Environmental uncertainty and entrepreneurial orientation: a two country study for small service firms

The relationship between aspects of environmental uncertainty, such as dynamism and hostility, and entrepreneurial orientation (EO) has been well established in the literature. Drawing predominantly on perceptions of uncertainty, there is general consensus that dynamism and hostility nurtures EO. This study uses data from small service firms in New Zealand (NZ) and South Africa (SA) to structurally analyse and compare the nature of this relationship. The findings contribute to the current understanding of the environmental uncertainty and EO relationship as follows. First, although the mean levels for EO are similar between firms in the more dynamic NZ environment and the more hostile SA environment, the factors that nurture such an EO differ significantly between countries. More specifically, EO in small service firms is supported by higher levels of environmental hostility in NZ and by higher levels of internal strategy processes in SA. Second, it contributes to research methodology by using and confirming the use of country of origin as an objective measure of environmental uncertainty.