Skip to main content

Entrepreneurs in post-sanctions Iran: Innovation or imitation under conditions of perceived environmental uncertainty?

Abstract

We examined the relationships between perceived environmental uncertainty and firm strategies (innovation vs. imitation) with a sample of 143 Iranian entrepreneurs. By using longitudinal data, we hypothesized that perceived environmental state uncertainty increases the possibility of pursuing innovative strategies and that the perceived effect and response of uncertainty increases the possibility of pursuing imitative strategies by Iranian entrepreneurs during the post-sanction period. Our results extend previous research by not only highlighting the importance of perceived environmental uncertainty in shaping firms’ strategic behavior, but also indicating how each dimension of perceived environmental uncertainty either enhances or inhibits the innovation/imitation strategy. Since perceived environmental uncertainty is a multidimensional and broad concept that usually stems from different sources, ignoring the exact types of uncertainty faced by entrepreneurs during strategy formulation could lead to unproductive investments and higher costs that may hurt firm performance in the long term. Our findings are in general consistent with the predictions of upper echelons theory and confirm that the strategy of a firm varies according to the types of uncertainty perceived by entrepreneurs.

This is a preview of subscription content, access via your institution.

References

  • Afshar Jahanshahi, A., & Brem, A. 2017. Does real options reasoning support or oppose project performance? Empirical evidence from electronic commerce projects. Project Management Journal, 48(4): 39–54.

  • Afshar Jahanshahi, A., Brem, A., & Shahabinezhad, M. 2018. Does thinking style make a difference in environmental perception and orientation? Evidence from entrepreneurs in post-sanction Iran. Sustainability, 10(5): 1546.

  • Aldag, R. J., & Storey, R. G. 1975. Environmental uncertainty: Comments on objective and perceptual indices. In Proceedings of the 35th annual meeting of the Academy of Management, 1975(1): 203–205.

  • Aragón-Correa, J. A., & Sharma, S. 2003. A contingent resource-based view of proactive corporate environmental strategy. The Academy of Management Review, 28(1): 71–88.

  • Ashill, N. J., & Jobber, D. 2009. Measuring state, effect, and response uncertainty: Theoretical construct development and empirical validation. Journal of Management, 36(5): 1278–1308.

  • Bellu, R. R. 1993. Task role motivation and attributional style as predictors of entrepreneurial performance: Female sample findings. Entrepreneurship and Regional Development, 5(4): 331–334.

  • Bourgeois, L. J., III. 1985. Strategic goals, perceived uncertainty, and economic performance in volatile environments. The Academy of Management Journal, 28(3): 548–573.

  • Brislin, R. W. 1970. Back-translation for cross-cultural research. Journal of Cross-Cultural Psychology, 1(3): 185–216.

  • Caloghirou, Y., Kastelli, I., & Tsakanikas, A. 2004. Internal capabilities and external knowledge sources: Complements or substitutes for innovative performance? Technovation, 24(1): 29–39.

  • Cannella, J. A., Park, J.-H., & Lee, H.-U. 2008. Top management team functional background diversity and firm performance: Examining the roles of team member colocation and environmental uncertainty. Academy of Management Journal, 51(4): 768–784.

  • Child, J. 1997. Strategic choice in the analysis of action, structure, organizations and environment: Retrospect and Prospect. Organization Studies, 18(1): 43–76.

  • Clemens, B., Bamford, C. E., & Douglas, T. J. 2008. Choosing strategic responses to address emerging environmental regulations: Size, perceived Influence and uncertainty. Business Strategy and the Environment, 17(8): 493–511.

  • Coad, A. 2018. Firm age: A survey. Journal of Evolutionary Economics, 28(1): 13–43.

  • Cohen, J., Cohen, P., West, S. G., & Aiken, L. S. 2013. Applied multiple regression/correlation analysis for the behavioral science, 3rd ed. Mahwah: Routledge.

    Book  Google Scholar 

  • Courtney, H., Kirkland, J., & Viguerie, P. 1997. Strategy under uncertainty. Harvard Business Review, 76(6): 61–80.

  • Covin, J. G. ., & Slevin, D. P. 1989. Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1): 75–87.

  • Covin, J. G., & Slevin, D. P. 1991. A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1): 7–26.

  • Devers, C. E., McNamara, G., Haleblian, J., & Yoder, M. E. 2013. Do they walk the talk? Gauging acquiring CEO and director confidence in the value creation potential of announced acquisitions. Academy of Management Journal, 56(6): 1679–1702.

  • DiMaggio, P. J., & Powell, W. 1983. The iron cage revisited institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2): 147–160.

    Article  Google Scholar 

  • Duncan, R. B. 1972. Characteristics of organizational environments and perceived environmental uncertainty. Administrative Science Quarterly, 17(3): 313–327.

  • Dyer, J. H., & Singh, H. 1998. The relational view: Cooperative strategy and sources of Interorganizational competitive advantage. Academy of Management Review, 23(4): 660–679.

  • Eisenhardt, K. M., & Bourgeois, L. J., III. 1988. Politics of strategic decision making in high-velocity environments: Toward a midrange theory. Academy of Management Journal, 31(4): 737–770.

  • Farashahi, M., & Hafsi, T. 2009. Strategy of firms in unstable institutional environments. Asia Pacific Journal of Management, 26(4): 643–666.

  • Fathian, M., Akhavan, P., & Hoorali, M. 2008. E-readiness assessment of non-profit ICT SMEs in a developing country: The case of Iran. Technovation, 28(9): 578–590.

  • Fink, M., & Harms, R. 2012. Contextualizing the relationship between self-commitment and performance: Environmental and behavioural uncertainty in (cross-border) alliances of SMEs. Entrepreneurship and Regional Development, 24(3–4): 161–179.

  • Freel, M. S. 2005. Perceived environmental uncertainty and innovation in small firms. Small Business Economics, 25(1): 49–64.

  • Galasso, A., & Simcoe, T. S. 2010. CEO overconfidence and innovation. Management Science, 57(8): 1469–1484.

    Article  Google Scholar 

  • Garrett, R. P., & Holland, D. V. 2015. Environmental effects on the cognitions of corporate and independent entrepreneurs. Small Business Economics, 45(2): 369–381.

  • Gerloff, E. A., Muir, N. K., & Bodensteiner, W. D. 1991. Three components of perceived environmental uncertainty: An exploratory analysis of the effects of aggregation. Journal of Management, 17(4): 749–768.

  • Grant, R. (1999). The resource-based theory of competitive advantage: Implications for strategy formulation. California Management Review, 33(3): 114–135.

  • Gretzinger, S., Fietze, S., Brem, A., & Ogbonna, T. 2018. Small scale entrepreneurship—Understanding behaviors of aspiring entrepreneurs in a rural area. Competitiveness Review, 28(1): 22–42.

  • Grimm, C. M., & Smith, K. G. 1991. Management and organizational change: A note on the railroad industry. Strategic Management Journal, 12(7): 557–562.

  • Gruber, M., MacMillan, I. C., & Thompson, J. D. 2008. Look before you leap: Market opportunity identification in emerging technology firms. Management Science, 54(9): 1652–1665.

  • Hambrick, D. C. 1982. Environmental scanning and organizational strategy. Strategic Management Journal, 3(2): 159–174.

  • Hambrick, D. C. 2007. Upper echelons theory: An update. Academy of Management Review, 32(2): 334–343.

  • Hambrick, D. C., & Mason, P. A. 1984. Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2): 193–206.

  • Harman, H. H. 1976. Modern factor analysis, 3rd ed. Chicago: University of Chicago Press.

  • Haunschild, P. R. 1993. Interorganizational imitation: The impact of interlocks on corporate acquisition activity. Administrative Science Quarterly, 38(4): 564–592.

  • Haunschild, P. R., & Miner, A. S. 1997. Modes of Interorganizational imitation: The effects of outcome salience and Uncertaint. Administrative Science Quarterly, 42(3): 472–500.

  • Heirati, N., & O’Cass, A. 2016. Supporting new product commercialization through managerial social ties and market knowledge development in an emerging economy. Asia Pacific Journal of Management, 33(2): 411–433.

  • Henisz, W. J., & Delios, A. 2001. Uncertainty, imitation, and plant location: Japanese multinational corporations, 1990–1996. Administrative Science Quarterly, 46(3): 443–475.

  • Herrmann, P., & Nadkarni, S. 2013. Managing strategic change: The duality of CEO personality. Strategic Management Journal, 35(9): 1318–1342.

  • Heuriks, F. J. 1998. Innovation, creativity and success. Small Business Economics, 10(3): 263–272.

  • Hill, C. W. L., & Rothaermel, F. T. 2003. The performance of incumbent firms in the face of radical technological innovation. Academy of Management Review, 28(2): 257–274.

  • Huber, G. P., O’Connell, M. J., & Cummings, L. L. 1975. Perceived environmental uncertainty: Effects of information and structure. Academy of Management Journal, 18(4): 725–740.

  • Huysmans, J. H. B. M. 1970. The effectiveness of the cognitive-style constraint in implementing operations research proposals. Management Science, 17(1): 92–104.

  • Jansen, J. J. P., Van Den Bosch, F. A. J., & Volberda, H. W. 2006. Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderators. Management Science, 52(11): 1661–1674.

  • Lam, S. S. K., & Yeung, J. C. K. 2010. Staff localization and environmental uncertainty on firm performance in China. Asia Pacific Journal of Management, 27(4): 677–695.

  • Laursen, K., & Salter, A. 2006. Open for innovation: The role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2): 131–150.

  • Lee, R. P., & Zhou, K. Z. 2012. Is product imitation good for firm performance? An examination of contingency factors. Journal of International Marketing, 20(3): 1–16.

  • Lengnick-Hall, C. A. 1992. Innovation and competitive advantage: What we know and what we need to learn. Journal of Management, 18(2): 399–429.

  • Li, H., & Atuahene-Gima, K. 2001. Product innovation strategy and the performance of new technology ventures in China. Academy of Management Journal, 44(6): 1123–1134.

  • Li, J., & Tang, Y. 2010. CEO hubris and firm risk taking in China: The moderating role of managerial discretion. Academy of Management Journal, 53(1): 45–68.

  • Lieberman, M. B., & Asaba, S. 2006. Why do firms imitate each other? Academy of Management Review, 31(2): 366–385.

  • Lipshitz, R., & Strauss, O. 1997. Coping with uncertainty: A naturalistic decision-making analysis. Organizational Behavior and Human Decision Processes, 69(2): 149–163.

    Article  Google Scholar 

  • Lumpkin, G. T., & Dess, G. G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1): 135–172.

  • Luo, Y. 1999. Environment-strategy-performance relations in small businesses in China: A case of township and village enterprises in southern China. Journal of Small Business Management, 37(1): 37–52.

  • McKelvie, A., Haynie, J. M., & Gustavsson, V. 2011. Unpacking the uncertainty construct: Implications for entrepreneurial action. Journal of Business Venturing, 26(3): 273–292.

  • McMullen, J. S., & Shepherd, D. A. 2006. Entrepreneurial action and the role of uncertainty in the theory of the entrepreneur. Academy of Management Review, 31(1): 132–152.

  • Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J., Jr. 1978. Organizational strategy, structure, and process. The Academy of Management Review, 3(3): 546–562.

  • Miller, D., & Shamsie, J. 1999. Strategic responses to three kinds of uncertainty: Product line simplicity at the Hollywood film studios. Journal of Management, 25(1): 97–116.

  • Milliken, F. J. 1987. Three types of perceived uncertainty about the environment: State, effect, and response uncertainty. Academy of Management Review, 12(1): 133–143.

  • Milliken, F. J. 1990. Perceiving and interpreting environmental change: An examination of college administrators’ interpretation of changing demographics. Academy of Management Journal, 33(1): 42–63.

  • Napier, N. K. 1989. Mergers and acquisitions, human resource issues and outcomes: A review and suggested typology. Journal of Management Studies, 26(3): 271–290.

  • Newbert, S. L. 2008. Value, rareness, competitive advantage, and performance: A conceptual-level empirical investigation of the resource-based view of the firm. Strategic Management Journal, 29(7): 745–768.

  • Oke, A., Walumbwa, F. O., & Myers, A. 2012. Innovation strategy, human resource policy, and firms’ revenue growth: The roles of environmental uncertainty and innovation performance. Decision Sciences, 43(2): 273–302.

  • Pérez-Luño, A., Cabrera, R. V., & Wiklund, J. 2007. Innovation and imitation as sources of sustainable competitive advantage. Management Research: Journal of the Iberoamerican Academy of Management, 5(2): 71–82.

  • Podoynitsyna, K., Song, M., van der Bij, H., & Weggeman, M. 2013. Improving new technology venture performance under direct and indirect network externality conditions. Journal of Business Venturing, 28(2): 195–210.

  • Podsakoff, P. M, & Organ, D. W. 1986. Self-reports in organizational research: Problems and prospects. Journal of Management, 12(4): 531–544.

  • Powell, M., & Ansic, D. 1997. Gender differences in risk behaviour in financial decision-making: An experimental analysis. Journal of Economic Psychology, 18(6): 605–628.

  • Priem, R. L., Love, L. G., & Shaffer, M. a. 2002. Executives’ perceptions of uncertainty sources: A numerical taxonomy and underlying dimensions. Journal of Management, 28(6): 725–746.

  • Rangan, S., Samii, R., & Van Wassenhove, L. N. 2006. Constructive partnerships: When alliances between private firms and public actors can enable creative strategies. Academy of Management Review, 31(3): 738–751.

  • Reed, R., & Defillippi, R. J. 1990. Causal ambiguity, barriers to imitation, and sustainable competitive advantage. Academy of Management Review, 15(1): 88–102.

  • Rhee, M., Kim, Y.-C., & Han, J. 2006. Confidence in imitation: Niche-width strategy in the UK automobile industry. Management Science, 52(4): 501–513.

  • Ross, J.-M., & Sharapov, D. 2015. When the leader follows: Avoiding dethronement through imitation. Academy of Management Journal, 58(3): 658–679.

  • Rothaermel, F. T., & Hess, A. M. 2007. Building dynamic capabilities: Innovation driven by individual-, firm-, and network-level effects. Organization Science, 18(6): 898–921.

  • Sarkissian, A. 2008. Intellectual property rights for developing countries: Lessons from Iran. Technovation, 28(11): 786–798.

  • Schmitt, A., Rosing, K., Zhang, S. X., & Leatherbee, M. 2017. A dynamic model of entrepreneurial uncertainty and business opportunity identification: Exploration as a mediator and entrepreneurial self-efficacy as a moderator. Entrepreneurship: Theory and Practice, 42(6): 835–859.

  • Schoorman, F. D., Bazerman, M. H., & Atkin, R. S. 1981. Interlocking directorates: A strategy for reducing environmental uncertainty. Academy of Management Review, 6(2): 243–251.

  • Schumpeter, J. A. 1934. The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. Piscataway: Transaction.

  • Sharfman, M. P., Shaft, T. M., & Anex, R. P., Jr. 2009. The road to cooperative supply-chain environmental management: Trust and uncertainty among pro-active firms. Business Strategy and the Environment, 18(1): 1–13.

  • Simsek, Z., & Heavey, C. 2011. The mediating role of knowledge-based capital for corporate entrepreneurship effects on performance : A study of small- to medium-sized firms. Strategic Entrepreneurship Journal, 5(1): 81–100.

  • Sirmon, D. G., Hitt, M. A., & Ireland, R. D. 2007. Managing firm resources in dynamic environments to create value: Looking inside the black box. Academy of Management Review, 32(1): 273–292.

  • Soltani, E., Syed, J., Liao, Y.-Y., & Shahi-Sough, N. 2012. Tackling one-sidedness in equality and diversity research: Characteristics of the current dominant approach to managing diverse workgroups in Iran. Asia Pacific Journal of Management, 29(1): 9–37.

  • Spivak, M. 2016. What to know about doing business in Iran. Harvard Business Review: May 5, 2016. https://hbr.org/2016/05/what-to-know-about-doing-business-in-iran.

  • Subramaniam, M., & Youndt, M. A. 2005. The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48(3): 450–463.

  • Sund, K. J. 2013. Scanning, perceived uncertainty, and the interpretation of trends: A study of hotel directors’ interpretation of demographic change. International Journal of Hospitality Management, 33: 294–303.

  • Swamidass, P. M., & Newell, W. T. 1987. Manufacturing strategy, environmental uncertainty and performance: A path analytic model. Management Science, 33(4): 509–524.

  • Tabachnick, B. G., & Fidell, L. S. 2007. Using multivariate statistics, 5th ed. Boston: Allyn & Bacon/Pearson Education.

  • Tsai, W. 2001. Knowledge transfer in intraorganizational networks: Effects of network position and absorptive capacity on business unit innovation and performance. The Academy of Management Journal, 44(5): 996–1004.

  • Tsui, A. S. 2007. From homogenization to pluralism: International management research in the academy and beyond. Academy of Management Journal, 50(6): 1353–1364.

  • Utterback, J. M. 1971. The process of technological innovation within the firm. Academy of Management Journal, 14(1): 75–88.

  • Van de Graaf, T. 2013. The “oil weapon” reversed? Sanctions against Iran and US-EU structural power. Middle East Policy, 20(3): 145–163.

  • Weber, L., & Mayer, K. 2014. Transaction cost economics and the cognitive perspective: Investigating the sources and governance of interpretive uncertainty. Academy of Management Review, 39(3): 344–363.

  • Welter, F. 2011. Contextualizing entrepreneurship—Conceptual challenges and ways forward. Entrepreneurship Theory and Practice, 35(1): 165–184.

  • Welter, F., & Smallbone, D. 2008. Women’s entrepreneurship from an institutional perspective: The case of Uzbekistan. International Entrepreneurship and Management Journal, 4(4): 505–520.

  • Welter, F., & Smallbone, D. 2011. Institutional perspectives on entrepreneurial behavior in challenging environments. Journal of Small Business Management, 49(1): 107–125.

  • Westhead, P., Wright, M., & Ucbasaran, D. 2004. Internationalization of private firms: Environmental turbulence and organizational strategies and resources. Entrepreneurship and Regional Development, 16(6): 501–522.

  • Wiklund, J., & Shepherd, D. 2005. Entrepreneurial orientation and small business performance: A configurational approach. Journal of Business Venturing, 20(1): 71–91.

  • Xu, K., Huang, K.-F., & Gao, S. 2012. The effect of institutional ties on knowledge acquisition in uncertain environments. Asia Pacific Journal of Management, 29(2): 387–408.

  • York, J. G., & Venkataraman, S. 2010. The entrepreneur–environment nexus: Uncertainty, innovation, and allocation. Journal of Business Venturing, 25(5): 449–463.

  • Zahra, S. A., & Bogner, W. C. 2000. Technology strategy and software new ventures’ performance: Exploring the moderating effect of the competitive environment. Journal of Business Venturing, 15(2): 135–173.

  • Zahra, S. A., & Covin, J. G. 1993. Business strategy, technology policy and firm performance. Strategic Management Journal, 14(6): 451–478.

  • Zahra, S. A., & Das, S. R. 1993. Innovation strategy and financial performance in manufacturing companies: An empirical study. Production and Operations Management, 2(1): 15–37.

  • Zhang, S. X., & Cueto, J. 2017. The study of Bias in entrepreneurship. Entrepreneurship Theory and Practice, 41(3): 419–454.

  • Zhang, S. X., & Afshar Jahanshahi, A. 2016. How CEOs’ personality shape their interpretation—A study of CEOs in Iran facing UN-led sanction. Academy of Management Proceedings, 2016(1). https://doi.org/10.5465/ambpp.2016.12632abstract.

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Asghar Afshar Jahanshahi.

Additional information

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix 1: Imitation strategy by Iranian firms

Appendix 1: Imitation strategy by Iranian firms

In the following image we can see an example for how some Iranian firms copied the most successful foreign products in the market.

figure a

Source: http://kafemarketing.com/.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Afshar Jahanshahi, A., Brem, A. Entrepreneurs in post-sanctions Iran: Innovation or imitation under conditions of perceived environmental uncertainty?. Asia Pac J Manag 37, 531–551 (2020). https://doi.org/10.1007/s10490-018-9618-4

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10490-018-9618-4

Keywords

  • Perceived environmental uncertainty
  • Imitation strategy
  • Innovation strategy
  • Entrepreneurs
  • Iran
  • Sanctions