5.6.1 Passion for Inventing and Environmental Dynamism
Passion for inventing’s impact on business growth might be moderated by environmental dynamism. The thrust of the argument for the positive moderating effect of environmental dynamism on the relationship between passion for inventing and business growth is that when the business environment is in constant change, greater passion for inventing can lead to more new product trials because entrepreneurs are likely to come out with new products due to the unpredictability of the environment.
Inventing new products can broaden firms’ customer base which can result in higher profitability (Atuahene-Gima and Ko, 2001). Additionally, when the environment is in a state of unpredictability, higher passion for inventing can lead to new product trials and more repeat product purchases as a result of a novelty effect (Baker and Sinkula, 2009). Hence, environmental dynamism should foster greater activities associated with scanning the environment for new market opportunities, developing new products or services (Cardon et al., 2009a), such that the linkage between passion for inventing and business growth is stronger and positive under high levels of environmental dynamism.
A major contention is the idea that for inventing activities to be actualised, it requires creative thinking to be implemented which can only take place when entrepreneurs are motivated (Baron and Tang, 2011; Cardon and Kirk, 2015). This study suggests that such motivation will normally be higher in dynamic, as opposed to stable environments because dynamic environments foster higher firm-level outcomes. Overall, the relationship between passion for
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inventing and business growth will be stronger in dynamic than stable environments, because the pressures induced by the environment to use the idea to invent new products or services will be stronger in dynamic environments. Accordingly this study proposes that:
H10: The positive association between passion for inventing and business growth is stronger
when environmental dynamism is higher.
5.6.2 Passion for Founding and Environmental Dynamism
Passion for founding might be most effective when the environment is in state of constant change. The opportunities brought about by the dynamic environment provide the platform for businesses to venture into new market niches and new geographical markets before their competitors. Previous scholarly studies suggest that entrepreneurs who experience passion for founding search for financial, human and social resources to grow their businesses (Cardon et al., 2009a; Cardon et al., 2013; Cardon and Kirk, 2015). These entrepreneurial behaviours might be prompted by constant changes in the environment which put pressure on firms to venture into new markets and geographical markets. For example Bhide (1994) argues that uncertainty encourages new promising businesses. Therefore, entrepreneurs in uncertain environments will be motivated to focus on new markets to achieve growth.
Indeed, it has been argued that passion for founding serves as a motivator for entrepreneurs who aspire for establishing new ventures (Cardon et al., 2013). As dynamic environment ‘‘reduces stability and predictability of relations among firms and their constituents within an industry’’ (Simerley and Li, 2000: 39), entrepreneurs operating within these industries are required to found new business to avert constraints faced by the existing business in the environment (D’Aveni, 1994). For example, if certain environmental activities pose threats to the firm’s growth initiative, entrepreneurs are likely venture into another business activities leading to founding new businesses. Thus, if environmental factors pose threat to the existing
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business, driving resource allocation agendas that underlie founding activities may appear effective.
Additionally, individuals who launch several businesses in their life time (Ucbasaran et al., 2008), may possess experience in assembling the necessary financial, human, and social resources required to found new ventures (Cardon et al., 2009a). The experience acquired from founding new ventures allows them to respond to the likely environmental threats and further allows entrepreneurs to generate high levels of activation in dynamic environments (Cardon et al., 2013). Thus, the levels of activation among entrepreneurs are likely to be higher in dynamic, as opposed to stable environments which in turn fosters greater growth activities (Baron and Tang, 2011). On the basis of this reasoning, this study concludes that dynamic environment can facilitate successful conversion of passion for founding into enhanced growth outcome due to higher levels of activation in dynamic environments. This study summarises this argument as:
H11: The positive association between passion for founding and business growth is stronger
when environmental dynamism is higher.
5.6.3 Passion for Developing and Environmental Dynamism
The effect of passion for developing on business growth might be moderated by environmental dynamism. This is because entrepreneurs operating in highly dynamic environments, typified by high growth rates, will be confident to enact entrepreneurial actions (Fini et al., 2012). Thus, industries characterised by high growth rates prompt the intensity of a business strategy which eventually generate high growth outcome. In this context, dynamic environments might generate high levels of activation for entrepreneurs to venture into activities that produces higher economic returns.
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Additionally, as passion for developing is associated with growth and expansion of businesses (Cardon et al., 2009a), this study argues that entrepreneurs who experience passion for developing can pursue strategies aimed at growth and expansion of their business when environmental dynamism is high. A major rationale is that when the environment is stable and predictable there would be fewer underexploited market opportunities and the returns available from developing a firm may not be very attractive, hence passion for developing may be most beneficial to business growth when changes take place in the environment. Thus, dynamic environments are likely to facilitate the individual’s passion in order to develop new products and technologies that can generate higher economic outcomes. This can enhance the growth of the business. Following this logic, the present study argues that:
H12: The positive association between passion for developing and business growth will be
stronger when environmental dynamism is higher.
5.7 CHAPTER SUMMARY
Chapter 5 presented a discussion of the study’s conceptual model and hypotheses development. Consequently, a model relating to aggregate passion, business growth, moderators of the passion-growth linkage, relationship of the entrepreneurial passion domains with business growth, and the moderators of the passion domains (inventing, founding and developing)-business growth linkages was presented. The identity, regulatory focus, contingency and social capital theories offered theoretical directions for the conceptual framework. The study argued that entrepreneurs’ overall passion might enable small businesses to return high growth outcomes. The study further argued that the passion domains might individually contribute to business growth. On the basis of this reasoning, the model examined the conceptual association between each individual passion domain and business growth. The individual passion domains’ linkages with business growth are also argued to be
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moderated by political ties and environmental dynamism. In the chapter that follows next, the study’s research methodology is presented.
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