Entrepreneurial orientation, organizational capability, and competitive advantage in emerging economies: Evidence from China

In order to understand how to leverage firm capabilities to support their entrepreneurial strategies in emerging settings, we examine whether the possession of an entrepreneurial orientation and the possession of its complementarities of market and guanxi capabilities, through which the entrepreneurial orientation is deployed into a successful entrepreneurial practice, are the key drivers of firm's competitive advantages. Based on the data set of 119 Chinese firms, our findings suggest that the higher the level of market and guanxi capabilities, the stronger the positive linkage between entrepreneurial orientation and firm's competitive advantage; thus, the potential needs for the fit between strategy and capability are highlighted. Meanwhile, we find that the relative moderating effects of market and guanxi capabilities are different in the state owned enterprises (SOEs) and non-SOEs due to the unique institutional environments they face. Theoretical and practical implications of these findings to entrepreneurship literature, capability complementarity perspective, and the studies about firm strategy in emerging economies, are also discussed.