One critical proposition in normative strategic management research is that an accurate perception of the environment by top managers is a prerequisite to attain- ing better organizational performance. However, recent entrepreneurship stud- ies suggest that entrepreneurs are often leading or even causing environmental changes, and thus they may perceive greater industrial instability than there actu- ally is. In this project, we examine if an over-perception of industrial instability exists among entrepreneurs. If it does, which perceptual mode (accurate percep- tion versus over-perception) will benefit firm performance? We conducted the study in a highly volatile environment — China — and found that entrepreneurial orientation (EO) had an inverse U-shape relationship with perceptual acuity of industrial instability, indicating that a greater level of EO indeed led to an over- perception of industrial instability. However, we found that although perceptual acuity of industrial instability improved firm sales, it was negatively associated with organizational effectiveness evaluated by top managers. Additional analyses were conducted and implications were provided in the end.

Publication Date



Journal of enterprising culture article, published March, 2009.Note: imported from RIT’s Digital Media Library running on DSpace to RIT Scholar Works in February 2014.

Document Type


Department, Program, or Center

Accounting (SCB)


RIT – Main Campus