex interrelations between the sub-dimensions of EO (as well as in relation to strategic planning), and our study offers much-needed insights into this area.

318


From a theoretical and methodological perspective, our approach to the study of EO opens up interesting avenues for future research. As an aggregated construct, EO implies the existence of an entrepreneurially strategic posture, while studies that examine the separate dimensions of EO assume that one or a combination of multiple sub-dimensions of EO lead to entrepreneurial behaviour (Covin and Wales, 2012). In this regard, it has been theorised that the manifestation of only one dimension of EO is insufficient to claim that EO is present or absent (Covin and Lumpkin, 2011). The importance of shared positive co-variance among the dimensions of EO is thus considered a central and defining aspect of an overarching strategic posture, and our fsQCA approach does not violate this assumption. Shared co-variance means neither that EO is a unidimensional construct by nature, nor that the EO sub-dimensions must equally contribute to performance (see Covin and Wales, 2012; Rigtering et al., 2013). In our fsQCA, the subdimensions of EO may positively co-vary, although our interest is in fact on identifying different configurations of EO and strategic planning that lead to optimal performance in different cultural settings. This approach can be applied in various domains. Configurations of EO are likely to differ between firms with different ownership structures (e.g. family business versus non-family business), firms operating in different industries (e.g. services versus high-tech), or firms with different structures (e.g. divisional, hierarchical, networking, etc.). We as a result urge other researchers to apply a configuration approach and investigate these unique interrelations between the subdimensions of EO and other relevant firm-level characteristics or strategic practices. For practitioners, our study offers insights into performance effects of different EO/strategic planning combinations for different firm sizes and in different cultural contexts. Practitioners can use these configurations as prototypical of what their EO and strategic planning profile should look like when they operate in specific cultural contexts. In every situation, strategic planning leads to high firm performance. Therefore, every firm, independent of size and cultural context, is urged to make and follow through with strategic plans. In terms of EO dimensions however, decision makers have to be more careful. This is what makes a correct interpretation of Tables 4–6 so important for finding the right combination of proactiveness, innovativeness, and risk-taking. Black circles here underscore the importance of a certain condition, i.e. firms need to take action to foster for example innovative thinking and actions. Blank cells denote “don’t care” conditions: Here, the presence or absence of a certain condition does not harm firm performance, although it could mean a waste of resources if for example funds are invested to increase employee creativity when innovativeness has no performance impact. Finally, white circles indicate harmful conditions. Here, the firm has to pay close attention to avoid certain postures in combination with other initiatives. This is particularly the case for risk-orientation. Our study is subject to a number of limitations that need to be addressed in future studies. First and foremost, we use EO and strategic planning data from only seven countries. Even though our dataset is larger and more diverse than the existing samples used in multi-country EO studies (e.g. Kreiser et al., 2010), including a larger number of countries is and will be important. This problem is most apparent in our analysis when we compare the configurations in UAI and LTO cultures. As a result, we are unable to indefinitely isolate the unique impact of UAI and LTO. More research is therefore needed to affirm the robustness of our results. Such research should also provide more advanced insight into whether culture affects the EO-performance relationship through


319

the behaviours of buyers, employees, or the behaviours of other firms that operate within the same cultural setting. After all, it’s essential to separate the different mechanisms from a theory building point of view. We also included only three of the six Hofstede dimensions of culture. Even though our decision was informed by meta-analytical results by Saeed et al. (2014), the dimensions MAS and IDV may have important implications for the EO-performance relationship as well. MAS for example represents a preference in society for achievement, heroism, assertiveness, and material rewards for success. It therefore may have important implications for the EO-performance relationship because a performanceoriented society would orient endeavours associated with EO towards high performance outcomes. In addition, even though the Hofstede indicators are the most commonly used measures of cultural differences at the country level (Kirkman et al., 2006), their validity has been debated. Schwartz (1990; 1999) for example argues that the IDV indicator of Hofstede fails to adequately capture values that foster the goals of collectives, pointing out that the Hofstede indicators are only available for a limited set of countries. In addition, the GLOBE project (House et al., 2002) builds on the Hofstede approach and theorisation, even though it failed to find significant positive correlations between a number of Hofstede and GLOBE dimensions that should in fact be similar. We decided to use the Hofstede indicators because we aim to capture the overall values held by individuals in society. The GLOBE dimensions assess a culture as “it is” and as “it should be.” This adds a future dimension to their cultural indicators, and Hofstede (2006) shows that this future orientation is not related to the existing prevalent values in society. Depending on the research goals, scholars can however use different cultural indicators (e.g. Schwartz, 1990; House et al., 2002), and including additional cultural dimensions can strengthen our knowledge of the impact of national culture on EO and strategic planning. Further, our study makes use of single respondents to determine the strategic posture of a firm while applying subjective performance indicators. Despite the fact that such practices are commonly accepted in EO research and the use of performance indicators does not significantly impact the reliability of EO studies (see Rauch et al., 2009), multiple respondents per firm and objective performance indicators would be preferable. In addition, even though the fsQCA method has shown to be suitable for identifying necessary conditions that lead to high firm performance (for an application in different entrepreneurship contexts, cp. e.g. the recent studies by Kraus et al. 2016a; 2016b), causality can only be inferred. Longitudinal studies and natural field experiments where cause and effect relationships can be isolated are therefore recommended (see List, 2011).

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