The impact of banks’ entrepreneurial orientation on strategic control systems

Abstract

Purpose

An organization’s entrepreneurial orientation will relate directly to its efficiency strategies, market development strategies (growth), and its product development strategies (innovation). A firm will develop appropriate strategic control systems according to these chosen strategies. In order to be competitive and balance efficiency, growth and innovation strategies, the purpose of this paper is to discuss the most appropriate strategic controls to implement these strategies.

Design/methodology/approach

The eight variables under study were measured using 22 psychometric survey items obtained from responses of 101 FDIC-registered banks.

Findings

The results show a more entrepreneurial orientation is associated with an efficiency strategy, a market development strategy, and a product development strategy. The efficiency strategy was not associated with formal controls, contrary to expectations. A market development strategy was associated with formal rules, but was not found to be associated with formal targets. Finally, product development strategies was associated with all four strategic control archetypes.

Research limitations/implications

The limitation of this study is that, it only examined banking institutions, and did not consider long-term financial performance implications. This paper supports and extends current research pertaining to company key success factors. Success requires effectively balancing cost reduction objectives, growth objectives, and innovation objectives, in order to achieve sustainable competitive advantage. A more entrepreneurial orientation necessitates a focus on innovation, traditional growth patterns, as well as cost cutting.

Originality/value

This paper demonstrates that an organization’s entrepreneurial orientation will relate directly to its efficiency, growth, and innovation strategies. Also, it finds the most effective strategic controls to implement these strategies.

Citation

Callaway, S.K. and Jagani, S.B. (2015), "The impact of banks’ entrepreneurial orientation on strategic control systems", American Journal of Business, Vol. 30 No. 1, pp. 49-71. https://doi.org/10.1108/AJB-10-2013-0067