Risk Taking's Impact On Business Performance Of New Enterprises

In recent years, the topic of entrepreneurship is becoming so popular, not only because the behavior of enterprise has made a positive affect on the macroeconomic, but also because these kind of behavior will make a positive effect on the established enterprise. The important of entrepreneurial orientation on the stratagem of corporations has been agreed by authors in the field of strategic management (Andrews,1972;Chandler,1962;Chandler,1862;Schendel&Hofer,l972). Miles and Snow(1978) thought the problems of entrepreneurial orientation were the things all the corporations had to face to. It relate to orientation of industry,products, the market relationship and resource distribution of corporations, and all of these would effect business performance. The predecessor's research indicated that the corporations with high entrepreneurial orientation would more like to update their products and service, and to practice new means of management and manufacture, and they always be more conscious of the develop orientation of industry, and all of these are the important factors of business success.(Frey G.Covin & Slevin,1989;J.G Covin & Slevin, 1990;G.Dess,Lumpkin,& McGee.1999).Risk taking is one of the there entrepreneurial orientation of enterprises, studying the risk taking's influence on business performance will be good for entrepreneurs to find the most suitable employees with proper level of risk taking, and as a result, these employees will create higher business performance for entrepreneurs, which will then promote the whole development of economic.In order to research the risk taking's impact on business performance more clearly, I not only studied correlative article in entrepreneurship, but also studied the concept of risk taking in many other field, such as information economics, investment, behavior economics. And I looked into the meaning of"risk"in the word"risk taking". With the meanings of"risk"in these different field, the"risk"in the"risk taking"I research on is consistent with definition of Knight in information economics—uncertainty with probability distributing. When we study the risk taking of entrepreneurs, we always put questions to the tendency of their decision-making, and the entrepreneurs need use their former experience to estimate how much the chance to success and how much the chance to be lost, and then they will make decisions based on their own tendency of risk taking. And this kind of risk is always pointed to the loss and bad results in finance. The definition of risk taking we defined is the tendency of entrepreneurs, who would like to devote lots of resource into risk business, and would like to bear the high risk for higher return.Being entrepreneurial and venturing into new fields unavoidably involves errors and a certain degree of risk (Schumpeter, 1934) and speculation (Kirzner, 1997). Amongst others, Lumpkin and Dess (1996) assume a relationship of risk taking with success. Up to now, there is little and inconsistent empirical evidence for that relationship (Rauch & Frese, 2000). Begley and Boyd (1987) pointed out that risk taking has a curvilinear relationship with firm performance (highest at moderate levels of risk taking). Krauss and Frese(2005)indicated risk-taking orientation had no effect on the number of employees but had a positive impact on business growth and the external success evaluation in South Africa. Post hoc analyses showed that the significant relationship between risk-taking orientation (as well as the other EO components) and business performance were linear.Aim at this complexion of variance, I pointed out some factors, which may influence the conclusions of experiment, such as cognitive mode(entrepreneurs are always estimate the environment optimistically), enterprise phase(opportunity cost,dynamic), types of entrepreneurs(Need levels,ERG theory),and performance target (growth goals or current income).We put entrepreneurs into two types: opportunity and survival, and put business performance into two types: current performance and growth performance. We put forward four hypotheses, based on this method of classifying. Through research of demonstration, We find out that the two conclusions of Begley & Boyd ( 1987) and Krauss & Frese(2005)are not incompatible. They have different conclusions just because they use different types of performance.