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© 2011 Baylor University

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.

July, 2012 819


DOI: 10.1111/j.1540-6520.2010.00436.x

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).

820 ENTREPRENEURSHIP THEORY and PRACTICE


In the following sections, we provide a brief overview of the EO construct, the
conceptualization of EO in terms of dimensionality, and the use of all or some of the
underlying measures. We use only the original EO scale, which is that operationalized by
Covin and Slevin (1989) and referred to by some as the “foundational scales” of EO
(Short, Broberg, Cogliser, & Brigham, 2010). We discuss the use of EO in international
settings and the lack of cross-cultural validation. The measurement invariance testing
procedure is framed in detail for the reader since few studies using the procedure appear
in the literature on entrepreneurship. Finally, we conduct the assessment of measurement
invariance and discuss the findings in terms of research implications.

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).

Dimensionality and Scale Items


In studies testing EO as a multidimensional construct, some have found it to be
composed of two factors (Knight, 1997; Richard, Barnett, Dwyer, & Chadwick, 2004),
while others have found it to be composed of three factors (Kreiser et al., 2002). Kreiser
et al. were one of a few to have tested the EO construct as unidimensional, bidimensional,

July, 2012 821


Table 1

Dimensionality, Scale Size, and Sample Location

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

and multidimensional. They found strong support for modeling EO as multidimensional.


Testing for dimensionality, however, is problematic in the EO area. In reviewing the extant
EO literature, we found 44 studies1 that used some version of the original EO scale, and
just over half (26/46) of the studies assessed dimensionality using either exploratory factor
analysis (EFA) or confirmatory factor analysis (CFA) (see Table 1). Of those, only a few
(e.g., Knight) reported testing different factor solutions prior to choosing the one-factor
(unidimensional) solution in contrast to Kreiser et al. We refer the reader to Covin and
Wales (2010) for an in-depth discussion of dimensionality issues of EO.
The final aspect of the EO construct, which has not been discussed often in the
literature but has an effect on the overall conceptualization of the construct, is that of items
within each subdimension. Table 1 shows that a fair number of studies using EO measured
EO with less than the original 9-item scale (25 total). The most frequently used number
other than 9 is an 8-item version (e.g., Baker & Sinkula, 2009; Kreiser et al., 2002; Tang,
Tang, Zhang, & Li, 2007), while others have used less than 8 (e.g., Zahra & Garvis, 2000).
Interestingly, of the 25 studies that used a scale version with less than 9 items, 12 of those
studies were international. Thus, there seem to be cultural issues with the full EO scale
that need addressing.

EO and International Research


The established nature of the EO construct and its positive effect on firm performance
has led to researchers applying it in international contexts often as an independent variable
amid other causal variables (e.g., Keh et al., 2006; Moreno & Casillas, 2008; Sapienza
et al., 2005; Wang, 2008; and Wiklund & Shepherd, 2003, 2005). Besides empirically
testing the EO construct in an international setting, all of these studies have one thing in
common: none established cross-cultural invariance of the EO scale. Previously, scholars
have addressed important scaling issues of EO, but each had its weaknesses and failed
to address true cross-cultural invariance. Knight (1997, p. 216) was the first researcher to
address EO cross-culturally, rightly noting that “If the scale is truly applicable abroad, its
factor structure and pattern of factor loadings should be equivalent across all cultures.”
However, although Knight assessed these two measures of validity, he did so using only
exploratory factor analysis. Additionally, Knight’s confirmatory factor analyses were

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.

822 ENTREPRENEURSHIP THEORY and PRACTICE


conducted with differently specified models, even though statistically, they are treated as
identical. Thus, any claims of measurement invariance are limited, although Knight
should be given credit as the first to broach the subject in the entrepreneurship discipline.
Kreiser et al. (2002) assessed the dimensionality of the EO scale across six countries. This
was an important addition to the literature as they systematically tested a unidimensional,
bidimensional, and multidimensional factor solution for EO in a cross-cultural setting.
However, the researchers’ second research question involved the correlation of the indi-
vidual EO subdimensions. Without establishing factor variance invariance (discussed in
the next section), valid comparisons of correlation coefficients across cultures cannot be
made (Pedhazur, 1982). In this instance, researchers would be unable to clearly state that
(for example) innovativeness has a stronger effect on firm performance in the United
States than is found in Japan. The betas may be larger in the U.S. group than in the
Japanese but lack of an invariant scale will preclude any meaningful comparison.
Without evidence of measurement invariance, conclusions are equivocated and theory
testing is cast into doubt (Horn & McArdle, 1992; Steenkamp & Baumgartner, 1998).
Additionally, the use of EO as a moderating or mediating construct is problematic without
evidence of invariance. Without at least achieving partial metric invariance, researchers
are unable to relate the EO construct to other constructs in the nomological net (Steen-
kamp & Baumgartner), making any measurement model uninterpretable across countries.
The reporting of international research results without testing for measurement equiva-
lence is not uncommon, however, in many academic disciplines (Chen, 2008; Murray,
Gao, Kotabe, & Zhou, 2007; Steenkamp & Baumgartner). Yet, as these scholars have
suggested, establishing measurement invariance in cross-cultural and international
research is crucial.

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

July, 2012 823


identical for each scale item across countries. Examples of EO studies where data were
used for subsequent hypothesis testing without assessing or meeting the minimum of
configural and/or metric invariance include Knight (1997) and Tang and Rothenberg
(2009). Testing for scalar invariance involves examining the uniformity between cross-
country differences in latent versus observed means. Studies that have compared latent
means across national samples without first establishing scalar invariance include Kemel-
gor (2002). Factor covariance invariance evaluates whether factor covariances are equal
across countries. Factor variance invariance is used to test whether factor correlations are
the same across countries. Recent EO studies that have compared correlations across
cultures without first establishing either factor covariance or variance invariance include
Colton et al. (2010); Kemelgor; Knight; Kreiser et al. (2002); and Marino, Strandholm,
Steensma, and Weaver (2002). Finally, error variance invariance assesses if the items are
equally reliable across countries.
Since each subsequent level of invariance testing is dependent upon the success of the
previous test, achieving full measurement equivalence is rare (Horn & McArdle, 1992;
Steenkamp & Baumgartner, 1998). Byrne, Shavelson, and Muthen (1989) proposed that in
the face of this improbable outcome, researchers should consider achieving partial mea-
surement invariance. They note that once configural invariance is achieved, other tests of
invariance can be conducted as long as at least two items per factor are found to be
invariant. Tests of measurement invariance should also be conducted with the researcher’s
overall goal in mind (e.g., considering the basic structure of the construct across countries;
making quantitative comparisons of means; inspecting structural relationships with other
constructs). Following Steenkamp and Baumgartner (p. 82), a minimum of configural
invariance is needed to explore the basic meaning and structure of a construct in a
cross-cultural setting, a minimum of metric and likely scalar invariances are required to
compare means across countries, and metric invariance is required to relate a central
construct to others in a nomological net.
The previous literature supports the importance of EO in the entrepreneurship and
strategy domains, and its empirical relationship to firm performance (Covin et al., 2006;
Rauch et al., 2002; Runyan et al., 2008). We have also shown that the traditional opera-
tionalization of EO is also the most frequently used by researchers, as is the common
usage of all nine original EO measures (in some form). These findings are well established
in the literature. Following we provide our methodology, analyses, results, and discuss our
findings, including their implications for both EO scholars as well as international
researchers in general.

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

824 ENTREPRENEURSHIP THEORY and PRACTICE


Table 2

Sample Profiles

China United States


Characteristics N = 187 N = 250

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.

July, 2012 825


methods. In the first method, general managers and chief executive officers who were also
master of business administration (MBA) and executive master of business administration
(EMBA) students at a Chinese university were asked to fill out the translated survey. There
were 132 surveys distributed and 87 useable surveys returned for an initial response rate
of 66%. At the same time, a national consulting company distributed 207 surveys to SMEs
in suburbs of three Chinese cities and received a total of 100 useable surveys in return.
This yielded an overall response rate of 55%.
Prior to conducting the measurement invariance testing, we assessed two potential
biases in our data. First, we examined both data sets for nonresponse bias by examining
responses from early responders and late responders (Armstrong & Overton, 1977) on
four demographic variables. The t-tests did not reveal any significant differences in terms
of age, education, years in business, or number of employees for either sample. Next, we
tested for common method variance since we utilized only one respondent per company.
Following Podsakoff and Organ (1986), we conducted a factor analysis to determine if one
factor would account for a significant amount of total variance. There was no general
factor found, with the first factor accounting for less than 20% of total variance, thus
common method variance was likely not a problem.
Prior to beginning tests of measurement invariance, it was necessary to determine if a
unidimensional or multidimensional factor structure best fit the data. Because of recent
findings that less than nine items were acceptable (e.g., Kreiser et al., 2002; Tang et al.,
2007), it was also necessary to determine the optimal number of scale items per factor.
Kreiser et al. also found that their EO measurement model achieved best fit when using only
eight measures, and a three-factor (multidimensional) model, while Tang et al. (2008) used
a unidimensional factor model. Consequently, we tested both configurations for our data.
We first modeled both U.S. and Chinese data using all nine EO measures in both
one-factor and three-factor solutions using Lisrel 8.72 (Jöreskog & Sörbom, 2005; Sci-
entific Software International, Lincolnwood, IL USA). We then repeated that procedure
using the eight EO measures as suggested by Kreiser et al. (2002). To assess the goodness
of fit for the models, we utilized three indices of fit: root mean square error of approxi-
mation (RMSEA) (range < .08), comparative fit index (CFI) (>.90), and incremental fit
index (IFI) (>.90). Following this procedure, we were then able to proceed to measure-
ment invariance testing as detailed by Steenkamp and Baumgartner (1998).

Analyses and Results

Measures and Dimensionality


We first modeled the nine measures of EO in a one-factor solution for the total sample
of the U.S. and Chinese SMEs, then for the groups separately. The fit was not satisfactory
for any of these models. We then fit the data to a three-factor solution and the change in c2
was significant, with fit indices well within recommended limits. This was true for the total
sample as well as both groups. There was, however, a significant difference between the
U.S. and the China groups, signaling variance between groups with the 9-item EO
construct. Additionally, although the fit indices all improved greatly from the one-factor
solution, the RMSEA was above the cut-off value for both the U.S. and the Chinese groups.
We then conducted the same procedure using eight measures in, first, a one-factor
and then three-factor solution. After reviewing modification indices, it was determined
that risk 3 (measurement item no. 9 in the EO scale) was causing the most “ill-fit” in
the model. Since this was the same item removed by Kreiser et al. (2002), we removed the
item for further model fitting. As with the previous models, the three-factor solution fit

826 ENTREPRENEURSHIP THEORY and PRACTICE


Table 3

Fit Indices for Individual Country Samples

Nine-item Solution

Chi-square DF p-value RMSEA CFI IFI

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

c2 Value DF p-value RMSEA CFI IFI

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.

Measurement Invariance Testing


We tested measurement invariance of the EO construct for the U.S. and the Chinese
samples with increasingly restrictive forms of invariance. We began by estimating a
two-group CFA model as the baseline where no cross-group constraints were imposed.
As Table 4 shows, the two-group model fit the data well (c2[34] = 90.56, p < .00,

July, 2012 827


Table 4

Measurement Invariance Testing

Invariance levels c2 Value df c2 Difference RMSEA CFI IFI

Configural 90.56 34 — .070 .98 .98


Metric 99.35 39 8.79 .067 .98 .98
Scalar 231.63 52 132.28* .100 .93 .93
Scalar-2 200.78 46 101.43* .087 .95 .95
Scalar-3 184.32 44 84.97* .085 .95 .95
Scalar-4 173.47 42 74.12* .084 .96 .96
Factor covariance† 210.90 49 113.55* .087 .95 .95
Factor variance† 215.44 52 116.09* .086 .95 .95
Error variance† 242.41 60 143.06* .083 .94 .94

* Significant at p < .01.



We include data for these steps for illustration purposes only. These include all variables used in assessing metric
invariance.
Scalar-2, released innovation 2; scalar-3, released proactiveness 2; scalar-4, released innovativeness 1.

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

828 ENTREPRENEURSHIP THEORY and PRACTICE


invariance. Although not discussed here, we include in Table 4 tests of invariance all the
way through testing for error variance invariance for demonstration purposes only.

Discussion and Implications


We set out in this study to test the cross-cultural equivalence of the EO construct as
it has become the most widely used measure of entrepreneurial behavior used in the
strategic and entrepreneurship literature (Kreiser et al., 2002; Rauch et al., 2009; Tang
et al., 2008). Additionally, there have been numerous calls for cross-cultural validation of
measures in international research (Hult et al., 2008; Netemeyer, Durvasula, & Lichten-
stein, 1991). To accomplish this we conducted a systematic test of measurement invari-
ance, using the method detailed by Steenkamp and Baumgartner (1998). We were able to
establish only configural and metric invariance across the U.S. and the Chinese samples in
our study. We were unable to establish scalar invariance and thus, also unable to complete
the last three steps proposed by Steenkamp and Baumgartner, namely testing for factor
covariance invariance, factor variance invariance, and error variance invariance. Consid-
ering the relative infancy of EO’s use in international research, this is less problematic
than it sounds. Furthermore, considering the well-known cultural divergency of China and
the United States (Tang et al., 2007), the finding of invariance at two levels points to a
generally valid scale, cross-culturally. We would posit that scholars should feel confident
using the EO scale in other non-Western cultures when at least configural and metric
invariance are needed. Specifically, studies such as that of Kreiser et al. and Colton et al.
(2010) are on solid methodological ground in claiming that the EO scale shows a similar
pattern of factor loadings across different countries. Similarly, our study shows that those
as well as the studies of Knight (1997) and Kemelgor (2002) can confidently compare
differences in factor scores across countries.
Steenkamp and Baumgartner (1998, p. 81) would refer to the results of our study as
“partial invariance.” They cautioned that full measurement invariance usually does not
hold, and thus, researchers should establish whether there is at least partial invariance.
They also noted that different levels of invariance are required based on the goals of the
research study. If the intention is to investigate fundamental meanings and structures of
constructs across cultures/countries, and thus, find whether constructs can be similarly
conceptualized across those cultures, then configural invariance is the minimum require-
ment. Our findings support researchers using EO in cross-cultural settings as either a
predictive construct or as an outcome variable. EO exhibits the same pattern of factor
loadings across both U.S. and Chinese SMEs, allowing scholars to assume that the basic
meanings of EO and the underlying dimensions are the same in both countries.
If the purpose of the study is to relate the construct cross-culturally to other constructs
in a nomological net (e.g., Wang, 2008), metric invariance must further be met beyond
configural invariance as scale intervals of the latent construct must be comparable across
groups (Steenkamp & Baumgartner, 1998). The findings of our study provide guidance to
scholars for modeling EO as a predictor variable, as part of a group of constructs, or as a
mediating variable. Metric invariance provides evidence that the scale intervals of the EO
construct are comparable across U.S. and Chinese SMEs. Thus, studies such as Wiklund
and Shepherd’s (2005) and Wang’s, where EO was modeled with other predictor vari-
ables, may be conducted more confidently in an international setting. This is particularly
important in formerly centrally planned economies such as China and Russia where the
concept of entrepreneurship is just emerging in the marketplace (Kreiser et al., 2002; Tang
et al., 2007).

July, 2012 829


When considering how and when to utilize the EO construct in non-Western settings,
it is clear that scholars may confidently assess EO using the classic scale. Our study, as
well as many others, has claimed that the pattern of factor loadings is similar. Assessing
the scale utilizing the more stringent invariance testing method lends more credence to
these claims and its further use. Researchers can use the EO scale in single-country
settings and have confidence that the pattern of factor loadings and sizes will be similar to
what has been found before (i.e., they will exhibit internal consistency and discriminant
validity). Thus, researchers can further test relationships between EO and other latent
constructs, as well as between EO and outcome variables (e.g., firm performance, firm
growth, etc.). What scholars should not do is use EO in a cross-cultural setting in which
the purpose is to compare item means or to assess betas between different groups without
conducting measurement invariance tests. This means that although the scholar using EO
in a single-country setting may assess means or beta strengths within a single sample, that
same scholar should not feel confident in doing the same between that sample and one
from a different country.
Considering the partial measurement equivalence achieved in our study, it seems
appropriate to discuss one of the main causes of scalar variance. Specifically, we refer
to the occurrence of measurement bias in the form of additive bias, normally caused by
misunderstanding of item wording or response category labels. Comparison of
means directly across groups depends on the assumption of differences in observed
variable scores being based on actual differences in the underlying constructs and not
based on additive bias (Scholderer, Grunert, & Brunso, 2005). Although rather onerous,
Scholderer et al. provided a four-step procedure for removing additive bias from cross-
cultural data (we refer the reader to the original article for detailed explanation). Con-
ducting such a procedure will allow scholars to then conduct comparisons of means
across countries. From a traditional viewpoint, this method seems more of an ad hoc
procedure than one dedicated to building sound cross-cultural measures. Rather,
the extant literature on EO will see solid development when scholars begin to better
understand what measures of EO are truly cross-cultural and which need further
refinement.
Our study also addressed the issues of dimensionality and number of scale items for
the EO construct. As did Kreiser et al. (2002), we found that a three-factor solution as
well as an 8-item scale provided the best fitting measurement model. We dropped the
same risk-taking measure as did others (specifically risk 3, Covin and Slevin’s measure
no. 9), including Kreiser et al., Marino et al. (2002), Keh et al. (2006), Tang et al.
(2008), Li et al. (2008), and Frank, Kessler, and Fink (2010). Thus, along with these
previous scholars, we add to the development of sound EO measures by demonstrating
that risk 3 in the Covin and Slevin (1989) scale is likely not suitable for settings outside
North America. Culture may explain a possible response bias with this item. The term
“aggressive” is used in this item, and as a highly collectivistic culture, the Chinese
respondents may have felt uncomfortable selecting this response. Aggressive behavior is
not congruent with expectations of behavior in a collectivistic society (Hofstede, 1983).
The collectivistic culture is one in which the focus is on group relationships and
harmony, and admitting to aggressive behavior to exploit opportunities may have been
perceived as an unacceptable response (Runyan, Sternquist, & Chung, 2009). Other
international studies using EO have been conducted in collectivistic cultures, and those
scholars also dropped this item in analysis (e.g., Tang & Rothenberg, 2009; Tang
et al.). Coupled with our tests for measurement invariance, a strong case is found for
future researchers to confidently use an 8-item EO scale in cross-cultural research
settings.

830 ENTREPRENEURSHIP THEORY and PRACTICE


Some interesting research questions emanate from the current study. Does the original
EO construct capture a large enough portion of entrepreneurial behavior or disposition in
non-Western cultures? There has been much discussion of extending the EO construct
over the past two decades, beginning mostly with Lumpkin and Dess’ (1996) seminal
essay. Would a construct conceptualized as containing other dimensions (along with the
EO dimensions) such as their suggestions for competitive aggressiveness and autonomy
be useful in cultural settings different from the United States? We would argue that
autonomy might be problematic in collectivistic cultures such as China, but researchers
should investigate. Is EO more likely to be multidimensional in international settings, or
are those scholars just more likely to test for dimensionality, and when accomplished, EO
is found to be multidimensional?

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.

July, 2012 831


Appendix 1

Entrepreneurial Orientation Scale

Entrepreneurial Orientation EO

Scale Origin Innovativeness 1 to 7 Bi-polar statements

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

INNOV1 .70 .150* .279** .184** .076 .121* .143* .180**


INNOV2 .174** .70 .324** .103 .275** .244** .247** -.066
INNOV3 .221** .633** .70 .222** .205** .268** .249** .248**
PROAC1 .164** .278** .408** .63 .339** .296** .307** .229**
PROAC2 .098 .455** .466** .421** .63 .303** .327** .275**
PROAC3 .138* .240** .325** .139* .274** .63 .253** .152
RISK 1 .327** .199** .306** .288** .208** .163** .73 .487**
RISK2 .213** .223** .344** .322** .283** .186** .440** .73

** p < .01; * p < .05 one-tailed


Lower diagonal; United States; Upper diagonal China; Alpha on diagonal; EO scale alpha = .843. Scale alphas are
highlighted in bold on the diagonal to distinguish from other statistics.

832 ENTREPRENEURSHIP THEORY and PRACTICE


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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.

Baoshan Ge is a professor of management at Jilin University, Changchun, Jilin Province, China.

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.

836 ENTREPRENEURSHIP THEORY and PRACTICE


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