Entrepreneurial and learning orientation: effects on growth and profitability in the software sector

Abstract

Purpose

The aim of this paper is to investigate the relationship between entrepreneurial orientation (EO) and learning orientation (LO) separately on two dimensions of performance (profitability and growth).

Design/methodology/approach

A sample of 196 Finnish software companies is analyzed using a partial least squares approach.

Findings

The paper provides evidence that the effects of entrepreneurial orientation on profitability are mediated by learning oriented behaviors. Furthermore, in contrast to expectations inherited from prior research, LO does not appear to have a similar effect on growth.

Research limitations/implications

The paper refers to an empirical study of software companies in Finland. Further research in other countries and industry settings is needed to confirm and extend the results.

Practical implications

The results suggest that software company managers in entrepreneurial software firms should develop a culture that includes nurturing learning, in order to support the creation of profitability.

Originality/value

The paper extends the prior research by investigating the EO‐LO relationship separately in the growth and profitability dimensions of performance. Furthermore, it provides evidence for the benefits of combining EO with LO in SMEs in the dynamic software industry, while prior studies on the topic have focused on larger organizations.

Citation

Hakala, H. (2013), "Entrepreneurial and learning orientation: effects on growth and profitability in the software sector", Baltic Journal of Management, Vol. 8 No. 1, pp. 102-118. https://doi.org/10.1108/17465261311291687