Holistic view of strategic entrepreneurship’s results: Estimating the implications for performance mean and variability

The essence of strategic entrepreneurship (SE) is identifying and pursuing value-creation opportunities under the condition of uncertainty. A characteristic feature of strategic entrepreneurship actions, therefore, is that their results are highly uncertain, or - statistically speaking - that the distribution of their expected outcomes has high dispersion. Although usually acknowledging the variance-enhancing property of most entrepreneurial actions, the extensive empirical literature so far concentrated primarily on assessing their impact on average (conditional mean) of firms, new ventures or individual entrepreneur’s performance, without analyzing their simultaneous effect on the variance of the resulting outcome distribution. However, understanding the performance variability implications of entrepreneurial actions is no less important, as it implies high risk (which is a major driver of business mortality) yet also enables enormously high returns (i.e., explains the possible high-growth outliers). As such, this chapter is intended to draw the attention of SE scholars to the need to analyze variance-based performance implications of entrepreneurial actions, and to discuss practical approaches for this analysis using the multiplicative heteroscedasticity regression methodology. The proposed approach is illustrated using an empirical example of assessing variance implications of two particular strategic entrepreneurship constructs - entrepreneurial orientation (an enabler of SE) and exploration (a crucial component of SE). The paper concludes by discussing the implications for the further theoretical and empirical development of the strategic entrepreneurship field.