Entrepreneurial Orientation and Startup Performance in Technology Business Incubation: Mediating Role of Absorptive Capacity

Abstract

The entrepreneurial orientation (EO) literature verifies its positive relationship with firm performance; nonetheless, its degree relies on certain factors. This study uses the knowledge-based view to develop and test a model of how start-ups can enhance their entrepreneurial orientation (EO) in incubator environments. Based on the concept of dynamic capabilities and strategic fit, this study proposes that absorptive capacity (ACAP) plays a role in catalyzing EO to yield performance outcomes. Only when start-ups combine existing resources with the absorptive capacity to make use of their strategic decisions, can they achieve a higher EO. The research model is empirically validated using survey data from 304 start-ups of various technology incubators in India. Our research evidence prove that ACAP improves the relationship between EO and performance in incubator environments. Further, we discuss implications for theory and practice.