Responding to market situation crucial for long-term success

Attack is the best form of defence in business, according to a unique 15-year study of 135 big Dutch companies by Rotterdam School of Management, Erasmus University (RSM) and professional services firm EY. Businesses which are most innovative and willing to take risks in a turbulent or precarious market – and do exactly the opposite when the market is stable – consistently achieve better results. That is the main conclusion of research by Hans Bruining, Associate Professor of Strategic Management at RSM and Aart-Willem Saly, Strategy Director at EY, into the relationship between entrepreneurship and profitability.

The study shows that companies that are proactive, constantly innovative, and willing to take risks in addition to their behaviour in response to the market situation perform noticeably better in the long term.

Moving with the market

Enterprising companies regularly innovate, open up new markets, introduce trends and are prepared to take risks. Does this really contribute to their profitability and performance in the long term? To answer that question, Dr Hans Bruining and Dr Aart-Willem Saly followed 135 Dutch companies employing more than 400 employees between 1999 and 2014. Aart-Willem Saly said: “The greatest effect on the financial performance of businesses concerns being able to gear entrepreneurship to the market situation. Businesses which were more proactive in times of market turbulence or threats to their position, and which innovated more and took risks, were significantly more profitable in 7 of the 14 years. There were no years in which these companies performed significantly worse than the average of all the companies we studied.”

Hans Bruining adds: “Research warns against ‘overdoing entrepreneurship’ I when the company’s position is not under particular pressure and the organisation has a relatively unthreatened position in the market. A more conservative approach in this situation is certainly equally profitable.”

Entrepreneurship and continuity

In the long term, a higher level of entrepreneurship contributes to a company’s continuity. On average, the 14 companies in the study which went bankrupt after 1999 scored lower on innovation, proactivity and the willingness to take risks than the other 135 companies which survived. Furthermore it appeared that although all companies’ financial results were hit hard during the crisis of 2008, companies scoring more highly for innovations and proactivity recovered sooner and were able to restore their results back to pre-crisis levels. In this case, their innovative activities were the engine for their recovery.

Crisis creates caution

At the time of the crisis, the average level of entrepreneurship among all Dutch companies fell, but has since been restored. However, the study shows that the companies in the study still tend to avoid risks. The crisis seems to have affected the extent to which companies are able and willing to take financial business risks. Some companies were able to adjust their level of entrepreneurship to the changing market situation at exactly the right moment, thus achieving greater profitability than other companies.

Tips for upper management

The study offers tips for upper management of big companies, but entrepreneurship is no magic formula. Saly says: “The study shows that entrepreneurship can be encouraged, but it is certainly not easy and requires patience. However, some measures have proved effective and beneficial to companies. Factors for success emerging from the study include having a clear and focused strategy, recruiting enterprising employees and creating separate business units which are fully dedicated to innovation and developing new business.

“We have also seen a recent increase in co-operations with enterprising start-ups. Overall, diversity in innovation plays an important role.”

About the study

The study was conducted by Dr Hans Bruining of RSM and Dr Aart-Willem Saly of EY. Dr Bruining is Associate Professor in Strategic Management and Entrepreneurship at RSM and researches buy-outs, strategic management and entrepreneurship. Dr Saly is Strategy director at accountancy and consultancy firm EY and advises big companies on strategy and innovation. The study was also supported by VNO-NCW (The Confederation of Netherlands Industry and Employers), which encouraged businesses to co-operate with the study.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

More information

Rotterdam School of Management, Erasmus University (RSM) is a top-tier European business school and ranked among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has an office in Taipei, Taiwan.

For more information about this release, please contact Marianne Schouten, Media & Public Relations Manager for RSM, on +31 10 408 2877 or by email at or Liesbeth Aarssen-Blokpoel, Manager Marketing PR for EY, on +31 88 407 53 55 or by email at

Accounting and control , Alumni , Companies , Executive education , Faculty & Research , Homepage , Newsroom , Organisation and personnel management , Strategic management and entrepreneurship