Entrepreneurs’ Improvisational Behavior and Firm Performance: A Study of Dispositional and Environmental Moderators

Previous research indicates that improvisation—the deliberate extemporaneous composition and execution of novel action—is a key form of entrepreneurial behavior. It has been argued, however, that entrepreneurs’ improvisational behavior does not necessarily result in performance gains for their firms. Instead, a contingency perspective suggests that the effectiveness of entrepreneurs’ improvisational behavior depends on key moderating variables. Drawing on this framework, the current study uses a national (U.S.) random sample of new ventures to examine the interactive effects on firm performance of entrepreneurs’ improvisational behavior with key dispositional and environmental variables. Consistent with predictions, findings indicated that within the context of dynamic environments, the relationship between improvisational behavior and firm performance was significantly more negative for entrepreneurs who were high in optimism than it was for those who were moderate in optimism. In contrast, within the context of stable environments, results demonstrated marginally significant evidence that entrepreneurs’ improvisational behavior was more positively associated with firm performance for entrepreneurs who were high in optimism than it was for those who were moderate in optimism. Overall, results suggest that improvisational behavior can be an effective form of entrepreneurial action within rapidly and unpredictably shifting environments, but only when coupled with realistic levels of optimism. Copyright © 2012 Strategic Management Society.

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