The Impact Of Institutional Environments On New Ventures’Entrepreneurial Orientation

Driven by new technologies and globalization, innovation has become the mostconcerned thing during the economic development of countries and regions. Therefore,entrepreneurial activity that has the nature of innovation has gradually become animportant driving force in the country or region’s economic development. As the coreconcept in the field of entrepreneurship research, entrepreneurial orientation is astrategic choice for companies to deal with the external environment. And after threedecades of theoretical development, most scholars and entrepreneurs have agreed withthat entrepreneurial orientation is the best choice to promote the growth of companies.However, when people recognized the significance of entrepreneurial orientationon business growth, they also observed that the growth quality of new ventures isdifference. And thus, entrepreneurial orientation is regarded as an effective strategy forenterprises to cope with the uncertainty of the environment.Entrepreneurial orientation can be carried out by the in internal and externalentrepreneurial activities. However, there is something different between new venturesand established companies, such as the limited recourse of new ventures. The weaknessof new ventures on acquiring market and recourse also makes them aware that to obtainand maintain a competitive advantage in the fierce market environment, companiesneed to constantly innovative products and technologies, and preemptive manner tochase market opportunities to promote business through entrepreneurialorientation-related activities. Hence external entrepreneurial activities, especiallyacquisitions, have been the key for new ventures to realize the high growth. Comparedwith the internal entrepreneurial activities, the external ones are more influenced byexternal environment. Especially China that is facing restructuring and upgrading ofindustrial structure, industrial policy subsidies, tax incentives and other non-marketpolicies have become an important means for government to interfere the strategicdecision of corporate. In emerging market economy, to some extent resourcedistribution is dominated by the government instead of market mechanism because ofthe governments’ control of critical resource or window guidance. Therefore the uniquesystem of transition in China deeply influences the new ventures’ decision-makingsystem of entrepreneurial orientation.Introducing entrepreneurial orientation is the key for new ventures to achieve their strategic integration and improvement. Institutional environments have more importantinfluence on enterprise strategic decision. From the view of exploitative innovationactivities, this research analyses the concept of entrepreneurial orientation. Then takingthe companies from Chinese Growth Enterprise Market (GEM) as samples, this articleselects government intervention level, the level of investor protection and financialdevelopment level to examine the relationships among institutional environment andentrepreneurial orientation. The empirical results reveal several important findings. Thegovernment intervention level has a significant positive effect on entrepreneurialorientation, and the level of investor protection has a significant impact onentrepreneurial orientation. But the financial development level’s influence onentrepreneurial orientation is not significant.