How management teams foster the transactive memory system–entrepreneurial orientation link: A domino effect model of positive team processes

Specialized knowledge can be a facilitator of entrepreneurial orientation (EO), but little is known about how management teams transform their knowledge resources into entrepreneurial activity. Complementing the knowledge-based view with social interdependence theory, we suggest that team processes mediate the impact of teams' transactive memory system (TMS) on EO. Our empirical analysis of data from interdisciplinary management teams shows that a strong TMS serves as a starting point to initiate a beneficial “domino effect” of positive team interaction patterns (enhanced team learning and participative decision-making) and positive team psychological processes (enhanced team identification), which, in turn, foster the development of EO. We thereby contribute new insights to the largely unresolved questions about the “where” and “why” of EO genesis within organizations. Managerial Summary Enhancing entrepreneurial orientation (EO) is of major importance for established firms to stay competitive in the market. This study sheds light on the question how EO emerges within management teams of a firm's decentralized units and specifically gives insights about how team design and team processes can foster the EO of these units. We find that teams with specialized experts who share a common meta-knowledge about who knows what in their team (i.e., teams with a strong transactive memory system) engage in more team learning and participative decision-making and identify themselves more strongly with their team, which consequently spurs unit EO. Our results highlight that well-designed and well-functioning management teams below the executive level can play an important role in fostering entrepreneurship in multiunit organizations.