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Keywords:

  • entrepreneurial orientation;
  • experimentation;
  • absorptive capacity;
  • variation;
  • growth

According to the perspective of entrepreneurial orientation-as-experimentation, entrepreneurial orientation (EO) increases variability in innovation outcomes. Although increased variability in the innovation portfolio could increase performance, it could also lead to a decline in performance. We propose that absorptive capacity plays a role in both increasing and managing variations in innovation outcomes. Potential absorptive capacity enhances the effects of EO on variability in innovation outcomes, whereas realized absorptive capacity helps transform and exploit variability in innovation outcomes to enhance firm performance. Copyright © 2014 John Wiley & Sons, Ltd.