Master Thesis
A quantitative analysis of owner-manager
characteristics and rapid growth of start-ups in the
Netherlands
University of Amsterdam & VU University Amsterdam
Student: Michel Pascal Breeuwer
Student ID UvA / VU: 11402032 / 2606270
Program: MSc. Entrepreneurship
Thesis supervisor: Professor E. Masurel
Preface and Acknowledgements
This master thesis is the final milestone in completing an amazing journey at the Vrije Universiteit and the Universiteit van Amsterdam called the MSc in Entrepreneurship. A journey that helped me develop my entrepreneurial way of thinking. Although many people say that entrepreneurship is not learnt at a university, doing a master in entrepreneurship certainly will improve your entrepreneurial mind-set. Being surrounded with all likeminded entrepreneurial students, getting taught by professors in entrepreneurship and most importantly experienced entrepreneurs themselves, is a great environment to stimulate unleashing and developing the entrepreneur you are within.
Just like many others, my goal is to be a successful entrepreneur myself with a rapid growing firm. Therefore this thesis researches the relation between owner-manager characteristics and rapid growth. By gaining more knowledge regarding if and which owner-manager characteristics determine rapid growth, I can help others and myself improve our understanding regarding what determines rapid growth and improve our chances of becoming successful as an entrepreneur.
Writing this thesis was demanding for myself but also for my surrounding including my family, friends, my thesis supervisor, and my colleagues. I want to thank them for their support, their help, and their trust in me while I was writing this thesis.
In particular I want to thank my thesis supervisor professor E. Masurel for challenging me and providing me with his knowledge and academic expertise. Furthermore I would like to thank him for his flexibility and availability even during his holidays.
The copyright of this thesis rests by me. I am solely responsible for the content of this thesis, including mistakes. The Vrije Universiteit and the Universiteit van Amsterdam cannot be held liable for the content of this thesis.
Executive summary
Growth is a top strategic priority for entrepreneurs and their firms meaning that a large part of the entrepreneurs is interested in knowing how to make their firms grow. As more knowledge regarding rapid growth makes it more likely for entrepreneurs to create rapid growth firms that will create more jobs and lead to a stronger national economy, rapid growth of start-ups is an interesting research field. In several countries it has already been proven that the personal characteristics of the entrepreneurs who start a firm have an impact on the firm’s ability to achieve and maintain a rapid growth rate. In order to reinforce the current literature about rapid growth it is therefore interesting to research if owner-manager characteristics determine rapid growth of start-ups in the Netherlands as well.
Therefore the research question of this paper is: “Do owner-manager characteristics determine rapid growth of start-ups in the Netherlands?”. Based on previous literature and qualitative expert interviews six independent variables were determined that could have a relation with the dependent variable rapid growth. Rapid growth was measured based on sales-growth, employment-growth and value-growth. The six independent variables were hypothesized and tested quantitatively using data gathered from 42 owner-managers of start-ups. The data was gathered via a survey.
Based on the conducted regression analyses, none of the independent variables had a significant relation with the dependent variable. Therefore all of the six hypotheses were rejected. As all of the hypotheses were rejected, the answer on the research question of this paper is that it seems that owner-manager characteristics do not, or that other than the tested owner-manager characteristics, determine the rapid growth of start-ups in the Netherlands. The outcome should be handled with caution due to the limitations of this research such as the influence of unobserved variables, a small sample size, the grouping of data into rapid and non-rapid growth, and limitations regarding the generalizability of this research due to a time limit to write this paper. Future research should make use of larger sample sizes, focus on one specific industry and work without any time limitations.
Table of Contents
1. Introduction ... 6
1.1 The problem ... 6
1.2 The aim of this research ... 7
1.3 The research ... 7 1.4 Theoretical contribution ... 8 1.5 Practical contribution ... 9 1.6 Structure ... 9 2. Theoretical framework ... 10 2.1 Owner-manager characteristics ... 10 2.1.1 Owner-manager ... 10 2.1.2 Owner-manager characteristics ... 11 2.2 Rapid growth ... 17 2.2.1 Growth ... 17 2.2.2 Measuring growth ... 21 2.2.3 Rapid growth ... 23 2.3 Start-ups ... 24 3. Hypotheses ... 26 3.1 Hypotheses ... 26 3.2 Conceptual model ... 29
4. Fieldwork and Results ... 30
4.1 Overall research framework ... 30
4.1.1 Setting ... 30
4.1.2 Approach and Methodological fit ... 32
4.2 Qualitative research ... 34 4.2.1 Approach ... 34 4.2.2 Internal validity ... 34 4.2.3 External validity ... 34 4.2.4 Reliability ... 35 4.2.5 Sampling design ... 35 4.2.6 Qualitative interviews ... 36 4.3 Quantitative research ... 37 4.3.1 Approach ... 37 4.3.2 Internal validity ... 38 4.3.3 External validity ... 38 4.3.4 Reliability ... 38 4.3.5 Sampling design ... 39
4.3.6 Description of the quantitative data ... 40
5. Testing Hypotheses ... 54
5.1 Testing the assumptions ... 54
5.2 Testing hypotheses ... 56
6. Discussion ... 62
6.1 Discussing overall factors ... 62
6.2 Discussing the rejected hypotheses ... 62
7. Conclusion ... 66
Bronvermelding ... 69
Appendix 1: Transcribed interviews ... 78
Interviewee 2 ... 83
Interviewee 3 ... 87
Interviewee 4 and 5 ... 92
Interviewee 6 ... 97
Interviewee 7 ... 98
Appendix 2: Quantitative Survey ... 103
Appendix 3: Helen Fisher’s personality test ... 110
Appendix 4: Regression analyses ... 111
Regression 1: Sales growth when comparing periods ... 111
Regression 2: Sales growth compared to competitors ... 115
Regression 3: Employment growth when comparing periods ... 119
Regression 4: Employment growth compared to competitors ... 123
Regression 5: Value growth when comparing periods ... 127
Regression 6: Value growth compared to competitors ... 132
1. Introduction
“No company can afford not to move forward, it may be at the top of the heap today but at the bottom of the heap tomorrow, if it does not” – James Cash Penny
Growth is a top strategic priority for entrepreneurs and their firms (Barringer et al., 2005), meaning that a large part of the entrepreneurs is interested in knowing how to make their firms grow. Even more interesting is the phenomenon called ‘rapid growth’. Rapid growth is often an indication of market acceptance and firm success, and firms that achieve rapid growth are an important stimulus to the national economy (Fesser and Willard, 1990). Many rapid growth firms in the Netherlands, like Thuisbezorgd.nl, Bloomon, Catawiki and Travelbird have spawned new industries and initiated the development of innovative products and services. By analysing rapid growth firms, researchers can help all firms better understand the attributes associated with firm growth in the Netherlands.
1.1 The problem
Despite the positive outcomes, the problem that has been identified is that rapid growth is difficult to achieve and maintain (Barringer et al., 2005). According to Zook and Allen (1999) only one in seven firms generate sustained, profitable growth. In the literature regarding rapid-growth there is no unanimity found as to why it is so difficult to achieve and maintain rapid growth.
This study is especially interested in the relation between owner-manager characteristics and rapid growth. Zhang et al (2008) state that the growth rate of companies often comes to a halt because of the changing needs at different phases during the company life cycle. The owner-managers may have strong start up skills but may not have the skills needed to manage further growth (Willard, Krueger, and Feeser, 1992). Furthermore in an earlier study, Hambrick and Crozier (1985), and Kotter and Sathe (1978) suggest that coping with stress imposed by instant size, internal turmoil, sense of infallibility and extraordinary resource needs are persistent challenges that managers of rapid growth firms have to face. Mismanagement of any of these challenges might lead to the failure of an otherwise successful rapid growth
firm. In other words, firm growth is limited by managerial constraints (Caves & Murphy, 1976; Oxenfeldt and Kelly, 1969). In short this study investigates how owner-manager characteristics relate to fast growth start-ups in the Netherlands.
1.2 The aim of this research
The main aim of this research is to get a better understanding of how rapid growth is achieved and maintained by finding out if owner-manager characteristics are a determinant for the rapid growth of start-ups in the Netherlands. The goal of this research is to answer the following research question:
“Do owner-manager characteristics determine rapid growth of start-ups in the Netherlands?”
Before answering the research question above, the following sub questions are created:
1. What are owner-manager characteristics? 2. What is rapid growth?
3. What is a start-up?
The research question is dissected into the sub questions above in order to gain the most extensive understanding of the research problem.
1.3 The research
This study uses a mixed method approach for empirical research. Meaning that both qualitative and quantitative techniques are used in order to obtain information to answer the research question. An important remark regarding this mixed method approach is that solely the results of the quantitative part will be used to test the hypotheses and therefore form conclusions regarding the research question. The qualitative part includes in depth expert interviews of which the results will be used to secure the quality of the surveys used in the quantitative part. Regarding the qualitative part an inductive approach is used. This means starting with data from the
literature. Based on the literature concept questions are conducted for the quantitative survey, which is verified through data observations. Based on the data observations statements are induced, which will form the final questions for the quantitative survey (Blumberg, 2014). With regards to inductive conclusions you can never be absolutely sure that it is flawless, because it is a generalization (Blumberg, 2014). The collected data may result from interviews and self-managed tools sent via e-mail like for instance the quantitative surveys.
1.4 Theoretical contribution
Entrepreneurship as a research field is academically seen as a quite young field that has not been fully explored yet (Wiklund et al., 1998). Compared to other academic literature within in the field of economics and business, less has been researched and written regarding entrepreneurship. Specifically regarding rapid growth, literature has focused on identifying systematic differences between rapid growth firms and slow growth firms. Delmar (1997) concluded based on a literature review of 55 articles on firm growth published between 1989 and 1996, that there is little agreement on what factors affect or determine growth. In 1998 Delmar and Davidson, again concluded despite extra research efforts that the knowledge about rapid growth firms was still ‘very limited’. Wiklund (1998) researched 70 articles on firm growth published between 1987 and 1997 and stated that the literature regarding rapid growth was ‘highly fragmented’. In contrary, after examining 106 articles, book chapters, and books on firm growth published between 1977 and 2003, Barringer et al. (2005) found that the literature regarding rapid growth was rather rich and mature. They suggested four major areas in which rapid growth firms differ from slow growth firms, namely: 1) entrepreneur characteristics, 2) firm attributes, 3) business practices, and 4) human resource management (HRM) practices. With regards to entrepreneur characteristic Barringer et al. (2005) concluded that the personal characteristics of the entrepreneurs who start a firm have an impact on the firm’s ability to achieve and maintain a rapid growth rate. This conclusion is based solely on a sample of American firms. In order to reinforce the current literature about rapid growth it is therefore interesting to research if owner-manager characteristics determine rapid growth of start-ups in the Netherlands as well.
1.5 Practical contribution
Besides the theoretical contribution, researching rapid growth also has several practical contributions. First of all rapid growth is an indication of market acceptance and firm success (Barringer et al., 2005; Covin and Slevin, 1990; Low & MacMillan, 1988; Baum, 2001). By gaining more knowledge about rapid growth, entrepreneurs are more likely to create successful firms that will be accepted by the market. Furthermore, Barringer et al. (2005) also state that rapid growth firms provide an important stimulus to the national economy. Therefore, by gaining more knowledge regarding rapid growth this might lead to more rapid growth firms and a stronger national economy.
Another reason why researching rapid growth is interesting, is because rapid growth firms pay a disproportionately large contribution to job creation (Henrekson and Johansson, 2010; Birch, 1987, 1995; Fisher and Reube, 2003). Just 4 percent of small businesses grow rapidly (Gazelles). Virtually all of the net job growth by small business occurs in these rapid growth firms (Bee, 2004).
Finally, research on rapid growth firms has the implicit goal of providing assistance to entrepreneurs who want their firms to grow or who want to sustain high growth rates.
1.6 Structure
In order to answer the research question stated above, first of all a theoretical framework is constructed in chapter two to create a clear understanding of the sub questions regarding what owner-manager characteristics are, what rapid growth is, and what start-ups are. Based on the theoretical framework, hypotheses are formulated in chapter three. Furthermore chapter three includes the conceptual model of this paper. Chapter four is the fieldwork chapter and therefore includes an explanation of the research design and describes the data for the quantitative analysis. In chapter five the hypotheses tested and therefore are accepted and- or rejected based on the analysed data. After accepting and- or rejecting the hypotheses the results are discussed in chapter six. Finally answering the research question and providing recommendations for future research in chapter seven finalizes this paper.
2. Theoretical framework
This Chapter explains the theoretical background of the research problem. As mentioned in the introduction, the research problem is dissected into three key constructs: owner-manager characteristics, rapid growth and start-ups. By analysing the current literature, clear definitions are given for these three key constructs. This results in a strong foundation on which fieldwork regarding the relation between owner-manager characteristics and rapid growth in Netherlands can be constructed.
2.1 Owner-manager characteristics
This section first explains the term owner-manager followed by what owner-manager characteristics are and which owner-manager characteristics are most widely studied. Finally a model will be presented regarding entrepreneurship personality types. 2.1.1 Owner-manager
In order to explain the term owner-manager first of all the definition of entrepreneurship has to be defined. According to the Oxford dictionary entrepreneurship is setting up a business or businesses and taking on financial risks in the hope of making a profit (Oxford dictionaries, 2017). This is a broad definition and based on the current literature regarding entrepreneurship it can be concluded that there is not one single definition to describe entrepreneurship. One of the most well known definitions of entrepreneurship is the definition by Schumpeter (1883-1950). According to Schumpeter (1934) it is the carrying out of new combinations that constitutes the entrepreneur. Entrepreneurs create innovations leading to creative destruction. Furthermore Schumpeter (1934) argued an entrepreneur does not need to be a business owner. In the literature there are several types of entrepreneurship known like serial entrepreneurs, portfolio entrepreneurs, corporate entrepreneurs, lifestyle entrepreneurs, social entrepreneurs and sustainable entrepreneurs. Although all these entrepreneur types are different, they all have in common that they create, discover and exploit value-adding opportunities. Therefore in this research entrepreneurship is defined as the creation, discovery and exploitation of value-adding opportunities.
Based on the Oxford dictionary an owner-manager of a firm is a person who both owns a business and manages it (Oxford dictionaries, 2017). An owner-manager is therefore always an entrepreneur, but an entrepreneur is not always an owner manager. The main reason why this research uses the term owner-manager instead of founder is because according to the Oxford dictionary, a founder of a firm is a person who establishes the firm (Oxford dictionaries, 2017). This therefore does not mean that the founder is currently the owner of the firm or actively involved in making the decisions within the firm. An important note to make is that within the literature regarding entrepreneurship terms like founder, owner, owner-manager and entrepreneur are used as if they mean the same thing.
2.1.2 Owner-manager characteristics
Owner-manager characteristics are features or qualities that belong to an owner-manager and serve to identify him or her (Oxford dictionaries, 2017). According to Barringer et al. (2005) the relationship between owner-manager characteristics and firm growth is important for at least three reasons. First of all it is widely believed that owner-managers of a firm place a lasting stamp on their companies, which influences the culture and behaviour of their firm (Mullins, 1996). An example is Walt Disney. For years after the death of Walt Disney, the executives of Walt Disney would regularly ask themselves the question ‘What would Walt do?’ (Collins & Porras, 1994). Mugler (1998) and Harms (2009) agree with this by stating that new ventures tend to be dominated by the owner-manager, who has a strong influence on all internal and external aspects of the firm. Harms (2009) argues that particularly with respect to rapid growth, the entrepreneurs plays a key role. The second reason why the relationship between owner-manager characteristics and firm growth is important, is that investors and others often assess the potential of a new venture by evaluating the attributes of its owner-manager. A critical criterion used by venture capitalist when deciding whether to fund a firm is their perception of the entrepreneur’s or the team of entrepreneurs’ ability to successfully start up the venture. The third reason Barringer et al. (2005) give is that launching a new firm is a challenging process. Therefore individual difference variables, such as prior industry experience and educational level achieved, have in many instances been found to be critical in successfully launching a new firm (Barringer et al., 2005). Harms (2009) mentions another reason why the relationship between owner-manager characteristics and firm
growth is important. He refers to Penrose (1995) which points out that growing firms may have a critical managerial deficit when the coordination demand of growth may rise above the coordination capacity of the owner-manager. This is a critical deficit because managers with enough insight knowledge of a particular firm to be effective immediately cannot be recruited from the market (Garnsey et al., 2003). As shown in figure 2.1 and 2.2 in chapter 2.2.1 rapid growth means that the firm goes through the stages of crisis in a shorter amount of time, meaning that the chance of a critical managerial deficit increases. Therefore the characteristics of the owner-manager may be an important factor for explaining rapid growth. In the following sub sections a brief review is given of the research on the most widely studied owner-manager characteristics.
2.1.2.1 Higher education
In a broad range of studies, education has served as a proxy for entrepreneurial skills and abilities. For example Sapienza and Grimm (1997) argue that imagination, search skills, foresight, and computational and communication skills are enhanced through college education. Furthermore, specific forms of knowledge-intensive education, like biochemistry, computer science and engineering, provide an advantage for the recipients of the education if they start a firm in that specific area of expertise (Barringer et al., 2005).
2.1.2.2 Entrepreneurial experience
According to Singer (1995), one of the most consistent predictors of future entrepreneurial performance is prior entrepreneurial experience. Singer (1995) argues that launching a new venture is not easy, in fact it is a complex task and entrepreneur with prior entrepreneurial experience therefore have a distinct advantage. Furthermore entrepreneurs with prior entrepreneurial experience are less likely to make costly mistakes than entrepreneurs without prior entrepreneurial experience (Barringer et al., 2005). Prior experience is important because the knowledge is relevant for making business decisions (Gilbert et al., 2006; Baum et al., 2001; Wasilczuk, 2000).
2.1.2.3 Prior industry experience
Different studies have studied the impact of prior industry experience on an entrepreneur’s ability to successfully start and grow a firm (Baum et al., 2001; Eisenhardt & Schoonhoven, 1990; Siegel, & MacMillan, 1993). For example,
MacMillan and Day (1987) argue that entrepreneurs with experience in the same industry as their current venture will have a better understanding of their industries and have a more mature network of industry contacts, and therefore will be better able to successfully start and grow their firm.
2.1.2.4 Gender
Gender is an important owner-manager characteristic as well. Earlier research suggests that women are less likely to start and manage rapid growth firms (Storey, 1994). Wiklund (1998) does not agree on this statement and states that the share of women managing rapid growth firms and slow growth firms is almost identical. Nevertheless this is still interesting characteristics to research because there is no uniform conclusion to be found in the current literature.
2.1.2.5 Age
Another interesting owner-manager characteristic is the owner-manager’s age. According to Wiklund (1998) it can be hypothesised that based on a resource perspective older owner-managers should have more relevant knowledge, which enhances their ability to grow their firms. On the contrary Davidsson (1989) argues that younger owner-managers have a larger desire and need for money and that expanding their firm could increase their income. Foley (1984) also argues that younger owner-managers are more likely to start and grow rapid growth firms. According to Bhide (2003) age might have a negative impact on firm growth, because greater age can be related to greater risk aversion. Foley (1984) states that motivation declines with age and therefore owner-managers with increasing age are less growth motivated, and their firms therefore will grow to a lesser extent. Also Khan (1986) relates younger owner-managers to rapid growth. Khan argues that work capacity is important for firm success and that working capacity decreases with age, therefore older owner-managers are less likely to achieve and manage rapid growth.
2.1.2.6 Ambition to grow
Hakkert and Kemp (2006) argue that the owner-manager’s growth ambition is positively related with the actual growth of the firm. The ambition to grow can be seen as the willingness of the owner-manager to grow the firm (Davidsson, 1989; Wiklund and Shepherd, 2003). The strategy of the firm has to be aligned with the opportunity and the resource-ability of the firm and ambition of the owner that
determines the growth path. Hakkert and Kemp (2006) distinguish four different typologies towards the ambition to grow. First of all proactive growers, they have a positive intention towards firm growth and search to achieve growth in a proactive way. Secondly, reactive growers, they do not actively search for growth but need a trigger for their external environment in order to grow. These growers are risk averse and focussed on securing family income. The third typology is non-growers. Non-growers do not have the intention to grow, but strive other goals like maintaining control and a better work life balance. The last typology is must growers. This typology has to grow because his or her business is not viable yet. According to Hakkert and Kemp (2006) the proactive growers are most likely to actually grow together with the must growers. Another study that argues that owner-managers who focus on growing are more likely to grow their firm is the article of Zhang et al. (2008). Zhang et al. (2008) state that firms with a growth oriented vision and mission are more likely to achieve rapid growth.
2.1.2.7 Personality types
Another characteristic, which has been researched less often but is very interesting, is the personality type of an owner-manager. According to the Oxford Dictionary a personality type is: A collection of personality traits, which are thought to occur together consistently, especially as determined by a certain pattern of responses to a personality inventory (Oxford dictionaries, 2017). A personality inventory is a type of questionnaire designed to reveal the respondent’s personality traits (Oxford dictionaries, 2017), and personality traits are particular features or characteristics of an individual’s personality (Oxford dictionaries, 2017). There are several different tests regarding personality types. Well-known tests are Myers-Briggs Type Indicator (MBTI), DISC, and Helen Fisher’s personality test. These tests all have in common that their goal is to give more insights regarding an individual’s personality type. The Myers-Briggs Type Indicator differs from the DISC and Helen Fisher’s personality test, by defining 16 personality types instead of 4. Determining the MBTI-type includes two steps. Step one is to filling in the MBTI-personality test and step two is a feedback session with an MBTI-coach. Determining the MBTI-type requires self-reflection of the individual. This combined with the fact that a coaching session is part of determining the personality of the individual, makes it a less attractive test to incorporate in this research regarding owner-manager characteristics and rapid
growth. The DISC personality test and Helen Fisher’s personality test have similarities. First of all, both tests work with four personality types. DISC works with the styles: Dominance, Influence, Steadiness, and Conscientiousness, and Helen Fisher works with the styles: Explorer, Director, Builder, and Negotiator. Both personality tests argue that most of the times one or more of these personality types are dominant. The reason why this research will not make use of the DISC personality test is because when looking for a DISC personality test, a lot of different tests are found which all proclaim to be the DISC personality test. This means that there is no congruence regarding the DISC personality test, there is no uniform test. With regards to Helen Fisher’s personality test, the tests available on the internet are either from Helen Fisher’s website or from her e-book. Therefore this research makes use of Helen Fisher’s personality test as a base for explaining personality types (Fisher, 2009). Furthermore, Helen Fisher, the founder of this test is a research professor of anthropology at Rutgers University in America, which therefore empowers her relation to personality characteristics (Rutgers.edu, 2017).
Helen Fisher’s personality test was created to test the degree to which a person expresses four broad styles of thinking and behaving. Each of these styles is associated with one of the four basic brain systems: the dopamine, oestrogen, serotonin and testosterone systems. The four personality types Fisher identified are: Explorer
The explorer personality type is associated with the dopamine system. Personality traits that are related to this system are the spontaneity, the propensity to seek novelty, curiosity, creativity, enthusiasm, willingness to take risk, and mental flexibility (Fisher, 2009).
Builder
This personality type is associated with the serotonin system. People with this personality type tend to be calm, loyal, cautious but not fearful, persistent, like traditions, fond of rules and facts, and they are orderly (Fisher, 2009).
Director
Directors are associated with the testosterone system. Personality traits related with this style are directness, decisiveness, focus, logic thinking, tough-mindedness, emotionally contained, and goal orientated (Fisher, 2009).
Negotiator
This personality type is associated with the oestrogen system. People with this personality type tend to see the big picture, are imaginative, have amazing verbal skills and social skills, are intuitive, sympathetic, and emotionally expressive (Fisher, 2009).
Every person is a combination of these four personality types, but express some more than others. On overall there is one dominant style called the primary personality type, followed by a second-dominant style called the secondary personality type. The latter is less dominant then the primary personality type but more dominant than the other personality types (Fisher, 2009).
2.1.2.8 Size of founding team
The literature regarding founding team size and firm growth, suggests that larger teams have an advantage over smaller teams or individual founders. For instance, Barkman (1994) argues that larger teams posses more talent, resources and professional contacts than an individual founder. Furthermore, according to Fesser and Willard (1990) the psychological support that the cofounders of a new business can offer to each other is an important factor as well. Team size is also important because it enables the firm to distribute responsibility across a greater number of individuals (Gilbert, 2006). Larger team size can also lead to a higher chance of disagreement within the team, especially when the team is diverse. However, research argues that these disagreements can lead to more extensive discussions of strategic options and to more learning options (Lant, Milliken, & Batra, 1992). According to West & Meyer (1998) disagreement correlates positively with the growth of firms. Although the literature includes ‘size of founding team’ as an owner-manager characteristic, this paper will not, because for this research owner-manager characteristics are defined as features or qualities that belong to an owner-manager and serve to identify him or her.
2.1.2.9 Broad social and professional network
New firms have to deal with the liabilities of size and newness (Elfring & Hulsink, 2003). As a result, the owner-managers of those new firms need to work their social and professional, their strong and their weak ties in order to gain access to critical resources (Elfring & Hulsink, 2003). For example, the entrepreneur calls a business acquaintance to ask for an introduction to a potential customer of supplier. In their article Elfring and Hulsink (2003) explain the value of network as an integral part of the explanation of entrepreneurial success. Furthermore Johannisson (1990) provides a great overview on how entrepreneurs utilize their networks to fuel growth. Although the literature includes ‘a broad social and professional network’ as an owner-manager characteristic, this paper will not, because for this research owner-manager characteristics are defined as features or qualities that belong to an owner-manager and serve to identify him or her
2.2 Rapid growth
This section first explains the term growth followed by ways how to measure growth. After that the focus will be on explaining rapid growth and what rapid growth is within the Netherlands.
2.2.1 Growth
An important article regarding firm growth is the article by Greiner (1972). In his article Greiner states that by analysing literature on firm growth, five key dimensions emerge: an organization’s age and size, its stages of evolution and revolution and the growth rate of its industry. The graph in figure 2.1 shows how theses elements interact to shape an organization’s development.
Figure 2.1 – How companies grow (Greiner, 1972, p4)
A clear conclusion based on this graph is that companies in a high growth industry also known as rapid growth reach a larger size on a younger age than companies in medium growth industries or low growth industries. The stages of evolution, Greiner explains as periods of growth without major economic setbacks or severe internal disruptions. He describes it as quiet periods because only modest adjustments appear to be necessary for maintaining growth under the same patterns of management. But these quiet periods are not sustainable. In contrast of the quiet periods there are turbulent periods as well. These periods Greiner describes as stages of revolution. In these turbulent stages, traditional management practises that were appropriate for a smaller firm size and earlier time no longer work. Greiner states that it is the task for management in each revolutionary period to find a set of new organizational practices that will become the basis for managing the next period of evolutionary growth.
After explaining how companies grow, Greiner goes into more depth regarding the evolution and revolution phases. Greiner (1972) suggests that there are five phases of growth. These five phases of growth by Greiner are shown in figure 2.2.
Figure 2.2 – The five phases of growth (Greiner, 1972, p5)
Within these five phases of growth, each evolutionary period is characterized by the dominant management style used to achieve growth and each revolutionary period is characterized by the dominant management problem that must be solved before growth can continue. According to Greiner (1972), each phase is at once a result of the previous phase and a cause for the next phase. For example, the evolutionary management style in phase 2 is direction, which grows out of and becomes the solution of the demand for more leadership in the previous phase. However, the management style direction eventually leads to a revolutionary crisis in which there is more demand for autonomy because of too much directing.
With regards to Greiner’s work (1972), Churchill & Lewis (1983) argue that this traditional framework of growth is not applicable for SME. They argue that the traditional framework fails to capture the important early stages in a company’s origin and growth. In their article, Churchill & Lewis (1983) propose an alternative framework that does capture the important early stages in a company’s origin and growth, which features the following five growth stages: existence, survival, success, take-off, and resource maturity. Figure 2.3 shows a graphic representation of Churchill & Lewis’s growth framework.
Figure 2.3 – Stages of SME growth (Churchill & Lewis, 1983)
The first stage shown in the growth framework of Churchill & Lewis (1983) is existence. In this stage the main problems of business are obtaining customers and delivering the product or services agreed upon. In the second stage, survival, the business has demonstrated that it is a workable business entity. The business has enough customers and keeps them by satisfying them sufficiently with its products or services. The main problem of business is now the relationship between revenue and
expenses, in other words breaking even. The third stage is success, in this stage the owners of the company face the decision whether to exploit the company’s accomplishments and expand or keep the company stable and profitable, which provides a base for alternative owner activities. The key issue therefore is whether to use the company as a platform for growth or as a means of support for the owners as they fully or partially disengage from the company. Stage four includes the take-off stage, in which the key problems are how to grow rapidly and how to finance that growth. Finally stage five is resource maturity. In this stage the main problems for business are first to consolidate and control the financial gains brought on by rapid growth, and second retaining the advantages of small size, including flexibility of response and the entrepreneurial spirit. The corporation must expand the management force fast enough to eliminate the inefficiencies that can be produced by growth and professionalize the company by use of tools such as budgets, strategic planning, management by objectives, and standard cost systems. This has to be done without stifling its entrepreneurial qualities (Churchill & Lewis, 1983).
Despite the two growth models are different, they on overall do share the same elements. According to Masurel and Montfort (2006) there are a lot of different studies regarding the growth process of a firm, but all of them incorporate elements of start, growth, maturity and decline. Another element that all growth models have in common is that they show that firm growth is a process where some attributes of the firm increase between two points in time (Hakkert and Kemp, 2006).
2.2.2 Measuring growth
Now we know what growth and the growth process includes, the next section is regarding how growth is measured. According to Murphy, Trailer, & Hill (1996) growth can occur in many different aspects of a firm’s operations, such as cash flow, net income, sales, market share, customer base and employment. Although there is no single overriding measure of new venture growth, based on reviewing the literature the most commonly used measures for firm growth are in terms of sales and employment. LeBrasseur et al. (2003) state that firm growth is defined as the rate of growth, as measured by sales volume experienced by a firm during its initial years. Zhang et al state that firm growth is measured by the difference in number of employees or the difference in annual sales, and Harms (2009) and Weinzimmer,
Nyström and Freeman (1998) state that in the literature they analysed growth often in based on growth in turnover or in number of employees.
Sales growth provides evidence of how revenues of a firm change over time (Gilbert et al., 2006). It is an indication for the extent to which customers are increasingly accepting the products or services of the firm (Robinson, 1998). Of all growth measures, sales growth is the most commonly used (Murphy et al., 1996; Weinzimmer, Nystrom, & Freeman, 1998; LeBrasseur et al., 2003).
However sales growth is dependent on the firm having a product or service, which is available to sell. In some industries like biotechnology or software, firms may spend years before developing a product or service for the market meaning that in those years there will be no sales growth. Therefore, for such firms a more relevant growth measure would be employment growth (Gilbert et al., 2006). Employment growth is the increase in number of individuals working for the firm and indicates that a change has occurred in the organizational composition or strategy of the firm (Hanks, Watson, Jansen and Chandler, 1993). Besides indicating internal changes in the firm, employment growth also signals the contribution the firm is making to the community from which it operates (Kirchoff & Phillips, 1988; Venkataraman, Van de Ven, Buckeye, and Hudson, 1990).
Also Delmar et al. (1997 and 2003) agree that sales and employment are the two most widely used indicators for growth. Besides only making that statement they also explain why other indicators are less relevant. They mention that other indicators have some obvious shortcomings, which limit their applicability outside of their specific contexts. For instance market share and physical output. These indicators can only be compared within industries with firms that have a similar product or service range. An indicator like total assets has a strong relation with the capital intensity of the industry and therefore is also only applicable in a specific context. And finally, profit is an important indicator of success but the relationship of profits to size is only evident in aggregates of firms or over long periods of time for individual firms (Delmar et al., 2003).
2.2.3 Rapid growth
Based on literature review, there is no general accepted definition defined in the literature regarding rapid growth. In figure 2.4 an overview is given of different definitions for rapid growth used in the literature regarding rapid growth.
Figure 2.4 – Overview different definitions of rapid growth
Based on the literature reviews the lowest growth rate used to define rapid growth is an annual growth rate of 10%. But a percentage does not have a meaning without a context. For this research the context is the Netherlands. Based on the SRA report ‘2017 in Zicht’ the average sales growth rate for 2017 is expected to be 7,2% per cent (SRA, 2017). Therefore the definition of rapid growth with an annual sales growth rate of at least 10% would also be applicable for the Netherlands. SRA is an overall organization for Accountancy firms, which analysed 120.000 annual reports of Dutch companies in order to create the SRA report ‘2017 in Zicht’.
2.3 Start-ups
In the Academic literature there is no consensus found regarding the definition of the word start-up. First of all the Oxford Dictionary describes a start-up as the action or process of setting something in motion. This is not specifically related to any business. The second definition the Oxford Dictionary gives is, a newly established business. Also Davila et al. (2002) argue that, that is the definition of a start-up. According to Schubert and Häusler (2001) a start-up is a company that is in de process of being founded. In other words it is not an established business yet. Korunka (2003) builds further on the process part of the definition of a start-up. According to Korunka (2003), a start-up is a process that begins with the first actions of the nascent entrepreneur (for example, initial contact with a chamber of commerce or bank) and ends with the first business activities of the new venture (for example, launching a product/service). Paternoster (2014), argues that the start-up process of a venture can be divided into four stages and refers to the lifecycle of a start-up. The first stage of the start-up lifecycle is called the start-up stage, which is the stage when start-ups create and refine the idea conception up to the first sale. Following on the start-up stage is the stabilization stage in which the product or service becomes stable enough to be commissioned to a new customer without causing overhead on the product- or service development. The third phase is the growth phase, which is defined by obtaining a larger market share. The final phase is the maturity phase, in which the start-up evolves to a mature organization, where the product development becomes more steady and predictable. This start-up lifecycle by Paternoster (2014) is very familiar to the stages of growth model by Churchill & Lewis (1983). The main difference is, that Churchill & Lewis (1983) identify 5 instead of 4 stages and do not literally mention that these stages of growth are the lifecycle of a start-up.
Besides these definitions from the literature, the well-known Dutch organization ‘Start-up Amsterdam’ uses the following definition for a start-up: ‘A start-up is an organization formed to search for a repeatable and scalable business model’ (Wesbuer, 2016). This definition for a start-up was originally created by Steve Blank (Blank, 2012) and argues that a start-up can move from start-up mode to a scale up in a short amount of time if they manage to find a scalable and repeatable business model soon. For example companies like angry bird, which went viral and found their
repeatable business model right away. On the other hand it can take decades before a company manages to find a scalable and repeatable business model. Therefore a start-up cannot be defined in a precise number of years.
The definition of a start-up by Steve Blank (2012) will be used as a foundation for this research.
3. Hypotheses
This chapter includes constructing the hypotheses for this research based on the previous theoretical framework. Within the theoretical framework several owner-manager characteristics have been discussed which are expected to determine rapid growth. The hypotheses in this research will be constructed based on these characteristics. Not all of the mentioned owner-manager characteristics will be selected due to limits in time and the size requirements of this paper. The selected owner-manager characteristics are the ones thought to be most suitable within the context of this research. Although the gender characteristic was thought to be suitable within the context of this research, it was not possible to research this owner-manager characteristic due to only having one female in the sample. After determining the hypothesis of this research, a conceptual model is constructed
3.1 Hypotheses
Since this research wants to find out if owner-manager characteristics determine the rapid growth of start-ups in the Netherlands, the hypotheses shall be constructed in a similar way. The relations between the independent and dependent variables are indicated as ‘positively related’. This means that the variable is hypothesised to have a positive causal effect on the rapid growth of start-ups in the Netherlands, in other words the variable is hypothesised to determine the rapid growth of start-ups in the Netherlands.
The first characteristic that is hypothesized in this research is the level of education of the owner-manager. Based on the information gathered the in theoretical framework it is expected that a higher level of education enhances the entrepreneurial skills. Therefore a higher level of education of the owner-manager is expected to have a positive effect on the growth of the firm. Based on this, the following hypothesis is formulated:
H1: The level op education of the owner-manager is positively related to the rapid growth of start-ups in the Netherlands.
The second characteristic is prior entrepreneurial experience. Because launching and growing a new venture is seen as a complex task, it is expected that an entrepreneur with prior entrepreneurial experience has an advantage compared to an entrepreneur without prior entrepreneurial experience. Prior entrepreneurial experience is expected to lead to better decision making and less costly mistakes. On this basis the following hypothesis is constructed:
H2: Prior entrepreneurial experience of the owner-manager is positively related to the rapid growth of start-ups in the Netherlands.
The following characteristic to be hypothesized is prior industry experience. It is expected that entrepreneurs with experience in the same industry as their current venture will have a better understanding of their industries and have a more mature network of industry contacts, and therefore will be better able to successfully start and grow their firm. Based on this, the following hypothesis is formulated:
H3: Prior industry experience of the owner-manager is positively related to the rapid growth of start-ups in the Netherlands.
The next characteristic is the age of the owner-manager. Younger owner-managers have a larger desire and need for money. By expanding their firm they can expand their income as well. And because of their desire and need to earn money they will want to expand their income as soon as possible meaning that they will want to expand their firm as soon as possible as well. On this basis the following hypothesis is constructed:
H4: A younger age of the owner-manager is positively related to the rapid growth of start-ups in the Netherlands.
The seventh characteristic to be hypothesized is the ambition of the owner-manager to grow. It is argued that owner-managers that focus on growing are more likely to grow their firm. Based on this, the following hypothesis is formulated:
H5: The ambition of the owner-manager to grow is positively related to the rapid growth of start-ups in the Netherlands.
The final characteristic is the personality type of the owner-manager. Based on Helen Fisher’s personality types, there are four personality constellations: Explorer, Builder, Director and Negotiator. Every person is a combination of these four personality types, but express some more than others. On overall there is one dominant style called the primary personality type, followed by a second-dominant style called the secondary personality type. The latter is less dominant then the primary personality type but more dominant than the other personality types (Fisher, 2009). According to the literature, rapid growth firms reach a larger size on a younger age than normal companies. This means that they go through the stages of growth at a higher pace. Each stage of growth requires a different management approach and other difficulties. Therefore owner-managers need to be flexible and creative. Furthermore due to the higher pace, owner-managers need to make a lot of decisions in a shorter amount of time and through this rapid pace the firm faces more risk. Based on this information it is expected that important personality traits for rapid growth are, mental flexibility, willingness to take risk, decisiveness, focus, tough-mindedness and being goal orientated. These traits are related to the personality types Explorer and Director. This research focuses specifically on start-ups and therefore it is expected mental flexibility, willingness to take risk and creativeness are seen as more important traits than tough-mindedness. Explorer is therefore expected to be the primary style. Personality traits like being cautious, fond of rules and facts, intuitive, and emotionally expressive are expected to be less important for rapid growth. These traits are related to the personality types Builder and Negotiator. On this basis the following hypothesis is constructed:
H6: The owner-manager’s primary personality type Explorer is more positively related to the rapid growth of the start-ups in the Netherlands than the other personality types of Helen Fisher’s personality test are.
3.2 Conceptual model
Based on analysing the literature a positive relation is expected between owner-manager characteristics and rapid growth. Figure 3.1 shows the conceptual model of this research.
Figure 3.1 – Conceptual model
The conceptual model shows the expected positive relation between owner-manager characteristics and rapid growth. In this research owner-manager characteristics are defined as the independent variables and rapid growth is defined as the dependent variable.
4. Fieldwork and Results
This chapter includes describing the way the hypotheses are tested, and analysed by first providing the overall research framework followed by the qualitative and quantitative research. Furthermore, this chapter includes how the quantitative data is collected and describes the data as well. The purpose of this fieldwork and results chapter is to secure that the research question will be answered in an accurate and justified way, and to give an understanding of the data used to conduct the research analyses. As stated in chapter 1 the research question of this paper is:
“Do owner-manager characteristics determine rapid growth of start-ups in the Netherlands?”
As mentioned this chapter starts with the overall research framework of this research. Within the overall research framework firstly the setting will be described where after the approach and methodological fit will be explained. After describing the overall research framework, this chapter will continue by describing the qualitative research including the approach, internal validity, external validity, reliability, sampling design, and qualitative interviews. The qualitative research will be followed by the quantitative research, in which the approach, internal validity, external validity, reliability, sampling design, and quantitative data will be described as well.
4.1 Overall research framework
4.1.1 SettingAs mentioned above this paper researches the relationship between owner-manager characteristics and rapid growth of start-ups in the Netherlands. In chapter 2 of this paper the key constructs: founder characteristics, rapid growth, and start-ups have been explained in depth. But in order to be able to have a clear understanding of what is specifically been researched in this paper, another important construct is the start-up scene in the Netherlands. This section will describe the start-start-up scene in the Netherlands in more depth.
First of all like described in chapter 2 of this paper, the definition used in this research for start-ups is: an organization formed to search for a repeatable and scalable business model. Well-known successful Dutch start-ups, which managed to find a repeatable and scalable business model and managed to develop themselves into scale-ups, are Booking.com and TomTom. The Dutch start-up scene is considered as one of the most prominent in Europe (techcrunch, 2017). Being an entrepreneur is hot and therefore more and more start-ups are being started (Interviewee 7, 2017, appendix 1). Places where a lot of these start-ups can be found are start-up incubators and start-up accelerators. According to the Oxford dictionary an incubator is an apparatus like a box in which small weak babies are cared for (especially those born earlier than normal); an apparatus like a box in which eggs can hatch by artificial warmth (Oxford dictionary, 2017). A start-up incubator therefore is an organisation, which promotes innovation and entrepreneurship, by helping start-ups to innovate; they drive the creation of start-ups (support to innovation, incubation and internationalisation) (European Business & Innovation Centre Network, 2017). The most important elements of a start-up incubator are space & roof, shared facilities, management assistance, and access to networks. Examples of start-up incubators in the Netherlands are ACE-Venture Lab and SBIC-Noordwijk. With regards to an accelerator the Oxford Dictionary states this is a device for increasing speed or an apparatus for making particles of matter move at high speeds (Oxford Dictionary, 2017). Start-up accelerators are therefore organisations that provide cohorts of selected nascent ventures seed-investments, usually in exchange for equity, and limited-duration educational programming, including extensive mentorship and structured educational components (Forbes, 2017). The main aim of start-up accelerators is to assist its participants in achieving a higher chance to become successful. They serve as catalysts in developing start-ups from the seed stage to the post-seed stage. Examples of start-up accelerators are Rockstart and Startupbootcamp. Within the Netherlands, Amsterdam (Rockstart, Startupbootcamp, B.Amsterdam, TQ, and more) is start-up capital of the country based on research by job searching company Joblift (Biplatform, 2017). After Amsterdam Utrecht, Rotterdam and Eindhoven are prominent cities for start-ups as well. Besides start-up incubators, and start-up accelerators, another great way to find start-ups is via online facilitators like Kickstarter.com, Symbid.nl and dutchstart-upmap.com. These are all platforms with different purposes regarding start-ups.
As mentioned in chapter one many rapid growth firms in the Netherlands, like Thuisbezorgd.nl, Bloomon, Catawiki and Travelbird have spawned new industries and initiated the development of innovative products and services. In the literature, research has been done regarding owner-manager characteristics and rapid growth but not specifically regarding the Netherlands (Barringer et al., 2005; Zhang et al., 2008). That certain owner-manager characteristics determine rapid growth in other countries of the world does not mean that the same relation is applicable for the Netherlands, among other things due to cultural differences. It therefore is interesting to research if and which owner-manager characteristics determine the rapid growth of start-ups in the Netherlands.
4.1.2 Approach and Methodological fit
According to Blumberg et al. (2014), the use of a qualitative, quantitative or mixed research approach depends on the research problem, the objective of the research, what kind of research one wants to conduct, and the information the researcher wants to obtain. For this paper the research problem is finding out if owner-manager characteristics determine rapid growth of start-ups in the Netherlands. The objective is to identify the owner-manager characteristics that determine rapid growth, and improve the understanding why these characteristics do or do not determine the rapid growth of start-ups in the Netherlands. Therefore this research aims to be descriptive and exploratory.
This research is on the one hand descriptive because it is focused on if owner-manager characteristics determine rapid growth, but on the other hand exploratory as well because it also focuses on how and what owner-manager characteristics determine rapid growth. According to Creswell (2013), qualitative studies are deemed to be the best approach if the topic is new, or has never been addressed with a certain sample or group (inductive), where as quantitative studies are seen as the best approach when testing a theory or explanation (deductive). Based on this, this paper requires a combination of a quantitative and qualitative research approach, which is called a mixed research approach (Blumberg et al., 2014). This means that both qualitative and quantitative techniques are used in order to obtain information to answer the research question. But because the main objective of this research is to find out if owner-manager characteristics determine rapid growth, solely the results of
the quantitative part will be used to test the hypothesis and therefore form conclusions regarding the research question. The qualitative part includes in depth expert interviews to explore the key constructs of this research in more depth. The outcome of the qualitative part will be used as input for the quantitative part.
In order to make sure that the mixed approach is the right approach for this research, the methodological fit by Edmondson and McManus (2007) is analysed as well. The methodological fit by Edmondson and McManus (2007) is illustrated in figure 4.1.
Figure 4.1 – Methodological fit (Edmondson and McManus, 2007, p 1168)
Owner-manager characteristics and rapid growth are well-researched theories, which suggests that this paper should make use of a quantitative research approach. However, this paper focuses specifically on start-ups in the Netherlands and therefore also is curious regarding ‘how’ and ‘what’ owner-manager characteristics determine rapid growth in the Netherlands. Therefore a hybrid approach, which is the same as a mixed approach, is a good methodological fit for this paper.
4.2 Qualitative research
This section includes the fieldwork regarding the qualitative research. In order to secure the quality of the research the research-judgement criteria will be used. Therefore this section will include the approach, internal validity, external validity, reliability, sampling design, and qualitative interviews regarding the qualitative research.
4.2.1 Approach
The main goal of the qualitative research part is to obtain a better understanding regarding ‘how’ and ‘what’ owner-manager characteristics determine rapid growth of start-ups in the Netherlands. The outcome of the qualitative research part will serve as input for quantitative part which is executed to answer the research question of this paper: ‘Do owner-manager characteristics determine rapid growth of start-ups in the Netherlands?’. In order to obtain a better understanding through qualitative research, interviews will be held with experts regarding each of the key constructs: owner-manager characteristics, rapid growth and start-ups.
4.2.2 Internal validity
In order to secure the internal validity of the qualitative research owner-managers who experienced rapid growth and succeeded, owner-managers who did not succeed to experience rapid growth, and experts regarding each of the key constructs regarding the research question of this paper were interviewed. By interviewing people from all different perspectives, the chance of a possible bias is lowered compared to if only owner-managers that experienced rapid growth where interviewed, which can be seen as the direct focus group.
4.2.3 External validity
The generalizability of this qualitative research depends on the outcome of the interviews conducted. In order to make the outcome as generalizable as possible a diverse group of experts will be interviewed regarding the key constructs of this paper. The results of the expert interviews will be used as input for the quantitative part of this paper, which eventually is meant for owner-managers and others interested in the relation between owner-manager characteristics and rapid growth in the Netherlands. Therefore the outcome of this qualitative part will not be
generalizable for other countries than the Netherlands. Furthermore, the outcome of these expert interviews will not be used as answers for the research question, and is mainly meant to secure the quality of the quantitative part of this paper.
4.2.4 Reliability
Regarding the reliability, and therefore the question if the measurement would be consistent over time, the measurement can be different in the future due to the rapid pace in which entrepreneurship is changing because of technology changes and globalization for example. At this time and in the near future the outcome will be reliable but due to the tempo in which how to start a new venture is changing, it is possible that in time to come this research will have a different outcome. For example because starting a new venture is getting more and more easy due to the rapid technological changes and globalisation (cheap off-shoring services), other characteristics of the owner-managers might be seen as more important in the future. 4.2.5 Sampling design
As mentioned in the approach the focus group for this qualitative research are experts regarding the key constructs of this paper. In order to conduct research, for each key construct at least one expert will be interviewed. This means that the interviewees therefore will not be randomly chosen. The sampling design will be based on convenience sampling and therefore a non-probability sampling approach is used. Furthermore as the focus group for this qualitative research is a specific group of individuals, judgemental sampling will be used. This makes it possible to search for the most suited sample to obtain an understanding of the key constructs of this research. Another reason why judgemental sampling is an appropriate approach for this research is because, like mentioned in the overall approach and methodological fit section, the qualitative part of this paper is regarding a nascent theory (Blumberg et al. 2014).
A sample size may vary depending on the time available for data gathering. Another determinant for the sample size is saturation. Saturation is reached when an interviewee provides an answer to a certain topic and that answer does not add new information to the research. According to Guest et al. (2006) in the case of a homogeneous group 12 interviews are sufficient to reach saturation. This means that for each key construct of the research question of this paper at least 12 experts should
be interviewed. Meaning a total of 36 expert interviews for this paper. Due to limits in time and the size requirement of this paper 7 experts will be interviewed in total, whereby at least one expert per key construct will be interviewed.
4.2.6 Qualitative interviews
As mentioned in section 4.2.5, seven experts are interviewed for the qualitative research of this paper. Table 4.1 shows an overview of the interviewees and their information details.
Table 4.1 – Overview of interviewees and their information details
The seven interviews had an average length of 1 hour and where conducted in Dutch or English. Of the seven interviews, 6 where done face-to-face and 1 was done via the phone. The reason why one was done via the phone was because the person had a very busy schedule, which did not allow for a meeting face-to-face. Because most of the interviews were conducted face to face, the fact that one interview was done via the phone will not be recognized as a limitation. Each interview started by giving background information about the research and explaining the goal of the interview. Afterwards the first interview questions were always regarding the background of the interviewee in order to get a better understanding of why he or she answered the other
questions in certain ways, and to create rapport with the interviewee. The data gathered from these interviews solely serve as supporting evidence for the quantitative part of this research.
After the interviews were conducted, they were transcribed. Because the data gathered from these interviews solely serves as supporting evidence for the quantitative part of this research, and due to the limits in time and the size requirement of this paper the interviews were not coded. This is recognized as a limitation of this research. The data within the transcribed interviews can be used to add value to the quantitative questionnaire and results by providing new insights and triangulation. The interview questions, and the transcribed interviews can be found in appendix 1.
The expert interviews have led to a lot of inspiration and interesting side-lines, but on overall the information obtained with these expert interviews confirms the approach of this research. The theory described in chapter two, the hypotheses stated in chapter three and the quantitative questionnaire described in chapter four are in accordance with views of the interviewed experts. The outcome of the expert interviews therefore serves as a form of triangulation regarding the hypotheses, the approach and the quantitative questionnaire of this research.
4.3 Quantitative research
This section includes the fieldwork regarding the quantitative research. Also with regards to the quantitative research the research-judgement criteria will be used to secure the quality of this research. This section will therefore include the approach, internal validity, external validity, reliability, sampling design, and the description of the data of the quantitative research.
4.3.1 Approach
The main goal of the quantitative research part is to test the hypotheses of this research in order to be able to answer the research question of this paper: ‘Do owner-manager characteristics rapid growth of start-ups in the Netherlands?’. In order to test the hypotheses quantitatively, surveys will be held among owner-managers of start-ups in the Netherlands. By statistically analysing the filled in surveys, results will be determined. These results will be used to accept or reject the hypotheses.
