managerial behavior, entrepreneurial style, and small firm

SADLER-SMITH et al. 47

Introduction

The issue of what constitutes an entre-preneurial approach to the managementof organizations is an important one indelineating and describing the field ofsmall business management/entrepre-neurship and its relationship to generalmanagement. Such inquiry prompts anumber of questions: For example, whatkinds of activities does an entrepreneur

perform? What roles can be inferred fromthese activities? What are the distin-guishing characteristics of entrepreneur-ial work? What variability exists amongentrepreneurial and managerial jobs?(Gartner 1988). A decade ago Churchill(1992) argued that considerable progresshad been made with regard to the simi-larities and differences in the generalcharacteristics of entrepreneurs andsmall business owners. These differ-

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 ofentrepreneur; however, much of this has been conducted from a trait-based ratherthan from a behavioral perspective. In this study of small firms in the UnitedKingdom, we explored the relationships among managerial behaviors (based upona competence model), entrepreneurial style (based on Covin and Slevin’s theory), andfirm type (in terms of sales growth performance). Principal components analysis ofa management competence inventory identified six broad categories of managerialbehavior. Regressing a measure of entrepreneurial style on these six behaviors sug-gested that managing culture and managing vision are related to an entrepreneur-ial style, while managing performance is related to a nonentrepreneurial style.Entrepreneurial style—but not managerial behavior—was associated positively withthe probability that a firm would be a high-growth type. The results are discussedfrom the perspective of a model of small firm management that posits separate entre-preneurial, nonentrepreneurial, and generic management behaviors derived from aglobal competence space.

*The authors are grateful to the Controller of Her Majesty’s Stationery Office for permis-

sion to use the Senior Manager Standard (1995) in this research. The Standard is Crown Copy-

right and is reproduced under license from Her Majesty’s Stationery Office.

ences, and those between small businessowners, entrepreneurs, and managers inlarge organizations, have been elabo-rated upon further in recent years (see,for example, Becherer and Maurer 1999;Chell, Haworth, and Brearley 1991;Stewart et al. 1998; Hyrsky 2000). Muchof this research has been conducted froma trait-based perspective by examiningthe innate characteristics of entrepre-neurs. While studying traits has achievedsome notable successes, what is lessclear are the ways in which managers indifferent kinds of small firms behave inmanaging their businesses and, further-more, how this relates to the concept ofentrepreneurship and to firm perform-ance. Management competence providesa potentially useful lens through whichto frame these and other questions. Sucha perspective is apposite given that inparallel with debates about entrepre-neurship and small firm performance(see, for example, Cohen and Musson2000; Du Gay 2000; Kaplan 1987) theissue of management competencies con-tinues to be an area of vigorous debateamong scholars, practitioners, and poli-cymakers (see Burgoyne 1989; Burgoyne1993; Bridge, O’Neill, and Cromie 1998;Gherardi 1999; Gruglis 1997; Holton andNaquin 2000). Entrepreneurship hasbeen linked with firm type (high growthversus low growth), managerial behav-iors have been linked with firm type,and managerial behaviors have beenexamined through functional analyses.However there have been few, if any,attempts to draw these literaturestogether and to explore the relationshipsamong small business management/entrepreneurship, firm type (in terms ofgrowth performance), and managementbehaviors utilizing competence as ananalytical framework. It is our assertionthat entrepreneurship and managerialcompetence represent two important andcomplementary strands of small firmresearch and practice that appear to have led largely separate existences. An

exploration of both of these issues mayhelp to further meaningfully circum-scribe the areas of entrepreneurship and small business management and toshed additional light on those man-agerial behaviors that are associated with entrepreneurship and small firmperformance.

Entrepreneurial Styleand Firm Type

Entrepreneurship has been defined asthe process of “creating something dif-ferent with value by devoting the neces-sary time and effort, assuming theaccompanying financial, psychological,and social risks and receiving the result-ing rewards of monetary and personalsatisfaction” (Hisrich and Peters 1992,p.6). Carland et al. (1984) argued thatentrepreneurship could be defined interms of innovative behavior allied to astrategic orientation in pursuit of prof-itability and growth. There have been anumber of empirically-based efforts todescribe the attributes of entrepreneur-ship in terms of personality traits, atti-tudes, and management behaviors. Thetrait-based perspective has predominatedand continues to be applied, as Utsch et al. (1999) investigated recently the differences between entrepreneurs andmanagers in East Germany. Theyobserved that entrepreneurs exhibitedgreater levels of self-efficacy, higher-order need strength, readiness to change,interest in innovation, Machiavellism(competitive aggression), and need forachievement than did managers (p <0.05). Managers on the other handshowed higher control rejection (lowerautonomy). There were no statisticallysignificant differences with respect toplanfulness, action orientation afterfailure, and goal orientation. Hyrsky(2000) in a factor analytical study ofsmall business managers in Europe,North America, and Australia identifiedwork commitment and energy, economicvalues and results, innovativeness and

48 JOURNAL OF SMALL BUSINESS MANAGEMENT

risk taking, ambition and achievement,and egotistic features as dimensions ofentrepreneurship. Georgelli, Joyce, andWoods (2000, p.14) described “beingentrepreneurial” as being willing to takerisks and being innovative, articulatedwith an ambition to grow. Georgelli,Joyce, and Woods went on to suggest thatthe core competencies for entrepreneur-ship are a capacity for changing businessprocesses, the launching of new prod-ucts, and services and a planning capac-ity but noted that not all small businessesare equipped with these capabilities(p.17), nor are all managers necessarilypredisposed towards them. Covin andSlevin (1988, p.218) defined an entre-preneurial style in terms of the extent towhich “top managers are inclined to takebusiness-related risks (a risk-takingdimension), favor change and innovation(an innovation dimension), and competeaggressively with other firms (a proac-tiveness dimension).” On the other hand,a nonentrepreneurial style, in Covin andSlevin’s (1988) terms, is characterized asbeing risk-averse, noninnovative, pas-sive, and reactive. They described thedevelopment and use of a measure ofentrepreneurial style based upon previ-ous theorizing and research by Khand-walla (1977) and Miller and Friesen(1982) and that provides a potentiallyuseful tool in this context for opera-tionalizing the key concept of entrepre-neurial style.

Entrepreneurship, SmallBusiness Management,and Firm Type

Carland et al. (1984) attempted todraw a clear distinction between entre-preneurs and owner managers of smallbusinesses; the former, they argued,are concerned with “profitability andgrowth,” while the main concern of thelatter is securing an income to meet theirimmediate needs. Stewart et al. (1998)found that small business owners were

more comparable to managers than toentrepreneurs (the latter were higher in achievement motivation, risk-takingpropensity, and preference for innova-tion). Hodgetts and Kuratko (2001) havesummarized the differences:

Small businesses are businessesthat are independently owned andoperated, are not dominant intheir field, and usually do notengage in many new or innovativepractices . . . The entrepreneur’sprincipal objectives are profitabil-ity and growth . . . the business ischaracterized by innovative strate-gic practices and continuedgrowth . . . [and] may be seen ashaving a different perspectivefrom small business owners in theactual development of their firm(pp.5–6).

This suggests therefore that the inten-tion to grow (Georgelli, Joyce, andWoods 2000) and an innovation/changeorientation are characteristics of entre-preneurial behavior. The issue of entre-preneurship may be linked to the wideragenda of regional or national economicgrowth. For example, Kuratko and Hod-getts (1998) noted the importance of newand smaller firms to the United Stateseconomy and in particular of job-creating fast-growing businesses versuslifestyle businesses. The former type,sometimes referred to as gazelles inBirch’s (1979) terminology and describedby Kuratko and Hodgetts (1998) as beingleaders in innovation, cited evidence oftotal numbers of innovations, innova-tions per employees, and numbers ofpatents in support of this assertion.Orser, Hogarth-Scott and Riding (2000)argued that much employment growth isattributable to the minority of firms thatgrow quickly. They also noted that busi-ness owners’ motives for growth are nothomogeneous and “appear to reflect


experiential and situational differences”(p.44).

Stewart et al. (1998) suggested thatthe difference between entrepreneursand small business owners is one areafor further research that may add to amore complete understanding of theentrepreneur. A pertinent question forentrepreneurship theory and small firmmanagement practice is the following:What are the behaviors that characterizemanagement in small businesses (differ-entiated in terms of entrepreneurialstyle) and how do these relate to firmtype in terms of performance (differenti-ated in terms of a high growth/lowgrowth distinction)? Gartner (1988)argued that trait-oriented research hasnot proved wholly adequate in explain-ing the phenomenon of entrepreneur-ship and advocated behavior as analternative and more promising wayforward. Previous research and theoriz-ing suggest that a number of managerialbehaviors may be associated with anentrepreneurial style. For example,Moss Kanter (1982) argued that there isa strong association between accom-plishment in innovation and the employ-ment of a participative–collaborativemanagement style, which itself is associ-ated with particular organizational cul-tural attributes. The author defined thisin terms of persuading rather than order-ing; team building; seeking input fromothers; being politically sensitive; andsharing rewards and recognition will-ingly and went on to note that when car-rying out basic accomplishments (that is,noninnovative activities), such a style isuseful but not necessary—indeed a tra-ditional, autocratic style may be equallyeffective (Moss Kanter 1982). A summaryof previous research is presented inTable 1. From this it may be argued thatsome of the principal differencesbetween entrepreneurial managementand nonentrepreneurial managementinclude the following: (1) Entrepreneur-ial managerial behaviors promote a

culture of creativity and risk taking,create flat informal structures, and for-mulate strategy in order to take advan-tage of identified opportunities; (2)Nonentrepreneurial managerial behav-iors emphasize planning, control, moni-toring, evaluation, and formalizedorganizational structures.

Entrepreneurial Styleand ManagerialBehaviors

The 1980s, as well as being the decadeof enterprise (Kaplan 1987), saw thearticulating of desirable managerialbehaviors in the language of manage-ment competence (see Mabey, Salaman,and Storey 1998). This approach becamean important element of managementthinking and influenced governmentpolicy in a number of nationaleconomies. For example, in the UnitedKingdom such an approach manifesteditself in the identification of generic management competences derived viafunctional analyses of managerial work,and the outcome of which it has beenproposed may be extended to the smaller firm sector. Attempts to analyzeand to categorize the attributes of effec-tive managerial behavior have their roots in the work of Boyatzis (1982),who described a job competency as “anunderlying characteristic of a person”that describes what an individual can do(and not necessarily what he or shedoes) and that is causally related to effec-tive and/or superior performance in a job(p.23). Competencies may be said there-fore to reflect desirable managerialbehaviors whose relative efficacy may becontext dependent.

Successive United Kingdom govern-ments have emphasized the impor-tance of the development and use ofdescriptors of desirable managerialbehaviors as a lever to enhance the skilllevel of managers in general throughcompetence-based training, assessment,


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Table 1Comparison of Entrepreneurial and Nonentrepreneurial Management

Source Entrepreneurial Domain Nonentrepreneurial Domain

Chandler and Hanks Scanning Environment for Opportunities; Acquire and Utilize Resources(1994) Formulating Appropriate Strategies to Take Develop Programs and Procedures

Advantage of Opportunities (Entrepreneurial Develop BudgetsCompetence) Delegate

Manage Employee and Customer RelationshipsEvaluate Performance (Managerial

Competence)

Cornwall and Perlman Scanning for and Active Pursuit of New Defensive Stance with Niche Protection(1990) Ventures Change Viewed as Threat

Change Viewed as Opportunity and Means to Control Focused on Short-Term Targets with Longer-Term Survival, Adaptation, and Risk MinimizationGrowth through intelligent Approach to Risk Analytical/Objective Culture

Culture (including Affective Components)/ Serves to Protect the Status QuoInformal Structure Nurtures Adaptation Formalized Lines of Communication with

Top-Down and Bottom-Up Approaches to Decision-Making Determined from the TopDecision-Making People Are an Abundant and Easily

People Are a Scarce and Precious Resource. Replaceable Resource.Creativity Is Encouraged. Creativity Is Tolerated.

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Table 1Continued

Source Entrepreneurial Domain Nonentrepreneurial Domain

Stevenson, Roberts, and Strategic Orientation Driven by Perception of Strategic Orientation Driven by Resources Grousbeck (1985) Opportunity in Environment of Rapid Change Currently Controlled

Commitment to Opportunity Is Revolutionary/ Established Performance Measurement CriteriaShort Duration and Management of Risk. Commitment to Opportunity Is Evolutionary/

Commitment of Resources Is Multi-Staged with Long Duration with Reduction of Risk.Minimal Commitment at Each Stage (with Lack Commitment of Resources Is Single-Staged of Longer-Term Control). with Complete Commitment/Formal

Episodic Use/Rent of Required Resources Planning.Flat Management Structure with Informal Required Resources Owned/Employed and

Networks 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’sManagement Charter Initiative (MCI) was launched to shape and promotemanagement development, particularlycompetence-based management devel-opment. The MCI became the “lead(policy-advising) body” for managementin the United Kingdom and first pub-lished a set of standards for senior managers in 1995 (Management CharterInitiative 1995). The MCI since has beensuperseded by the Management Enter-prise and Training Organization (METO),whose remit explicitly covers small andmedium-sized enterprises. The MCI/METO Senior Manager Standard consistsof two related elements, performancestandards, and personal competencies.The latter apply across different man-agement levels, while the formerdescribe desirable behaviors for seniormanagers in a number of key areas ofbusiness performance. The nine units of the performance standard (and usedas the basis of our research) are (1)external trends; (2) internal strengthsand weaknesses; (3) stakeholders; (4)strategy and commitment; (5) programs,policies, and plans; (6) delegation andaction; (7) culture; (8) monitoring; and(9) evaluating and improving.

Since managers in many small firmstend not to specialize in one specificfunctional area but are required tooperate across the range of managementcompetencies, Loan-Clarke et al (2000,p.179) argued that “the applicability ofcompetence-based MTD [managementtraining and development] to the broaderroles of managers in small businesses islikely to be greater than to the roles ofmany managers in large organizations”(since the latter tend to specialize whilethe former are often required to performa more generalist role). Competence-based analyses of managerial workprovide a potentially useful descriptor ofthose management behaviors that are

assumed to be causally related to effec-tive and/or superior job performance.The nature of the relationship betweenentrepreneurial style and particularmodes of managerial action (as de-scribed in competence statements) is notclear. In terms of the antecedents ofbehavioral preferences and the links topsychological traits, Berr, Church, andWaclawski (2000, p.154) argued that“individual differences in personalitystyle do have a moderate yet significantimpact upon management behavior.” Wechose to concentrate on the behaviorallevel of analysis rather than to exploretrait-level phenomena since the latterhave been well researched (see, forexample, Brockhaus and Horwitz 1986;Olsen 1985; Chell, Haworth, and Brear-ley 1991; Frese, van Gelderen, andOmbach 2000) and critiqued (see, forexample, Gartner 1988).

Entrepreneurial Style,Managerial Behavior,and Firm Type

From a conceptual perspective, schol-ars have previously compared and contrasted the entrepreneurial andadministrative (managerial) domains. Forexample, Hodgetts and Kuratko (2001)drew a distinction between entrepre-neurial style (characterized by creativity,innovation, and risk-taking behaviors)and managerial style (characterized plan-ning and organizational behaviors) butdid not see these as mutually exclusive:“The ability to remain entrepreneurialwhile adopting administrative [manage-rial] traits is vital to the venture’s suc-cessful growth” (p.345). Hisrich andPeters (1992), building upon the work ofStevenson and Sahlman (1986), con-trasted entrepreneurial versus manage-rial approaches in terms of five keybusiness dimensions—strategic orien-tation, commitment to opportunity,commitment of resources, control ofresources, and management structure.


Within this overall context, competence-based frameworks present complemen-tary framework for the analysis ofmanagerial behaviors. Mukhtar (1998) ina study of entrepreneurship suggestedthat all firms operate inside a global com-petence space within which business-specific competencies may be identified.Following this line of thought and as abasis for our research we argue that (1)there is a global competence space com-prising managerial behaviors that may beidentified via functional analyses andarticulated in competence standards; (2)the global competence space comprisesentrepreneurial management behaviors,administrative (nonentrepreneurial)management behaviors (Stevenson andSahlman 1986), and generic (shared)management behaviors; (3) managementbehaviors within smaller firms may bemapped within the global competencespace, and particular firms may behypothesized as possessing a portfolio ofbehaviors comprising entrepreneurial,administrative, and generic elements andas related to the organization’s entrepre-neurial style (Figure 1). Furthermore,entrepreneurial style and the associatedbehaviors are hypothesized as predictorsof performance in terms of high-growth[gazelles, in Birch’s (1979) terminology]or low-growth (lifestyle or small businessowner) types.

Using the MCI’s performance stan-dards, Covin and Slevin’s (1988) opera-tionalization of the concept ofentrepreneurship and the frameworkproposed in Figure 1, the followingpropositions were used as the bases ofour investigations:

Proposition 1a: There will be a positiverelationship between entrepreneurialstyle and those managerial behaviorsthat (1) promote a culture of creativ-ity and risk taking; (2) create flatinformal structures; and (3) formu-late strategy in order to take advan-tage of identified opportunities.

Proposition 1b: There will be a negativerelationship between entrepreneurialstyle and those managerial behaviorsthat emphasize planning, control,monitoring, evaluation, and formal-ized organizational structures.

Proposition 2: There will be a positiverelationship between entrepreneurialstyle and firm type (high growth).

Proposition 3: There will be a positiverelationship between entrepreneurialmanagement behavior and firm type(high growth).

From a theoretical perspective theresearch will attempt to link two sepa-rate streams of management theory andpractice, namely small business/entre-preneurship and competence. The find-ings may be relevant from a practicalstandpoint since they may assist policy-makers and educators in identifyingthose behaviors that may be a validelement of an entrepreneurial manage-ment development curriculum. Theresearch will take smaller firms in theUnited Kingdom as its context for anumber of reasons: (1) They are per-ceived as having a considerable contri-bution to make to innovation (Carr 2000;Freel 2000); (2) The issue of managementcompetence is increasingly to the fore inthe small firm sector (Loan-Clarke et al.2000, p.177); (3) Small firms are popu-lated by people who perform entrepre-neurial, managerial, and operationalfunctions (Cohen and Musson 2000); and(4) The effective management of smallerfirms is seen by many as crucial to theeconomic growth of regional andnational economies (Westhead andStorey 1996; Wilson 1995), especiallysince it is estimated that over 99 percentof firms in the United Kingdom employless than 100 people (Mukhtar 1998).The study of smaller firms presentsopportunities and advantages to theresearcher since the complexities of


multilevel research may be fewer than inlarger firms because structures aresimpler with greater internal culturalconsistencies and fewer diverging internal forces (Chandler and Hanks1994).

Data CollectionThe study was cross-sectional, and

data were collected by means of a postal questionnaire survey mailed to550 small and medium-sized enterprisesin the southwest region of the UnitedKingdom (comprising the counties ofDevon and Cornwall). Respondents wereselected randomly from a commerciallyavailable database. The survey form con-sisted of three pages and an accompa-nying letter that stipulated that a smalldonation to charity would be made forevery completed questionnaire received.

The questionnaire consisted of the fol-lowing three sections:

Section 1, Respondent Information:number of employees, sector (manu-facturing, service, or construction),sales growth (percent) over past fiveyears (seven-point scale).

Section 2, Managing Your Business:Respondents were asked to indicatethe importance they attached to eachof 34 separate managerial behaviorsfor the running of their businesses(five-point scale; very importantscored five and very unimportantscored one). The items themselveswere drawn from the UnitedKingdom MCI’s senior manager per-formance standard and comprisednine separate multiple-item scales(referred to henceforth as manage-


Globalcompetence

space

Entrepreneurialbehaviors

Nonentrepreneurialbehaviors

Genericbehaviors

Entrepreneurialstyle

Firm type(high growth or

low growth)

+

- +

Figure 1Management Behaviors, Entrepreneurial Style,

and Firm Type

ment behaviors; numbers in paren-theses refer to the item numbers inthe appendix): (1) external trends(three items, MB1–MB3); (2) internalstrengths and weaknesses (five items,MB4–MB8); (3) stakeholders (twoitems, MB9–MB10); (4) strategy andcommitment (four items, MB11–MB14); (5) programs, policies, andplans (five items, MB15–MB19);(6) delegation and action (five items, MB20–MB24); (7) culture(three items, MB25–MB27); (8) moni-toring (three items, MB28–MB30);and (9) evaluating and improving(four items, MB31–MB34).

Section 3, Your Business: This consistedof Covin and Slevin’s (1988) entre-preneurial style scale with two minor modifications: One large firm-specific item from the original scalewas dropped; and a five-point scale(rather than the seven-point scale as used by Covin and Slevin) com-mensurate with Section 2 was used.This scale and variants of it have a long tradition in the strategic management literature (Atuahene-Gima and Ko 2001) and consistentlyhave demonstrated reliability andvalidity.

The questionnaire was mailed to themanaging director of each of the firmssampled; this person was taken as beinga knowledgeable key informant andhence provided a valid approach tomeasuring organizational processes(Shortell and Zajac 1990). The use ofmanagers in small businesses may over-come some of the difficulties associatedwith research in larger organizations; forinstance, the lack of functionalist dividesin smaller firms and the workings of theirorganizations may be more traceable(Cohen and Musson 2000, p.32), andboth entrepreneurial and managerialcompetencies may be located in individ-ual managers (Carr 2000).

ResultsCharacteristics of Sample

The number of usable questionnairesreceived was 156 and represented aresponse rate of 28 percent. The samplecharacteristics were as follows: (1)sector: manufacturing, 88 (56 percent);service, 34 (22 percent); construction, 34(22 percent); (2) size: median number ofemployees, 26; (3) sales growth: (a)decreased by more than 10 percent, 16(10.3 percent); (b) decreased by betweenone and 10 percent, 18 (11.5 percent); (c)remained unchanged, 9 (5.8 percent); (d)increased by between one and 10percent, 38 (24.4 percent); (e) increasedby between 11 percent and 30 percent,37 (23.7 percent); (f) increased bybetween 31 percent and 50 percent, 8(5.1 percent); (g) increased by more than50 percent, 30 (19.2 percent).

Descriptive Statistics,Item and Factor Analyses,and Intercorrelations

The properties of the five-item Covinand Slevin entrepreneurship scale wereinvestigated by computing internal con-sistency (Cronbach’s alpha) and item-total correlations. Item-total correlationswere in the range 0.62 to 0.75, and theinternal consistency was 0.86 and is com-parable to that obtained in previousstudies using this version of the scale(Sadler-Smith, Spicer, and Chaston 2001).Both of these parameters (item-total cor-relations and Cronbach’s alpha) are inexcess of the minimum values suggestedby Nunally (1978) and are taken as evi-dence of an acceptable level of internalconsistency. In order to explore thefactor structure of the survey instrument,the entrepreneurial style and manage-ment behavior items were subjected toprincipal components analysis (Kaiser-Meyer-Olkin measure of sampling ade-quacy = 0.83; Bartlett’s test of sphericity,c2 = 3616.32, df = 741, p < 0.001). Thescree plot (eigenvalues against order of


extraction) suggested that seven princi-pal components (factors) representing63.78 percent of the total variance shouldbe extracted. Hair et al. (1998, p.112)presented guidelines for identifying significant factor loadings based on sam-ple size. Using this approach, the crite-rion of salient loading for the presentstudy (N = 156) was set at 0.45 and was used as the basis for an interpreta-tion of the resultant factor structure.Based upon the content of those itemsthat loaded at or above the salient value(and using the highest loading in thethose instances where items cross-loadedat or above this value), the extractedfactors were labeled as follows: factor 1:managing performance; factor 2: entre-preneurial style; factor 3: managingprocess; factor 4: managing stakeholdersand environments; factor 5: managingculture; factor 6: managing vision; andfactor 7: managing development. Themanagement behaviors items and theirrespective factors and loadings areshown in the Appendix. Mean scores andinter correlations were computed foreach of the seven factors and are shownin Table 2.

Managerial Behavior andEntrepreneurial Style

Propositions 1a and 1b were tested by regressing the entrepreneurial stylemeasure on each of the managementbehaviors. The results of the regressionare summarized in Table 3. The com-puted collinearity statistics (tolerancevalues) were in the range 0.40 to 0.70and were in excess of the threshold valueof 0.10 suggested by Hair et al. (1998,p.193) and were not taken as denotinghigh collinearity. The regression modelwas significant (F = 3.12; df = 6, 140;p = 0.007; R2 = 0.12) and providedsupport for Propositions 1a and 1b.Entrepreneurial style was significantlybut negatively related to managing per-formance (b = -0.30; t = -2.30; p = 0.023),

thus supporting Proposition 1b. Con-versely, managing organizational culture(b = 0.33; t = 3.37; p = 0.001) and man-aging vision (b = 0.23; t = 2.05; p = 0.042)were associated positively with entrepre-neurial style, providing support forProposition 1a. For managing processes,stakeholders and environments, anddevelopment, there were no statisticallysignificant relationships with entrepre-neurial 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 cate-gories of firm: high-growth firms (greaterthan 30 percent sales growth over thepast five years) and low-growth firms (30 percent sales growth or less thanover the past five years). Since the objec-tive was to analyze the relationshipbetween a group of independent vari-ables (managerial behaviors and entre-preneurial style) and a binary outcomevariable (firm type as high growth or lowgrowth), binary logistic regression wasused (Hair et al. 1998). Table 3 reportsthe results of this analysis. Of the origi-nal 156 cases, 15 were deleted due tomissing data. The result of the c2 test ofthe improvement of the full likelihoodmodel over the initial model (c2 = 16.42;df = 7; p = 0.02) suggested that a signif-icant relationship exists between thetotal set of independent variables and the binary dependent measure (mem-bership of the high-growth or low-growth group). The results of theregression indicated that entrepreneurialstyle is associated positively with theprobability that a firm is of the high-growth type (p = 0.002) and hence sup-ports Proposition 2 (see Table 4). Theregression coefficients for the managerialbehaviors are insignificant and hence donot support Proposition 3.


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

Variables (2) (3) (4) (5) (6) (7) Mean (SD) Coefficient a

(1) Managing Performance 0.61*** 0.52*** 0.51*** 0.60*** 0.61*** 0.05 3.85 (0.62) 0.91

(2) Managing Process — 0.47*** 0.49*** 0.43*** 0.40*** 0.08 3.78 (0.69) 0.86

(3) Managing Stakeholders and — 0.33*** 0.50*** 0.47*** 0.07 3.65 (0.68) 0.83Environments

(4) Managing Culture — 0.29** 0.36** 0.24** 3.47 (0.77) 0.73

(5) Managing Vision — 0.59** 0.18* 4.22 (0.49) 0.83

(6) Managing Development — 0.11 4.18 (0.53) 0.78

(7) Entrepreneurial Style — 2.99 (0.79) 0.74

*p < 0.05**p < 0.01

***p < 0.001

DiscussionThis study has sought, using a com-

petence-based analytical framework, toidentify the management behaviors thatare associated with an entrepreneurialstyle and the relationship with firm type(defined in terms of growth). The propo-

sition that style and behaviors would berelated received support in that an entre-preneurial style was significantly relatedto two aspects of managerial behavior:

1. Managing the culture of the firm byproviding guidance on the ways in


Table 3Regression of Management Behaviors on

Entrepreneurial Style

Variables b t p

Managing Performance -0.30 -2.30 0.023Managing Process 0.01 0.06 0.949Managing Stakeholders and Environments -0.21 -0.20 0.842Managing Culture 0.33 3.37 0.001Managing Vision 0.23 2.05 0.042Managing Development 0.08 0.71 0.481

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

Table 4Results of Logistic Regression for Firm Type (High Growth

versus Low Growth)

Variables b (SE) Wald p R

Managing Performance 0.10 (0.56) 0.03 0.854 0.00Entrepreneurial Style 0.89 (0.29) 9.43 0.002 0.21Managing Process 0.50 (0.40) 0.01 0.911 0.00Managing Stakeholders and -0.46 (0.39) 1.40 0.236 0.00

EnvironmentsManaging Culture 0.17 (0.37) 0.22 0.638 0.00Managing Vision -0.65 (0.54) 1.43 0.230 0.00Managing Development -0.08 (0.52) 0.02 0.880 0.00

Summary of Regression 2 log-likelihood (initial model) = 160.212 log-likelihood (full model) = 143.79c2 (df, 7) = 16.42; p = 0.022R2 = 0.11

which the businesses’ values are to be expressed; promoting andprotecting planned work and the employees who carry it out;encouraging diversity in workingstyles; and identifying and settingup collaborative and consultativeworking arrangements.

2. Managing the vision in terms ofidentifying customer needs andspotting opportunities; identify-ing problems and opportunities inproducts and services; identify-ing and evaluating competitors and collaborators; developingsystems to review the externalenvironment; creating a sharedvision and developing a mission to give purpose to organization;and formulating appropriate objectives and strategies to guideorganization.

A nonentrepreneurial style was asso-ciated with managing performancethrough developing measures and crite-ria (financial and otherwise) to evaluatethe extent to which the firm’s mission,objectives, and policies are beingachieved and through diagnosing causesof success and failure and also throughdeveloping systems for improving futureperformance in relation to prespecifiedgoals. These results may suggest that atraditional performance management-based style may be commensurate withnonentrepreneurial style. Some of theserelationships are shown in Figure 2. Thebehaviors associated with managingorganizational processes (primarilygoods and services provision and exe-cuting programs and plans), managingstakeholders and environments (politi-cal, statutory, and regulatory), and managing development (evaluating andimproving management and organiza-tional structures and systems) did notdistinguish between entrepreneurial andnonentrepreneurial organizations. Thesemanagement practices may therefore

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

LimitationsThe conclusions drawn should be

considered in light of the limitations ofthe research. For example, self-reportassessments of managerial behaviorshave well-documented drawbacks;however, this should not be overempha-sized since Chandler and Jansen (1992)observed significant correlationsbetween self-assessment of entrepre-neurial and managerial competenciesand performance of startup firms. Theresults of post hoc statistical proceduressuggested that common method vari-ance, a widely recognized limitation ofself-report data (see Becherer andMaurer 1999), is not likely to be problemin the present study. The design of theresearch was cross- sectional rather thanlongitudinal or experimental, and hencethe conclusions themselves must betreated as correlational rather thancasual. Although the response rate com-pares favorably with other surveys of thistype (see, for example, Chandler andHanks 1994; Loan-Clarke et al. 2000), thefact remains that approximately 70percent of the sample did not respond.It is possible that those who did respondwere disproportionately inclined to thecompetencies embodied in the standard,thus creating a response bias. Alterna-tives to self-report measures of behaviorsshould be considered in future research.Confining the research to a region of theUnited Kingdom may have helped tocontrol for spatial variations, but this factcoupled with the small-sample size limitsthe generalizability of the findings.Further research in other localities thatuses larger samples and employs appro-priate methods to alleviate the effects ofresponse biases may help to clarifyfurther the nature of the managerialbehaviors that are associated with entre-preneurial style.


Conclusion

When writing about smaller busi-nesses, recourse often is made to the useof metaphor, simile, and analogy in orderto highlight different dimensions of thisphenomenon; for example, as alreadynoted Birch (1979) described fast-growing innovative firms as gazelles,while others offer naturalistic similes.Darwinian analogies sometimes are usedto explain survival (of the fittest), andpopulation ecology is applied to thestudy of life cycles. As part of this debateand in a summary of the “state of the artof entrepreneurship,” Churchill (1992,p.579) recounted the apocryphal story ofthe blind men encountering the elephant

for the first time and the difficulties theycame across in describing and classifyingthis new and different animal. Churchillused this analogy to argue that one ofthe outcomes of the research in the1980s and 1990s was a better under-standing of the relationship betweenentrepreneurship and small business anda realization of what was unknown.When encountering a new phenomenon(like the blind men and the elephant), itmay be helpful sometimes to attempt to combine different perspectives and touse existing concepts and vocabulary toaid the description and classification ofthe characteristics of the phenomenonand the way it behaves. Furthermore,such an approach may aid communica-


Figure 2Generic and Specific Management Behaviors

Globalcompetence

space

Generic managerialbehaviors

Entrepreneurial

ManagingprocessesManaging

stakeholdersand

environmentsManaging

development

Nonentrepreneurial

Nonentrepreneurial

managerial behaviors Entrepreneurial

managerialbehaviors

Managingculture

Managingvision

Managingperformance

tion among researchers and practitionerswho may be drawn from different fieldsof management inquiry.

The aim of the present study has beento bring together the vocabulary of man-agement competence and that of smallbusiness and entrepreneurship in anattempt to describe some of the mana-gerial behaviors in smaller and entrepre-neurial ventures as an alternative (orcomplement) to trait-based perspectives.Having identified some of the behaviorsthat appear to distinguish an entrepre-neurial style, further challenges toresearch are presented. The types ofmanagerial behaviors outlined and themeasures used here require furtherrefinement, elaboration, and augmen-tation since the content of the itemsthemselves, it may be argued, reflectmanagement competencies rather thanentrepreneurial competencies per se.The data presented here suggest someoverlap between the two domains. Therelationship between management/entre-preneurial competencies and businesscontext may be a fruitful avenue forexploration along with the predictivecapacity of the behavior/context interac-tion. Even if competencies do reflectdesirable managerial behaviors, a con-tingency perspective suggests that theirrelative efficacy is likely to be contextdependent. Furthermore, they may beviewed as dynamic rather than static intheir interaction with contextual andtemporal factors, such as with respect tothe transitions between the differentstages of a business venture and the rel-ative balance between entrepreneurialand management competencies. In aglobally competitive business environ-ment in which a high premium is placedboth upon entrepreneurship and mana-gerial effectiveness, the theoretical elab-oration and practical application of suchknowledge may be of benefit toresearchers who wish to describe and toexplain the observed variations in behav-

ior and management in small firms andto policymakers and management edu-cators in identifying the skills that anaspiring entrepreneur may need to haveat his or her disposal.

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AppendixResults of Factor Analysis for Managerial Behaviors

Variable Loading

Managing Performance (Factor 1)Develop measures and criteria to evaluate achievement of organization’s mission, objectives and policies. MB 31. 0.84Evaluate extent to which the organization’s mission, objectives and policies are being achieved. MB 32. 0.76Agree targets for people and units inside and outside the organization. MB 22. 0.75Develop systems for managing future performance. MB 30. 0.71Obtain and evaluate data on performance against key indicators and update plans and schedules. MB 29. 0.62Select key financial and other indicators and monitor programmes, projects and plans. MB 28. 0.61Identify causes of success and failure in programmes, projects, plans and their implementation. MB 33. 0.61Identify possible strengths and weaknesses in organization’s mission, objectives and policies. MB 34. 0.61Define values and policies to develop appropriate organizational culture. MB 13. 0.59Gain support for the organization’s shared vision, mission, objectives, strategies, values and policies. MB 14. 0.57Prepare and submit proposals for programmes, projects and plans to meet the organization’s objectives. MB 15. 0.55Evaluate and amend proposals in the light of the organization’s objectives and its needs as a whole. MB 16. 0.51

Managing Process (Factor 3)Negotiate contracts and agreements with internal and external providers of goods and services. MB 20. 0.82Generate support and obtain resources for programmes, projects and plans. MB 18. 0.72Negotiate and obtain agreement for programmes, projects and plans. MB 19. 0.70Delegate responsibility and authority for areas of action within the organization. MB 21. 0.62Provide professional and technical advice on preparing and implementing programmes, projects and plans. 0.51

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AppendixContinued

Variable Loading

Managing Stakeholders and Environments (Factor 4)Identify current and likely future interests of stakeholders. MB 9. 0.75Evaluate and influence stakeholder’s capabilities to help or hinder achievement of organization’s objectives. 0.67

MB 10.Evaluate and respond appropriately to changes in political, statutory, regulatory and trading environments. MB2. 0.60Develop systems to review the generation and allocation of financial resources. MB 8. 0.52

Managing Culture (Factor 5)Consult and provide guidance on the ways in which values are to be expressed in work and working 0.83

relationships. MB 27.Promote and protect planned work and those who carry it out. MB 24. 0.72Encourage a diversity of working styles among teams and individuals consistent with the achievement of 0.70

organizational objectives. MB 25.Identify and set up collaborative and consultative working arrangements. MB 26. 0.66

Managing Vision (Factor 6)Identify problems and opportunities in products and services. MB 4. 0.57Develop systems to review the organization’s external operating environment, identify customer needs and spot 0.54

opportunities for product and service development. MB1.Identify and evaluate existing and potential competitors and collaborators. MB 3. 0.54Create shared vision and develop a mission to give purpose to organization. MB 11. 0.52Formulate appropriate objectives and strategies to guide organization. MB 12. 0.46

Managing Development (Factor 7)Identify and evaluate the strengths and weaknesses of management. MB 6. 0.74Review and improve the organization’s structures and systems. MB 5. 0.66Plan how to develop the effectiveness of the management team. MB 7. 0.53

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Brief BiographiesDr. Sadler-Smith is professor of human

resource development at PlymouthBusiness School, University of Ply-mouth, UK and his interests includehuman resource development insmaller firms, organizational learningand cogniti.

Ms. Hampson is associate lecturer inhuman resource studies at PlymouthBusiness School, University of Ply-mouth, UK and her interests includesmall business management andwork-life balance.

Dr. Chaston is professor of marketingand entrepreneurship at PlymouthBusiness School, University of Ply-mouth, UK and his interests includesmall firm growth, entrepreneurshipand marketing.

Mrs. Badger is principal lecturer inhuman resource studies at PlymouthBusiness School, University of Ply-mouth, UK and her interests includeembedding learning into organiza-tions and small firm management.


managerial behavior, entrepreneurial style, and small firm

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