Knowledge-based Theory, Entrepreneurial Orientation, Stakeholder Engagement, and Firm Performance

Mathew Hughes, Paul Hughes, Ian R. Hodgkinson, Yi-Ying Chang*, Che-Yuan Chang

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


Research Summary
Our understanding of entrepreneurial orientation (EO) is limited by the inattention to why a firm arranges itself to give rise to EO, what sets its strategic intent, and what affects its contribution to performance. These omissions have led to calls for a causally adjacent theory of EO. Grounded in knowledge-based theory, we investigated (a) how knowledge production gives rise to EO, (b) how the relationship between EO and profitability is mediated by knowledge use, and (c) how this relationship between EO and knowledge use is moderated by stakeholder engagement. Using multirespondent, multisource data from small-size and mid-size enterprises in two economically distinct East Asian countries, Taiwan and Japan, empirical evidence supports our theory. Our findings are consistent across both studies. We contribute a knowledge-based theory of EO.

Managerial Summary
Why do some firms organize to be entrepreneurial while others do not, and why do some entrepreneurially oriented firms profit more financially than others? We find that those firms that organize processes to accumulate, aggregate, activate, store, manage, and distribute knowledge become more entrepreneurial oriented as the means to create wealth from this “knowledge production.” In other words, knowledge production can affect perceptions of opportunities and resources, leading to choices about organizational arrangements to best use knowledge. However, we find that the firm also needs to be adept at knowledge use to profit financially from its entrepreneurial endeavors, and leading firms utilize stakeholder engagement to strengthen the relationship between entrepreneurial behavior and knowledge use on the route to greater profitability.
Original languageEnglish
JournalStrategic Entrepreneurship Journal
Number of pages33
Publication statusPublished - 14 Aug 2021
Externally publishedYes

Bibliographical note

Epub ahead of print. Published online: 14 August 2021.


  • Empowered organizational members
  • Entrepreneurial orientation
  • Knowledge
  • Knowledge production
  • Knowledge use
  • Knowledge-based theory
  • Performance
  • Profitability
  • SMEs
  • Stakeholder engagement

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