Professional Documents
Culture Documents
Entrepreneurial
E T&P Orientation in
Cross-Cultural
Research: Assessing
Measurement Invariance
in the Construct
Rodney C. Runyan
Baoshan Ge
Baobao Dong
Jane L. Swinney
The entrepreneurial orientation (EO) scale has become the most widely used scholarly
measure of entrepreneurial behavior. Additionally, it is frequently used in studying entrepre-
neurship in non-Western cultures. In the current study, the authors respond to calls for
cross-cultural validation of measures used in international research by assessing the mea-
surement invariance of the most frequently utilized EO scale. Using samples of small and
medium-sized firms from the United States and China, the authors assess the dimensionality
of EO, optimal number of scale items, and the measurement invariance of the construct
across cultures. The results support conceptualizing EO as multidimensional, using an
8-item version, and utilizing it in cross-cultural research settings in certain instances.
Introduction
As a discipline, the study of entrepreneurship has seen remarkable growth over the
past two decades. During that time, the construct of entrepreneurial orientation (EO) has
become the most widely used measure of entrepreneurial behavior or tendency in the
strategy and entrepreneurship literature (Covin, Green, & Slevin, 2006; Kreiser, Marino,
& Weaver, 2002; Rauch, Wiklund, Lumpkin, & Frese, 2009; Tang, Tang, Marino, Zhang,
& Li, 2008). The most extensively used operationalization of EO comes from Covin and
Slevin (1989), and is based on earlier work by Khandwalla (1976/1977) and Miller and
Please send correspondence to: Rodney C. Runyan, tel.: 865-974-4594; e-mail: rrunyan@utk.edu, to Baoshan
Ge at gebs@jlu.edu.cn, to Baobao Dong at markruby@sina.com, and to Jane L. Swinney at swinnej@
okstate.edu.
An earlier version of the this article was presented at the 14th Bi-Annual Cross-Cultural Research Conference,
Puerto Vallarta, Mexico.
etap_436 819..836
Friesen (1982). Miller (1983, p. 776) posited that there is an “entrepreneurial imperative”
and it is composed of three subdimensions: risk taking, proactiveness, and innovativeness.
Although Zahra, Jennings, and Kuratko (1999) echoed the importance of EO to the
strategy field, they expressed concern that it not be hastily accepted as a “. . . common
measure without establishing its dimensionality or psychometric properties” (p. 54).
Scholars continue to assess these aspects of EO but have rarely performed so in contexts
other than Western research settings.
With its growing acceptance, the EO construct has seen increased use in international
research. Examples of studies using EO in international settings include Kemelgor (2002)
in the Netherlands; Kreiser et al. (2002) in several European countries; Wiklund and
Shepherd (2003, 2005) in Sweden; Sapienza, De Clercq, and Sandberg (2005) in Belgium;
Keh, Nguyen, and Ng (2006) in Singapore; and Tang et al. (2008) and Tang and Rothen-
berg (2009) in China. These and other previous research have shown that EO and/or some
of its dimensions may differ across countries and cultures (e.g., Knight, 1997; Kreiser
et al., 2002; Thomas & Mueller, 2000). Other than Knight, Kreiser et al., and Li, Guo, Liu,
and Li (2008), international EO studies do not address the cross-cultural validity of the EO
scale. As noted by Steenkamp and Baumgartner (1998), the validity of models developed
in one country must be examined in other countries as well. Yet, simply utilizing scales in
a cross-cultural manner does not go far enough in determining if the scale is cross-
culturally valid (i.e., the scale is measuring the same constructs in both cultures). The
leading concern in extending theory and constructs across cultures is to determine if the
instruments (i.e., scales) created to measure those constructs are invariant across cultures
(Hui & Triandis, 1985; Steenkamp & Baumgartner).
EO is well-established in strategy and entrepreneurship research in the United States
but is in its infancy in non-U.S. business settings. This is problematic in that EO has been
tied empirically to firm performance (Covin & Slevin, 1989; Rauch et al., 2009; Runyan,
Droge, & Swinney, 2008; Wiklund & Shepherd, 2005), and there is growing support for
the position that culture has an important impact on entrepreneurial behavior (Kreiser
et al., 2002; Mueller & Thomas, 2001). Kreiser et al. (p. 73) posited that national culture
likely plays “. . . a significant role in determining the overall level of a firm’s entrepre-
neurial orientation.” Thus, with EO’s positive effect upon firm performance empirically
confirmed (Rauch et al.) and the growing proposition that different cultures will impact
EO, establishing the cross-cultural equivalence of EO is crucial.
In this study, we contribute to the body of knowledge on EO in three ways. First, we
conduct a systematic assessment of the EO construct across two cultures (Unites States
and China) to test for measurement invariance. To assess measurement invariance,
researchers test for configural, metric, scalar, factor covariance, factor variance, and error
variance invariance as suggested by Steenkamp and Baumgartner (1998). Second, we
extend the research of Lumpkin and Dess (1996) and Kreiser et al. (2002) by modeling the
EO construct as both a unidimensional and multidimensional construct in an effort to
determine which provides the optimal model fit in a cross-cultural setting. Since most
studies using a multidimensional conceptualization appear in international settings, it
seemed wise to consider dimensionality here. What is interesting in those international
studies is the number of scale items utilized. While the number ranges from as low as six
(Colton, Roth, & Bearden, 2010) to a high of nine (e.g., Kemelgor, 2002), most such
studies have used an 8-item version of the EO scale (e.g., Knight, 1997; Kreiser et al.).
Thus, third, we further the body of knowledge in this area by assessing the optimal number
of measurement items cross-culturally. Further examination of this issue is called for,
especially since the Kreiser et al. study was set mostly in Western cultures (albeit not
North America).
Theoretical Realm
The EO Construct
The notion of EO refers to the processes, practices, and choice activities leading to
new entrance or opportunity for an individual/firm (Covin & Slevin, 1989) and developed
out of the management strategy literature (Miller & Freisen, 1978; Mintzberg, 1973;
Shapero, 1975), which began conceptualizing entrepreneurial behavior as a strategy
choice or management style (Khandwalla, 1976/1977; Miller, 1983; Miller & Freisen,
1977). This led to the further refinement of the construct as being composed of various
dimensions. Beginning with Lumpkin and Dess (1996), scholars began to use the term EO
and to conceptualize additional constructs as part of EO (e.g., George, Wiklund, & Zahra,
2005; Lumpkin and Dess).
In many respects, EO has become a generic term in entrepreneurial research, with
many researchers adding items to the Covin and Slevin (1989) scale (e.g., Lumpkin &
Dess, 2001), deleting items (e.g., Rhee, Park, & Lee, 2010), modeling items as different
subdimensions (e.g., Knight, 1997), and/or using completely different measures (e.g., Tan
& Tan, 2005; Zahra, 1993) but still calling the scale EO. Rauch et al. (2009) found that of
51 EO studies in their meta-analysis, nearly half were variations of the original scales.
Often, scales are used that have been modified in one of these ways without providing
theoretical justification or assessing the psychometric properties of the revised scale
(Short et al., 2010). Thus, it is imperative that entrepreneurship scholars clearly state
which measures they are using and how the measures are conceptualized. A short review
of the EO construct and scales follows.
Based on the work of Khandwalla (1976/1977) and Miller and Friesen (1982), Covin
and Slevin (1989) developed and operationalized what is now referred to as the EO scale.
As conceptualized by Miller and Friesen and Miller (1983), the construct is composed
of three dimensions: innovativeness, risk taking, and proactiveness. In Appendix 1, we
list the 9-item EO scale as used in our study in its entirety, with scale origins included.
Since the focus of this research note is on measurement invariance, we do not review
the well-known EO construct here. For a very thorough and in-depth exploration of the
EO construct and its origins, we refer the reader to Edmond and Wiklund (2010).
Less Non-U.S.
than one-
eight Eight Nine country Multicountry Dimensionality
Unidimensional Multidimensional items items items sample sample assessed
39 7 13 12 21 14 5 26
1. In an effort at parsimony, we did not include a table with all 44 studies listing each of the issues
agglomerated in Table 1. Readers interested in a detailed list of these studies and how they are coded may
email the first author and request a copy.
Measurement Invariance
Vandenberg and Lance (2000, p. 4) found in their extensive review of the invariance
literature that measurement invariance was “. . . rarely tested in organizational research.”
Since their review, there has been an increase in measurement invariance research in the
extant literature. A database search using the terms “cross-cultural” and invariance
returned a list of 18 such studies between 2000 and 2009. These ranged from social
psychology (Chen, 2008) to marketing (Murray et al., 2007) to organization commitment
(Mathieu, Bruvold, & Ritchey, 2000), but none that addressed entrepreneurial factors in
general or EO specifically. In their review of cross-cultural research from 1995–2005,
Hult et al. (2008) found that a small (less than 20%) number of studies addressed either
scalar or metric measurement equivalence in the top five international business journals.
These findings support the position of Murray et al. that despite calls for such cross-
validation of measures, relatively little has been accomplished.
The most powerful and versatile method for testing such cross-cultural invariance is
the multigroup, confirmatory factor analysis (CFA) approach (Steenkamp & Baumgartner,
1998). This process involves a systematic procedure whereby increasing constraints are
imposed upon a measurement model to test for various levels of invariance. These levels
of invariance include (in order of procedure): configural invariance, metric invariance,
scalar invariance, factor covariance invariance, factor variance invariance, and error vari-
ance invariance.
Configural invariance addresses the question of whether the same pattern of factor
loadings exists across different groups or countries (i.e., that there are no cross-loadings
of measures). Metric invariance answers the question of whether factor loadings are
Methodology
In this study data were collected from owners/managers of small and medium-sized
firms (SMEs) in the United States and China, at two different time periods. A total sample
size of 250 U.S. SMEs and 187 Chinese SMEs were used in the data analyses, and sample
demographics can be found in Table 2. The instrument was originally constructed for use
in the United States. For use in China, it was subjected to a double back-translation
technique. A pilot test was conducted with 10 Chinese firms, with wordings further
modified to ensure both understanding and semantic equivalence. For the U.S. sample,
Directors of Downtown Development Authorities were contacted in 11 towns in a
Midwest state in the United States and asked to distribute surveys to its membership of
SMEs. Over a 2-week period, a total of 1,042 surveys were distributed, producing a
response rate of 24%. For the Chinese sample, data were collected using two separate
Sample Profiles
Gender
Male 131 129
Female 56 117
Age
40 or less years 140 45
41–50 years 39 62
51 years and over 8 83
Education
Middle school or below (U.S. 22 33
high school graduate)
Some college 5 70
College graduate 131 109
Postgraduate degree 29 27
Family business
Yes 34 170
No 153 71
Years business has existed
6 or less 112 47
7–15 53 53
16–30 10 72
31 or more 12 76
Years of current owner
6 or less 151 76
7–15 34 53
16–30 1 62
31 or more 1 50
Employee numbers
1–50 92 191
51–200 52 38
201–500 24 0
500–1000 12 0
1000 or more 7 0
Industry
Technology 49 14
Manufacturing 35 12
Financial related 29 27
Real estate 34 9
Retail and wholesale 22 98
Services (non-financial) 15 26
Other 3 64
Firm ownership
State-owned 9 12
Collective 78
Joint ventures 9
Private firms 68 228
Other 23
Totals may be less than 100%
because of nonresponse.
Nine-item Solution
Total Sample
One-factor 158.25 27 .000 .106 .95 .95
Three-factor 64.68 24 .000 .062 .98 .98
United States (250)
One-factor 116.31 27 .000 .115 .89 .89
Three-factor 73.41 24 .000 .091 .94 .94
China (187)
One-factor 105.38 27 .000 .125 .83 .84
Three-factor 18.26 24 .000 .088 .92 .93
Eight-item Solution
Total Sample
One-factor 123.71 20 .000 .109 .94 .94
Three-factor 51.65 17 .000 .068 .98 .98
United States (250)
One-factor 84.16 20 .000 .114 .91 .91
Three-factor 38.91 17 .002 .072 .97 .97
China (187)
One-factor 60.11 20 .000 .104 .85 .85
Three-factor 33.66 17 .009 .073 .94 .94
the data much better for the total sample as well as the two groups. Table 3 details the
model fitting for each of the steps described here. Fit indices for the 9-item, three-factor
solution were not “bad” and might have been retained for invariance testing. However, the
change in c2 was significant for both the U.S. and the Chinese groups between the 9-item
and 8-item factor solutions. This provided us with the guidance to move forward to the
measurement invariance testing phase of our study using a three-factor model with eight
measurement indicators. Scale reliabilities for the EO scale were all above the accepted
cut-off value of .70 (Nunnally, 1978). The scale reliability was .84 for the entire sample;
for the Chinese sample, it was .73, and for the U.S. sample, it was .77. The correlation
matrix for the final eight items appears in Appendix 2.
RMSEA = .07, CFI = .98, IFI = .97). These results illustrate that the EO construct dis-
plays configural invariance across the two groups. That is, the measured variables show
the same pattern of factor loadings for both countries.
We then fit the same two-group model to test metric invariance, examining if the
factor loadings are the same for each scale item across samples. To accomplish this test,
we constrained all of the factor loadings to be equal across groups. This model fit the data
well (c2[39] = 99.35, p = .00, RMSEA = .07, CFI = .98, IFI = .98). Since each subsequent
test for invariance requires increasingly restrictive specification, the metric model is by
definition nested within the baseline model. Thus, we conducted a chi-square difference
test between the two models. The difference was not significant (c2[5] = 8.79). We con-
clude that the EO construct is metrically invariant across the U.S. and the Chinese
samples, allowing meaningful cross-national comparisons to be made.
Following the assessment of metric invariance we tested for scalar invariance, allow-
ing the examination of cross-group consistency in latent versus observed means. From the
model of metric invariance, we further imposed cross-group constraints upon the factor
intercepts. The model did not fit the data well. Following Steenkamp and Baumgartner
(1998), we examined the modification indices in the Lisrel output to see which of the
intercepts were contributing most to the ill fit. We subsequently respecified the model,
setting free in order each of the four intercepts that were not invariant (and thus contrib-
uting to the large difference in c2). In each case, the fit of the model improved, but there
was still a very large chi-square difference between the modified model of scalar invari-
ance and the preceding metric invariance model. We therefore conclude that the EO
construct does not have scalar invariance across the U.S. and the Chinese samples. We
proceeded no further since the EO scale was now down to a total of four items that were
possibly still invariant (one of innovativeness, one of risk taking, and two of proactive-
ness). Scalar invariance of at least two items per construct must be established in order for
subsequent tests and comparisons to be meaningful (Steenkamp and Baumgartner). Since
scalar invariance cannot be established, further tests of invariance (i.e., factor covariance,
factor variance, and error variance) are not able to be assessed. Table 4 details the tests of
Limitations
Research conducted in international settings has long used measurements conceptu-
alized in Western settings (Hui & Triandis, 1985). Researchers should be cautious in
interpreting findings cross-culturally when measurement invariance has not been exam-
ined (Horn & McArdle, 1992; Steenkamp & Baumgartner, 1998). However, they should
also be cautious in accepting the results of a small number of empirical studies. Our study
was set in two culturally divergent countries: the United States and China. We are only
beginning to find empirical studies in the literature that are conducted within China and
are comparative in nature. Tang et al. (2007) were one of the first to utilize in China, the
widely accepted EO construct as operationalized by Covin and Slevin (1989). Our study
is the first (to our knowledge) to test for measurement invariance in the EO construct and
to do so in a U.S.–China study.
The early studies that led to the EO construct came from the management strategy
literature and were part of a movement from the entrepreneur as an individual to the
entrepreneurial actions of firms (Miller, 1983). The U.S. sample in our study contained a
large number of small firms, managed by the owner or entrepreneur himself, while the
Chinese sample had less than 20% that were family businesses. In both cases, there were
a large number of firms with less than 50 employees. Firm ownership is an emerging
concept in China, and thus, how owners there think about entrepreneurial concepts is
unknown. Although the EO construct has been used reliably with large firms (e.g., Covin
& Slevin, 1988) and small firms alike (e.g., Covin & Slevin, 1989; Runyan et al., 2008),
our results should be interpreted with caution because of the differences in size of firms
between the samples as well as type of ownership.
Entrepreneurial Orientation EO
Khandwalla (1976/1977) Favor a strong emphasis on the marketing of tried OR A strong emphasis on R&D, technological
and true products or services leadership, and innovation
Miller and Friesen (1982) Has introduced no new lines of products or OR Very many new lines of products or services
services
Miller and Friesen (1982) Changes in product or service lines have been OR Changes in product or service lines have been
mostly of a minor nature quite dramatic
Proactiveness 1 to 7 Bi-polar statements
Covin and Slevin (1989) Typically responds to actions which competitors OR Typically initiates actions which competitors then
initiate respond to
Covin and Slevin (1989) Is seldom the first business to introduce new OR Is very often the first to introduce new products/
products/services, administrative techniques, services, administrative techniques, operating
operating technologies, etc. technologies, etc.
Covin and Slevin (1989) Typically seeks to avoid competitive clashes, OR Typically adopts a very competitive,
preferring a “live-and-let-live” posture “undo-the-competitors” posture
Risk Taking 1 to 7 Bi-polar statements
Khandwalla (1976/1977) Strongly favor low-risk projects (with normal and OR Strongly favor high-risk projects (with chances of
certain rates of return) very high return)
Miller and Friesen (1982) Believe that owing to the nature of the OR Believe that owing to the nature of the
environment, it is best to explore it gradually environment, bold, wide-ranging acts are
via timid, incremental behavior necessary to achieve my firm’s objectives
Covin and Slevin (1989) Typically adopt a cautious, “wait-and-see” posture OR Typically adopt a bold, aggressive posture in in
in order to minimize the probability of making order to maximize the probability of exploiting
costly decisions potential opportunities
Khandwalla, 1976/1977; Miller and Friesen, 1982; Covin and Slevin, 1989.
Appendix 2
Correlation Matrix
United
States/
China INNOV1 INNOV2 INNOV3 PROAC1 PROAC2 PROAC3 RISK1 RISK2
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The authors acknowledge the advice and comments provided by Dr. Jeffrey Covin and Dr. Hans Baumgartner
in preparing this final draft. We also thank the Associate Editor Sara Carter and the two anonymous reviewers
for their suggestions in the revision process.
Financial support for part of this research was provided through grants from the National Natural Science &
Foundation of China.
Rodney C. Runyan is an assistant professor of retailing at the University of Tennessee, Knoxville, TN, USA.
Baobao Dong is an assistant professor at Jilin University, Changchun, Jilin Province, China. For correspon-
dence from Asia, please direct to Baobao Dong at markruby@sina.com
Jane L. Swinney is an associate professor at Oklahoma State University, Stillwater, OK, USA.