Managerial Behavior, Entrepreneurial Style, and ... - Wiley Online Library

Journal of Small Business Management 2003 41(1), pp. 47–67

Managerial Behavior, Entrepreneurial Style, and Small Firm Performance* by Eugene Sadler-Smith, Yve Hampson, Ian Chaston, and Beryl Badger

Considerable effort has been devoted to identifying the general characteristics of entrepreneur; however, much of this has been conducted from a trait-based rather than from a behavioral perspective. In this study of small firms in the United Kingdom, we explored the relationships among managerial behaviors (based upon a competence model), entrepreneurial style (based on Covin and Slevin’s theory), and firm type (in terms of sales growth performance). Principal components analysis of a management competence inventory identified six broad categories of managerial behavior. Regressing a measure of entrepreneurial style on these six behaviors suggested that managing culture and managing vision are related to an entrepreneurial style, while managing performance is related to a nonentrepreneurial style. Entrepreneurial style—but not managerial behavior—was associated positively with the probability that a firm would be a high-growth type. The results are discussed from the perspective of a model of small firm management that posits separate entrepreneurial, nonentrepreneurial, and generic management behaviors derived from a global competence space.

Introduction The issue of what constitutes an entrepreneurial approach to the management of organizations is an important one in delineating and describing the field of small business management/entrepreneurship and its relationship to general management. Such inquiry prompts a number of questions: For example, what kinds of activities does an entrepreneur

perform? What roles can be inferred from these activities? What are the distinguishing characteristics of entrepreneurial work? What variability exists among entrepreneurial and managerial jobs? (Gartner 1988). A decade ago Churchill (1992) argued that considerable progress had been made with regard to the similarities and differences in the general characteristics of entrepreneurs and small business owners. These differ-

*The authors are grateful to the Controller of Her Majesty’s Stationery Office for permission to use the Senior Manager Standard (1995) in this research. The Standard is Crown Copyright and is reproduced under license from Her Majesty’s Stationery Office.

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ences, and those between small business owners, entrepreneurs, and managers in large organizations, have been elaborated upon further in recent years (see, for example, Becherer and Maurer 1999; Chell, Haworth, and Brearley 1991; Stewart et al. 1998; Hyrsky 2000). Much of this research has been conducted from a trait-based perspective by examining the innate characteristics of entrepreneurs. While studying traits has achieved some notable successes, what is less clear are the ways in which managers in different kinds of small firms behave in managing their businesses and, furthermore, how this relates to the concept of entrepreneurship and to firm performance. Management competence provides a potentially useful lens through which to frame these and other questions. Such a perspective is apposite given that in parallel with debates about entrepreneurship and small firm performance (see, for example, Cohen and Musson 2000; Du Gay 2000; Kaplan 1987) the issue of management competencies continues to be an area of vigorous debate among scholars, practitioners, and policymakers (see Burgoyne 1989; Burgoyne 1993; Bridge, O’Neill, and Cromie 1998; Gherardi 1999; Gruglis 1997; Holton and Naquin 2000). Entrepreneurship has been linked with firm type (high growth versus low growth), managerial behaviors have been linked with firm type, and managerial behaviors have been examined through functional analyses. However there have been few, if any, attempts to draw these literatures together and to explore the relationships among small business management/ entrepreneurship, firm type (in terms of growth performance), and management behaviors utilizing competence as an analytical framework. It is our assertion that entrepreneurship and managerial competence represent two important and complementary strands of small firm research and practice that appear to have led largely separate existences. An

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exploration of both of these issues may help to further meaningfully circumscribe the areas of entrepreneurship and small business management and to shed additional light on those managerial behaviors that are associated with entrepreneurship and small firm performance.

Entrepreneurial Style and Firm Type Entrepreneurship has been defined as the process of “creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks and receiving the resulting rewards of monetary and personal satisfaction” (Hisrich and Peters 1992, p.6). Carland et al. (1984) argued that entrepreneurship could be defined in terms of innovative behavior allied to a strategic orientation in pursuit of profitability and growth. There have been a number of empirically-based efforts to describe the attributes of entrepreneurship in terms of personality traits, attitudes, and management behaviors. The trait-based perspective has predominated and continues to be applied, as Utsch et al. (1999) investigated recently the differences between entrepreneurs and managers in East Germany. They observed that entrepreneurs exhibited greater levels of self-efficacy, higherorder need strength, readiness to change, interest in innovation, Machiavellism (competitive aggression), and need for achievement than did managers ( p < 0.05). Managers on the other hand showed higher control rejection (lower autonomy). There were no statistically significant differences with respect to planfulness, action orientation after failure, and goal orientation. Hyrsky (2000) in a factor analytical study of small business managers in Europe, North America, and Australia identified work commitment and energy, economic values and results, innovativeness and

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risk taking, ambition and achievement, and egotistic features as dimensions of entrepreneurship. Georgelli, Joyce, and Woods (2000, p.14) described “being entrepreneurial” as being willing to take risks and being innovative, articulated with an ambition to grow. Georgelli, Joyce, and Woods went on to suggest that the core competencies for entrepreneurship are a capacity for changing business processes, the launching of new products, and services and a planning capacity but noted that not all small businesses are equipped with these capabilities (p.17), nor are all managers necessarily predisposed towards them. Covin and Slevin (1988, p.218) defined an entrepreneurial style in terms of the extent to which “top managers are inclined to take business-related risks (a risk-taking dimension), favor change and innovation (an innovation dimension), and compete aggressively with other firms (a proactiveness dimension).” On the other hand, a nonentrepreneurial style, in Covin and Slevin’s (1988) terms, is characterized as being risk-averse, noninnovative, passive, and reactive. They described the development and use of a measure of entrepreneurial style based upon previous theorizing and research by Khandwalla (1977) and Miller and Friesen (1982) and that provides a potentially useful tool in this context for operationalizing the key concept of entrepreneurial style.

Entrepreneurship, Small Business Management, and Firm Type Carland et al. (1984) attempted to draw a clear distinction between entrepreneurs and owner managers of small businesses; the former, they argued, are concerned with “profitability and growth,” while the main concern of the latter is securing an income to meet their immediate needs. Stewart et al. (1998) found that small business owners were

more comparable to managers than to entrepreneurs (the latter were higher in achievement motivation, risk-taking propensity, and preference for innovation). Hodgetts and Kuratko (2001) have summarized the differences: Small businesses are businesses that are independently owned and operated, are not dominant in their field, and usually do not engage in many new or innovative practices . . . The entrepreneur’s principal objectives are profitability and growth . . . the business is characterized by innovative strategic practices and continued growth . . . [and] may be seen as having a different perspective from small business owners in the actual development of their firm (pp.5–6). This suggests therefore that the intention to grow (Georgelli, Joyce, and Woods 2000) and an innovation/change orientation are characteristics of entrepreneurial behavior. The issue of entrepreneurship may be linked to the wider agenda of regional or national economic growth. For example, Kuratko and Hodgetts (1998) noted the importance of new and smaller firms to the United States economy and in particular of jobcreating fast-growing businesses versus lifestyle businesses. The former type, sometimes referred to as gazelles in Birch’s (1979) terminology and described by Kuratko and Hodgetts (1998) as being leaders in innovation, cited evidence of total numbers of innovations, innovations per employees, and numbers of patents in support of this assertion. Orser, Hogarth-Scott and Riding (2000) argued that much employment growth is attributable to the minority of firms that grow quickly. They also noted that business owners’ motives for growth are not homogeneous and “appear to reflect

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experiential and situational differences” (p.44). Stewart et al. (1998) suggested that the difference between entrepreneurs and small business owners is one area for further research that may add to a more complete understanding of the entrepreneur. A pertinent question for entrepreneurship theory and small firm management practice is the following: What are the behaviors that characterize management in small businesses (differentiated in terms of entrepreneurial style) and how do these relate to firm type in terms of performance (differentiated in terms of a high growth/low growth distinction)? Gartner (1988) argued that trait-oriented research has not proved wholly adequate in explaining the phenomenon of entrepreneurship and advocated behavior as an alternative and more promising way forward. Previous research and theorizing suggest that a number of managerial behaviors may be associated with an entrepreneurial style. For example, Moss Kanter (1982) argued that there is a strong association between accomplishment in innovation and the employment of a participative–collaborative management style, which itself is associated with particular organizational cultural attributes. The author defined this in terms of persuading rather than ordering; team building; seeking input from others; being politically sensitive; and sharing rewards and recognition willingly and went on to note that when carrying out basic accomplishments (that is, noninnovative activities), such a style is useful but not necessary—indeed a traditional, autocratic style may be equally effective (Moss Kanter 1982). A summary of previous research is presented in Table 1. From this it may be argued that some of the principal differences between entrepreneurial management and nonentrepreneurial management include the following: (1) Entrepreneurial managerial behaviors promote a

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culture of creativity and risk taking, create flat informal structures, and formulate strategy in order to take advantage of identified opportunities; (2) Nonentrepreneurial managerial behaviors emphasize planning, control, monitoring, evaluation, and formalized organizational structures.

Entrepreneurial Style and Managerial Behaviors The 1980s, as well as being the decade of enterprise (Kaplan 1987), saw the articulating of desirable managerial behaviors in the language of management competence (see Mabey, Salaman, and Storey 1998). This approach became an important element of management thinking and influenced government policy in a number of national economies. For example, in the United Kingdom such an approach manifested itself in the identification of generic management competences derived via functional analyses of managerial work, and the outcome of which it has been proposed may be extended to the smaller firm sector. Attempts to analyze and to categorize the attributes of effective managerial behavior have their roots in the work of Boyatzis (1982), who described a job competency as “an underlying characteristic of a person” that describes what an individual can do (and not necessarily what he or she does) and that is causally related to effective and/or superior performance in a job (p.23). Competencies may be said therefore to reflect desirable managerial behaviors whose relative efficacy may be context dependent. Successive United Kingdom governments have emphasized the importance of the development and use of descriptors of desirable managerial behaviors as a lever to enhance the skill level of managers in general through competence-based training, assessment,


Table 1 Comparison of Entrepreneurial and Nonentrepreneurial Management Source

Entrepreneurial Domain

Nonentrepreneurial Domain

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Chandler and Hanks (1994)

Scanning Environment for Opportunities; Formulating Appropriate Strategies to Take Advantage of Opportunities (Entrepreneurial Competence)

Acquire and Utilize Resources Develop Programs and Procedures Develop Budgets Delegate Manage Employee and Customer Relationships Evaluate Performance (Managerial Competence)

Cornwall and Perlman (1990)

Scanning for and Active Pursuit of New Ventures Change Viewed as Opportunity and Means to Longer-Term Survival, Adaptation, and Growth through intelligent Approach to Risk Culture (including Affective Components)/ Informal Structure Nurtures Adaptation Top-Down and Bottom-Up Approaches to Decision-Making People Are a Scarce and Precious Resource. Creativity Is Encouraged.

Defensive Stance with Niche Protection Change Viewed as Threat Control Focused on Short-Term Targets with Risk Minimization Analytical/Objective Culture Serves to Protect the Status Quo Formalized Lines of Communication with Decision-Making Determined from the Top People Are an Abundant and Easily Replaceable Resource. Creativity Is Tolerated.

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Table 1 Continued Source Stevenson, Roberts, and Grousbeck (1985)

Entrepreneurial Domain

Nonentrepreneurial Domain

Strategic Orientation Driven by Perception of Opportunity in Environment of Rapid Change Commitment to Opportunity Is Revolutionary/ Short Duration and Management of Risk. Commitment of Resources Is Multi-Staged with Minimal Commitment at Each Stage (with Lack of Longer-Term Control). Episodic Use/Rent of Required Resources Flat Management Structure with Informal Networks

Strategic Orientation Driven by Resources Currently Controlled Established Performance Measurement Criteria Commitment to Opportunity Is Evolutionary/ Long Duration with Reduction of Risk. Commitment of Resources Is Single-Staged with Complete Commitment/Formal Planning. Required Resources Owned/Employed and Efficiency of Use Measured. Formalized Hierarchy

and certification (Loan-Clarke et al. 2000; Du Gay, Salaman, and Rees 1996). In the late 1980s the United Kingdom’s Management Charter Initiative (MCI) was launched to shape and promote management development, particularly competence-based management development. The MCI became the “lead (policy-advising) body” for management in the United Kingdom and first published a set of standards for senior managers in 1995 (Management Charter Initiative 1995). The MCI since has been superseded by the Management Enterprise and Training Organization (METO), whose remit explicitly covers small and medium-sized enterprises. The MCI/ METO Senior Manager Standard consists of two related elements, performance standards, and personal competencies. The latter apply across different management levels, while the former describe desirable behaviors for senior managers in a number of key areas of business performance. The nine units of the performance standard (and used as the basis of our research) are (1) external trends; (2) internal strengths and weaknesses; (3) stakeholders; (4) strategy and commitment; (5) programs, policies, and plans; (6) delegation and action; (7) culture; (8) monitoring; and (9) evaluating and improving. Since managers in many small firms tend not to specialize in one specific functional area but are required to operate across the range of management competencies, Loan-Clarke et al (2000, p.179) argued that “the applicability of competence-based MTD [management training and development] to the broader roles of managers in small businesses is likely to be greater than to the roles of many managers in large organizations” (since the latter tend to specialize while the former are often required to perform a more generalist role). Competencebased analyses of managerial work provide a potentially useful descriptor of those management behaviors that are

assumed to be causally related to effective and/or superior job performance. The nature of the relationship between entrepreneurial style and particular modes of managerial action (as described in competence statements) is not clear. In terms of the antecedents of behavioral preferences and the links to psychological traits, Berr, Church, and Waclawski (2000, p.154) argued that “individual differences in personality style do have a moderate yet significant impact upon management behavior.” We chose to concentrate on the behavioral level of analysis rather than to explore trait-level phenomena since the latter have been well researched (see, for example, Brockhaus and Horwitz 1986; Olsen 1985; Chell, Haworth, and Brearley 1991; Frese, van Gelderen, and Ombach 2000) and critiqued (see, for example, Gartner 1988).

Entrepreneurial Style, Managerial Behavior, and Firm Type From a conceptual perspective, scholars have previously compared and contrasted the entrepreneurial and administrative (managerial) domains. For example, Hodgetts and Kuratko (2001) drew a distinction between entrepreneurial style (characterized by creativity, innovation, and risk-taking behaviors) and managerial style (characterized planning and organizational behaviors) but did not see these as mutually exclusive: “The ability to remain entrepreneurial while adopting administrative [managerial] traits is vital to the venture’s successful growth” (p.345). Hisrich and Peters (1992), building upon the work of Stevenson and Sahlman (1986), contrasted entrepreneurial versus managerial approaches in terms of five key business dimensions—strategic orientation, commitment to opportunity, commitment of resources, control of resources, and management structure.

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Within this overall context, competencebased frameworks present complementary framework for the analysis of managerial behaviors. Mukhtar (1998) in a study of entrepreneurship suggested that all firms operate inside a global competence space within which businessspecific competencies may be identified. Following this line of thought and as a basis for our research we argue that (1) there is a global competence space comprising managerial behaviors that may be identified via functional analyses and articulated in competence standards; (2) the global competence space comprises entrepreneurial management behaviors, administrative (nonentrepreneurial) management behaviors (Stevenson and Sahlman 1986), and generic (shared) management behaviors; (3) management behaviors within smaller firms may be mapped within the global competence space, and particular firms may be hypothesized as possessing a portfolio of behaviors comprising entrepreneurial, administrative, and generic elements and as related to the organization’s entrepreneurial style (Figure 1). Furthermore, entrepreneurial style and the associated behaviors are hypothesized as predictors of performance in terms of high-growth [gazelles, in Birch’s (1979) terminology] or low-growth (lifestyle or small business owner) types. Using the MCI’s performance standards, Covin and Slevin’s (1988) operationalization of the concept of entrepreneurship and the framework proposed in Figure 1, the following propositions were used as the bases of our investigations: Proposition 1a: There will be a positive relationship between entrepreneurial style and those managerial behaviors that (1) promote a culture of creativity and risk taking; (2) create flat informal structures; and (3) formulate strategy in order to take advantage of identified opportunities.

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Proposition 1b: There will be a negative relationship between entrepreneurial style and those managerial behaviors that emphasize planning, control, monitoring, evaluation, and formalized organizational structures. Proposition 2: There will be a positive relationship between entrepreneurial style and firm type (high growth). Proposition 3: There will be a positive relationship between entrepreneurial management behavior and firm type (high growth). From a theoretical perspective the research will attempt to link two separate streams of management theory and practice, namely small business/entrepreneurship and competence. The findings may be relevant from a practical standpoint since they may assist policymakers and educators in identifying those behaviors that may be a valid element of an entrepreneurial management development curriculum. The research will take smaller firms in the United Kingdom as its context for a number of reasons: (1) They are perceived as having a considerable contribution to make to innovation (Carr 2000; Freel 2000); (2) The issue of management competence is increasingly to the fore in the small firm sector (Loan-Clarke et al. 2000, p.177); (3) Small firms are populated by people who perform entrepreneurial, managerial, and operational functions (Cohen and Musson 2000); and (4) The effective management of smaller firms is seen by many as crucial to the economic growth of regional and national economies (Westhead and Storey 1996; Wilson 1995), especially since it is estimated that over 99 percent of firms in the United Kingdom employ less than 100 people (Mukhtar 1998). The study of smaller firms presents opportunities and advantages to the researcher since the complexities of


Figure 1 Management Behaviors, Entrepreneurial Style, and Firm Type

Entrepreneurial behaviors

+

Nonentrepreneurial behaviors

-

Entrepreneurial style

+

Firm type (high growth or low growth)

Generic behaviors

Global competence space

multilevel research may be fewer than in larger firms because structures are simpler with greater internal cultural consistencies and fewer diverging internal forces (Chandler and Hanks 1994).

Data Collection The study was cross-sectional, and data were collected by means of a postal questionnaire survey mailed to 550 small and medium-sized enterprises in the southwest region of the United Kingdom (comprising the counties of Devon and Cornwall). Respondents were selected randomly from a commercially available database. The survey form consisted of three pages and an accompanying letter that stipulated that a small donation to charity would be made for every completed questionnaire received.

The questionnaire consisted of the following three sections: Section 1, Respondent Information: number of employees, sector (manufacturing, service, or construction), sales growth (percent) over past five years (seven-point scale). Section 2, Managing Your Business: Respondents were asked to indicate the importance they attached to each of 34 separate managerial behaviors for the running of their businesses (five-point scale; very important scored five and very unimportant scored one). The items themselves were drawn from the United Kingdom MCI’s senior manager performance standard and comprised nine separate multiple-item scales (referred to henceforth as manage-

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ment behaviors; numbers in parentheses refer to the item numbers in the appendix): (1) external trends (three items, MB1–MB3); (2) internal strengths and weaknesses (five items, MB4–MB8); (3) stakeholders (two items, MB9–MB10); (4) strategy and commitment (four items, MB11– MB14); (5) programs, policies, and plans (five items, MB15–MB19); (6) delegation and action (five items, MB20–MB24); (7) culture (three items, MB25–MB27); (8) monitoring (three items, MB28–MB30); and (9) evaluating and improving (four items, MB31–MB34). Section 3, Your Business: This consisted of Covin and Slevin’s (1988) entrepreneurial style scale with two minor modifications: One large firmspecific item from the original scale was dropped; and a five-point scale (rather than the seven-point scale as used by Covin and Slevin) commensurate with Section 2 was used. This scale and variants of it have a long tradition in the strategic management literature (AtuaheneGima and Ko 2001) and consistently have demonstrated reliability and validity. The questionnaire was mailed to the managing director of each of the firms sampled; this person was taken as being a knowledgeable key informant and hence provided a valid approach to measuring organizational processes (Shortell and Zajac 1990). The use of managers in small businesses may overcome some of the difficulties associated with research in larger organizations; for instance, the lack of functionalist divides in smaller firms and the workings of their organizations may be more traceable (Cohen and Musson 2000, p.32), and both entrepreneurial and managerial competencies may be located in individual managers (Carr 2000).

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Results Characteristics of Sample The number of usable questionnaires received was 156 and represented a response rate of 28 percent. The sample characteristics were as follows: (1) sector: manufacturing, 88 (56 percent); service, 34 (22 percent); construction, 34 (22 percent); (2) size: median number of employees, 26; (3) sales growth: (a) decreased by more than 10 percent, 16 (10.3 percent); (b) decreased by between one and 10 percent, 18 (11.5 percent); (c) remained unchanged, 9 (5.8 percent); (d) increased by between one and 10 percent, 38 (24.4 percent); (e) increased by between 11 percent and 30 percent, 37 (23.7 percent); (f) increased by between 31 percent and 50 percent, 8 (5.1 percent); (g) increased by more than 50 percent, 30 (19.2 percent).

Descriptive Statistics, Item and Factor Analyses, and Intercorrelations The properties of the five-item Covin and Slevin entrepreneurship scale were investigated by computing internal consistency (Cronbach’s alpha) and itemtotal correlations. Item-total correlations were in the range 0.62 to 0.75, and the internal consistency was 0.86 and is comparable to that obtained in previous studies using this version of the scale (Sadler-Smith, Spicer, and Chaston 2001). Both of these parameters (item-total correlations and Cronbach’s alpha) are in excess of the minimum values suggested by Nunally (1978) and are taken as evidence of an acceptable level of internal consistency. In order to explore the factor structure of the survey instrument, the entrepreneurial style and management behavior items were subjected to principal components analysis (KaiserMeyer-Olkin measure of sampling adequacy = 0.83; Bartlett’s test of sphericity, c2 = 3616.32, df = 741, p < 0.001). The scree plot (eigenvalues against order of


extraction) suggested that seven principal components (factors) representing 63.78 percent of the total variance should be extracted. Hair et al. (1998, p.112) presented guidelines for identifying significant factor loadings based on sample size. Using this approach, the criterion of salient loading for the present study (N = 156) was set at 0.45 and was used as the basis for an interpretation of the resultant factor structure. Based upon the content of those items that loaded at or above the salient value (and using the highest loading in the those instances where items cross-loaded at or above this value), the extracted factors were labeled as follows: factor 1: managing performance; factor 2: entrepreneurial style; factor 3: managing process; factor 4: managing stakeholders and environments; factor 5: managing culture; factor 6: managing vision; and factor 7: managing development. The management behaviors items and their respective factors and loadings are shown in the Appendix. Mean scores and inter correlations were computed for each of the seven factors and are shown in Table 2.

Managerial Behavior and Entrepreneurial Style Propositions 1a and 1b were tested by regressing the entrepreneurial style measure on each of the management behaviors. The results of the regression are summarized in Table 3. The computed collinearity statistics (tolerance values) were in the range 0.40 to 0.70 and were in excess of the threshold value of 0.10 suggested by Hair et al. (1998, p.193) and were not taken as denoting high collinearity. The regression model was significant (F = 3.12; df = 6, 140; p = 0.007; R2 = 0.12) and provided support for Propositions 1a and 1b. Entrepreneurial style was significantly but negatively related to managing performance (b = -0.30; t = -2.30; p = 0.023),

thus supporting Proposition 1b. Conversely, managing organizational culture (b = 0.33; t = 3.37; p = 0.001) and managing vision (b = 0.23; t = 2.05; p = 0.042) were associated positively with entrepreneurial style, providing support for Proposition 1a. For managing processes, stakeholders and environments, and development, there were no statistically significant relationships with entrepreneurial style.

Managerial Behavior, Entrepreneurial Style, and Firm Type To test Propositions 2 and 3 firms we took Birch’s (1979) concept and used this as the basis to form two categories of firm: high-growth firms (greater than 30 percent sales growth over the past five years) and low-growth firms (30 percent sales growth or less than over the past five years). Since the objective was to analyze the relationship between a group of independent variables (managerial behaviors and entrepreneurial style) and a binary outcome variable (firm type as high growth or low growth), binary logistic regression was used (Hair et al. 1998). Table 3 reports the results of this analysis. Of the original 156 cases, 15 were deleted due to missing data. The result of the c2 test of the improvement of the full likelihood model over the initial model (c2 = 16.42; df = 7; p = 0.02) suggested that a significant relationship exists between the total set of independent variables and the binary dependent measure (membership of the high-growth or lowgrowth group). The results of the regression indicated that entrepreneurial style is associated positively with the probability that a firm is of the highgrowth type (p = 0.002) and hence supports Proposition 2 (see Table 4). The regression coefficients for the managerial behaviors are insignificant and hence do not support Proposition 3.

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Table 2 Intercorrelations, Means, and Standard Deviations (SD) of Study Variables (N = 156) Variables (1)

Managing Performance

(2)

Managing Process

(3)

Managing Stakeholders and Environments

(4)

Managing Culture

(5)

Managing Vision

(6)

Managing Development

(7)

Entrepreneurial Style

*p < 0.05 **p < 0.01 ***p < 0.001

(7)

Mean (SD)

Coefficient a

0.61***

0.05

3.85 (0.62)

0.91

0.43***

0.40***

0.08

3.78 (0.69)

0.86

0.33***

0.50***

0.47***

0.07

3.65 (0.68)

0.83

—

0.29**

0.36**

0.24**

3.47 (0.77)

0.73

—

0.59**

0.18*

4.22 (0.49)

0.83

—

0.11

4.18 (0.53)

0.78

—

2.99 (0.79)

0.74

(2)

(3)

(4)

(5)

(6)

0.61***

0.52***

0.51***

0.60***

—

0.47***

0.49***

—

Table 3 Regression of Management Behaviors on Entrepreneurial Style b

t

p

-0.30 0.01 -0.21 0.33 0.23 0.08

-2.30 0.06 -0.20 3.37 2.05 0.71

0.023 0.949 0.842 0.001 0.042 0.481

Variables Managing Managing Managing Managing Managing Managing

Performance Process Stakeholders and Environments Culture Vision Development

F = 3.12; df = 6,140; p = 0.007; R2 = 0.12

Summary of Regression

Table 4 Results of Logistic Regression for Firm Type (High Growth versus Low Growth) Variables Managing Performance Entrepreneurial Style Managing Process Managing Stakeholders and Environments Managing Culture Managing Vision Managing Development Summary of Regression

b (SE)

Wald

p

R

(0.56) (0.29) (0.40) (0.39)

0.03 9.43 0.01 1.40

0.854 0.002 0.911 0.236

0.00 0.21 0.00 0.00

0.17 (0.37) -0.65 (0.54) -0.08 (0.52)

0.22 1.43 0.02

0.638 0.230 0.880

0.00 0.00 0.00

0.10 0.89 0.50 -0.46

2 log-likelihood (initial model) = 160.21 2 log-likelihood (full model) = 143.79 c2 (df, 7) = 16.42; p = 0.022 R2 = 0.11

Discussion This study has sought, using a competence-based analytical framework, to identify the management behaviors that are associated with an entrepreneurial style and the relationship with firm type (defined in terms of growth). The propo-

sition that style and behaviors would be related received support in that an entrepreneurial style was significantly related to two aspects of managerial behavior: 1. Managing the culture of the firm by providing guidance on the ways in

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which the businesses’ values are to be expressed; promoting and protecting planned work and the employees who carry it out; encouraging diversity in working styles; and identifying and setting up collaborative and consultative working arrangements. 2. Managing the vision in terms of identifying customer needs and spotting opportunities; identifying problems and opportunities in products and services; identifying and evaluating competitors and collaborators; developing systems to review the external environment; creating a shared vision and developing a mission to give purpose to organization; and formulating appropriate objectives and strategies to guide organization. A nonentrepreneurial style was associated with managing performance through developing measures and criteria (financial and otherwise) to evaluate the extent to which the firm’s mission, objectives, and policies are being achieved and through diagnosing causes of success and failure and also through developing systems for improving future performance in relation to prespecified goals. These results may suggest that a traditional performance managementbased style may be commensurate with nonentrepreneurial style. Some of these relationships are shown in Figure 2. The behaviors associated with managing organizational processes (primarily goods and services provision and executing programs and plans), managing stakeholders and environments (political, statutory, and regulatory), and managing development (evaluating and improving management and organizational structures and systems) did not distinguish between entrepreneurial and nonentrepreneurial organizations. These management practices may therefore

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represent generic behaviors used in the running of a wide variety of small businesses.

Limitations The conclusions drawn should be considered in light of the limitations of the research. For example, self-report assessments of managerial behaviors have well-documented drawbacks; however, this should not be overemphasized since Chandler and Jansen (1992) observed significant correlations between self-assessment of entrepreneurial and managerial competencies and performance of startup firms. The results of post hoc statistical procedures suggested that common method variance, a widely recognized limitation of self-report data (see Becherer and Maurer 1999), is not likely to be problem in the present study. The design of the research was cross- sectional rather than longitudinal or experimental, and hence the conclusions themselves must be treated as correlational rather than casual. Although the response rate compares favorably with other surveys of this type (see, for example, Chandler and Hanks 1994; Loan-Clarke et al. 2000), the fact remains that approximately 70 percent of the sample did not respond. It is possible that those who did respond were disproportionately inclined to the competencies embodied in the standard, thus creating a response bias. Alternatives to self-report measures of behaviors should be considered in future research. Confining the research to a region of the United Kingdom may have helped to control for spatial variations, but this fact coupled with the small-sample size limits the generalizability of the findings. Further research in other localities that uses larger samples and employs appropriate methods to alleviate the effects of response biases may help to clarify further the nature of the managerial behaviors that are associated with entrepreneurial style.


Figure 2 Generic and Specific Management Behaviors Global competence space

Entrepreneurial managerial behaviors

Managing culture Managing vision

Generic managerial behaviors

Managing processes Managing stakeholders and environments Managing development

Nonentrepreneurial managerial behaviors

Managing performance

Nonentrepreneurial

Entrepreneurial

Conclusion When writing about smaller businesses, recourse often is made to the use of metaphor, simile, and analogy in order to highlight different dimensions of this phenomenon; for example, as already noted Birch (1979) described fastgrowing innovative firms as gazelles, while others offer naturalistic similes. Darwinian analogies sometimes are used to explain survival (of the fittest), and population ecology is applied to the study of life cycles. As part of this debate and in a summary of the “state of the art of entrepreneurship,” Churchill (1992, p.579) recounted the apocryphal story of the blind men encountering the elephant

for the first time and the difficulties they came across in describing and classifying this new and different animal. Churchill used this analogy to argue that one of the outcomes of the research in the 1980s and 1990s was a better understanding of the relationship between entrepreneurship and small business and a realization of what was unknown. When encountering a new phenomenon (like the blind men and the elephant), it may be helpful sometimes to attempt to combine different perspectives and to use existing concepts and vocabulary to aid the description and classification of the characteristics of the phenomenon and the way it behaves. Furthermore, such an approach may aid communica-

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tion among researchers and practitioners who may be drawn from different fields of management inquiry. The aim of the present study has been to bring together the vocabulary of management competence and that of small business and entrepreneurship in an attempt to describe some of the managerial behaviors in smaller and entrepreneurial ventures as an alternative (or complement) to trait-based perspectives. Having identified some of the behaviors that appear to distinguish an entrepreneurial style, further challenges to research are presented. The types of managerial behaviors outlined and the measures used here require further refinement, elaboration, and augmentation since the content of the items themselves, it may be argued, reflect management competencies rather than entrepreneurial competencies per se. The data presented here suggest some overlap between the two domains. The relationship between management/entrepreneurial competencies and business context may be a fruitful avenue for exploration along with the predictive capacity of the behavior/context interaction. Even if competencies do reflect desirable managerial behaviors, a contingency perspective suggests that their relative efficacy is likely to be context dependent. Furthermore, they may be viewed as dynamic rather than static in their interaction with contextual and temporal factors, such as with respect to the transitions between the different stages of a business venture and the relative balance between entrepreneurial and management competencies. In a globally competitive business environment in which a high premium is placed both upon entrepreneurship and managerial effectiveness, the theoretical elaboration and practical application of such knowledge may be of benefit to researchers who wish to describe and to explain the observed variations in behav-

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ior and management in small firms and to policymakers and management educators in identifying the skills that an aspiring entrepreneur may need to have at his or her disposal.

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Appendix Results of Factor Analysis for Managerial Behaviors Variable

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Managing Performance (Factor 1) Develop measures and criteria to evaluate achievement of organization’s mission, objectives and policies. MB 31. Evaluate extent to which the organization’s mission, objectives and policies are being achieved. MB 32. Agree targets for people and units inside and outside the organization. MB 22. Develop systems for managing future performance. MB 30. Obtain and evaluate data on performance against key indicators and update plans and schedules. MB 29. Select key financial and other indicators and monitor programmes, projects and plans. MB 28. Identify causes of success and failure in programmes, projects, plans and their implementation. MB 33. Identify possible strengths and weaknesses in organization’s mission, objectives and policies. MB 34. Define values and policies to develop appropriate organizational culture. MB 13. Gain support for the organization’s shared vision, mission, objectives, strategies, values and policies. MB 14. Prepare and submit proposals for programmes, projects and plans to meet the organization’s objectives. MB 15. Evaluate and amend proposals in the light of the organization’s objectives and its needs as a whole. MB 16. Managing Process (Factor 3) Negotiate contracts and agreements with internal and external providers of goods and services. MB 20. Generate support and obtain resources for programmes, projects and plans. MB 18. Negotiate and obtain agreement for programmes, projects and plans. MB 19. Delegate responsibility and authority for areas of action within the organization. MB 21. Provide professional and technical advice on preparing and implementing programmes, projects and plans. MB 17.

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Appendix Continued Variable


Managing Stakeholders and Environments (Factor 4) Identify current and likely future interests of stakeholders. MB 9. Evaluate and influence stakeholder’s capabilities to help or hinder achievement of organization’s objectives. MB 10. Evaluate and respond appropriately to changes in political, statutory, regulatory and trading environments. MB2. Develop systems to review the generation and allocation of financial resources. MB 8. Managing Culture (Factor 5) Consult and provide guidance on the ways in which values are to be expressed in work and working relationships. MB 27. Promote and protect planned work and those who carry it out. MB 24. Encourage a diversity of working styles among teams and individuals consistent with the achievement of organizational objectives. MB 25. Identify and set up collaborative and consultative working arrangements. MB 26. Managing Vision (Factor 6) Identify problems and opportunities in products and services. MB 4. Develop systems to review the organization’s external operating environment, identify customer needs and spot opportunities for product and service development. MB1. Identify and evaluate existing and potential competitors and collaborators. MB 3. Create shared vision and develop a mission to give purpose to organization. MB 11. Formulate appropriate objectives and strategies to guide organization. MB 12. Managing Development (Factor 7) Identify and evaluate the strengths and weaknesses of management. MB 6. Review and improve the organization’s structures and systems. MB 5. Plan how to develop the effectiveness of the management team. MB 7.

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0.75 0.67 0.60 0.52 0.83 0.72 0.70 0.66 0.57 0.54 0.54 0.52 0.46 0.74 0.66 0.53

Brief Biographies Dr. Sadler-Smith is professor of human resource development at Plymouth Business School, University of Plymouth, UK and his interests include human resource development in smaller firms, organizational learning and cogniti. Ms. Hampson is associate lecturer in human resource studies at Plymouth Business School, University of Plymouth, UK and her interests include small business management and work-life balance.

Dr. Chaston is professor of marketing and entrepreneurship at Plymouth Business School, University of Plymouth, UK and his interests include small firm growth, entrepreneurship and marketing. Mrs. Badger is principal lecturer in human resource studies at Plymouth Business School, University of Plymouth, UK and her interests include embedding learning into organizations and small firm management.

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