Entrepreneurial leadership in the healthcare industry : the effect on the success of a company in the Dutch Healthcare when the founder leaves

(1)

Faculty of Economics and Business Faculty of Economics and Business Administration

Entrepreneurship (Joint Degree)

Dewy Atteveld

2502735 & 11141425

Dr. R.C.W. van Der Voort

14

th

August 2016

Entrepreneurial

Leadership in the

Healthcare Industry

The effect on the success of a company in the Dutch

Healthcare when the founder leaves

(2)

Acknowledgements

There it is, the end of my study career. Writing this master thesis made me appreciate the time I have been studying and what I have learned the past couple of years. Writing this thesis was a special moment for me to apply and test the knowledge I have learned the past few years. I couldn’t have done it on my own and that’s why I would like to take a moment for thanking a few people.

I would first like to thank my supervisor Roel van der Voort for his guidance and advise. Thank you for the quick responses on my questions and the tips that improved my master thesis. It was really helpful, especially in the end when it was the most difficult part of the writing process.

I also want to thank the company CareEPD for their collaboration. Without their collaboration, it wasn’t possible for me to apply the knowledge I have learned into practice. Applying the knowledge into a real situation made me see the value of what I have learned at University. Simon, thank you for the opportunity you gave me to write my thesis about CareEPD and for the freedom you gave me. All the employees of CareEPD, thank you for filling in the survey.

A special thanks goes to the founder of CareEPD, Willem. You didn’t only support me during the process of writing this thesis, but during my whole study career. You always stimulated me to study as long and much as possible. This way I hope I can do something back for the support of all those years.

(3)

Abstract

The purpose of this research is to determine the effect on the success of a company when the founder leaves. It is of interest to research this effect because entrepreneurial exit is an important factor for the scientific field in entrepreneurship. There is some research about entrepreneurial exit, but not in relation to a company in the Dutch health care market with a turbulent environment. There is also no research about what kind of leader the founder should replace.

This specific problem is researched at the company CareEPD. The founder of the company, Willem, decided to leave, and Simon, a former employee of CareEPD, replaced him. This paper researched what kind of effect this transition has on the success of the company. Success has been measured in terms of trust by the employees. The literature review gave more insight about different types of leadership, entrepreneurial companies, entrepreneurial leaders leaving the company, the Dutch health care market and entrepreneurial leaders in the Dutch health market.

The first survey was filled in by the entrepreneur and the manager of CareEPD. The survey consisted of the Big Five personality dimensions test, to see whether the new CEO could be characterized as a manager or an entrepreneur. Zhao & Seibert (2006) researched the big five personality dimensions in combination with entrepreneurial status. With the results of their research it was possible to see how the entrepreneur Willem and the manager Simon scored. The results of the survey showed that they both have managerial and entrepreneurial skills. According to the results of Zhao & Seibert (2006), should Simon score as a manager. However, CareEPD is in a turbulent environment which indicated that both entrepreneurial and managerial dimensions are required to succeed.

The second survey measured the trust of the employees in the new leader. The Trust in Leader Scale (Adams & Sartori, 2008) was used for this. The total results were divided into gender and working period of the employees. The results demonstrates that the employees have more trust in the new manager than in the entrepreneur. The gender of the employee or the time that the employee work for CareEPD did not make a difference in results.

This paper developed a method to research what kind of leader should follow the previous leader in a company within a turbulent market. In conclusion, an entrepreneurial leader leaving the company has a positive effect on the success of a company in the Dutch health market.

Keywords: Entrepreneurial leadership, Dutch health care, founder exit, trust of employees in management

(4)

1. Introduction

The main cause for writing this thesis is the recent development at the company CareEPD, which operates in the Dutch health market. This company develops an electronic patient system for its customers. The company’s founder decided to leave and an employee was asked to replace the CEO. It is of interest to research this transition to determine its effect on the company. A proper overview of the company, the founder’s history, and the transition of management will be enclosed in the case study chapter. On the basis of this company and recent developments, additional theory will be matched. An overview of the literature is presented in the literature review. There is already

considerable research about entrepreneurship, but not on the entrepreneur leaving the company. The theory will develop several hypotheses that will answer the research question. The next sections will introduce the research question, the relevance of this thesis, and the structure of the report.

1.1 Research question

To research the transition of management at the company CareEPD, the following research question was developed: What is the effect on the success of a company in the Dutch health market when the entrepreneurial leader leaves the company?

There are several methods to measure the success of a company: Analysis of the finances, customer satisfaction research, or competition analysis. This thesis will measure success in terms of trust of the employees, because employees experience this change the most. Employees are the foundation of the company. If they do not believe in the new manager, they will not believe in the company. In

conclusion, employees are essential for a successful company.

The following hypotheses will help to find an answer to the research question:

H1: When an entrepreneur is replaced by a manager, the manager should have a high score on

Neuroticism and Agreeableness.

H2: The entrepreneur leaving the healthcare company has a positive effect on the trust of the

employees in the new manager.

H2a: The entrepreneur leaving the healthcare company has a positive effect on the trust of

both male and female employees in the new manager

H2b: The entrepreneur leaving the healthcare company has a negative effect on the trust of the

employees who have worked the longest at CareEPD in the new manager

H3: When an entrepreneur leaves a company in the Dutch health market, the new CEO should

(7)

7

1.2 Relevance

1.2.1 Scientific Relevance

The field of entrepreneurship is gaining more popularity. The theory has been developed over the last 30 years, and the field is growing. Most importantly, people who are interested in entrepreneurship need to understand this development to appreciate the nature of entrepreneurial leadership (Kuratko, 2007). The entrepreneurial exit is important to research to understand the entrepreneurial process because the exit is an essential part of the process. This is important for the entrepreneur, the firm, the economy, and the industry (DeTienne, 2010). The entrepreneurial exit is also relevant to research because it is becoming an increasingly important topic. The aging population is expected to have an impact on the number of exits, which will affect the economy. It is also something which all entrepreneurs will experience in the end, voluntary or not (DeTienne & Cardon, 2012).

The Dutch health market is a field in need of research. Executives in the market are becoming more responsible for realizing important public values. The market is changing from public governance in the companies to a market-oriented industry for a more effective and demand-driven health-care system (Scheer, 2007). Given the turbulence of the external environment, it is important to research whether the entrepreneur leaving is beneficial because he or she will leave with his or her expertise and knowledge developed over the years (Guo, 2006).

1.2.2 Practical Relevance

The practical relevance of this thesis is mostly for the company CareEPD. Although the study is still of great importance for the scientific field, the company CareEPD can apply the results internally. The new manager can work with these results and determine whether improvements can be made. The research will only be performed at CareEPD, which means that it will be a single case study. This is of relevance because other research, like that of Willard et. al. (1992), which focused on 480 employees, had a larger sample size. It is important to determine the effect in a small company, instead of a large one. This company has 30 employees, which will make the research more in-depth. Because it is a company in the Dutch healthcare, it is also of importance to research the field of entrepreneurship within a turbulence environment.

1.3 Structure

The case study used in this research will be first introduced and explained. A theoretical framework will reveal the relevant literature. The main concepts explained in the literature chapter are leadership types, existing entrepreneurial companies, effects of entrepreneurs leaving the company, Dutch health market information, and existing research on entrepreneurial leadership in the Dutch health market.

(8)

8 The five hypotheses developed in the theoretical framework will be preliminary analysed at the

method chapter. The results will be tested and presented in the results chapter. The discussion chapter will analyse the results in more depth. This thesis will end with a summary and with some limitations of the research.

(9)

9

2. Case study CareEPD

1

The Dutch health market changes constantly: Legislative changes, mergers, reorganizations, and new technical developments. The market is turbulent, so it is necessary for the companies in that market to react quickly to those changes. CareEPD is a company operating in that market, which recently had some internal turbulence. The founder of the company, Willem2_{, decided to leave and an employee,}

Simon3_{, replaced him and became the new CEO. CareEPD provides a digital healthcare system. The}

company quickly acts on the changes and turbulence in this market and offers three services. The first is the web service EPDweb4_{. EPDweb is an innovative healthcare management system and electronic}

patient file. The service helps with the availability of information to all those involved in a patient’s treatment, and it takes care of the declarations that belong to the treatment. The second service is supporting care providers in fully understanding EPDweb, carried out by the department Training and Services. The last service is a smartphone app. The app is designed to reduce the administrative burden on medical workers.

The earnings of CareEPD consists of several components: Monthly fees for user licenses, monthly usage fees, and fees for the use of the services of the department Training and Services. The turnover of CareEPD has grown from €320,000 in 2007 to €2.1 million in 2014. The equity increased from €40,00 to €900,000. The company CareEPD was founded in 2003 and consists, at the moment, of 30 employees. CareEPD is working with groups created and coordinated by a coordinator instead of working with a traditional hierarchy. Every group can consist of employees from the same department or of employees from different departments. There are currently five groups. This shows that CareEPD is not a company with a traditional hierarchy, but every company has a founder and CEO.

CareEPD is becoming bigger with the time in terms of the number of employees and the increase in equity and turnover. Every company goes through a different stage of life. The stages are Inception, Survival, Growth, Expansion, and Maturity. Each stage has a different management style:

Entrepreneurial individualistic, entrepreneurial administrative, entrepreneurial, co-ordinate, professional administrative, and watchdog. CareEPD is currently at the Growth stage. This is a characterization for managed growth with ensuring resources, some new product development, accounting systems and simple control reports, and a market with some large competitors and new entries. To achieve stage 4, the management style should be a professional administrative with a top management role decentralization (Scott & Bruce, 1987).

1_{A synonym is used to protect the animosity of the company} 2_{A synonym is used to protect the animosity of the founder} 3_{A synonym is used to protect the animosity of the new CEO} 4_{A synonym is used to protect the animosity of the product}

(10)

10 The founder Willem studied from 1988 to 1991 when he completed his bachelor’s in Law. Afterward, he worked as a consultant at company X. He was involved in some projects at several profit and non-profit organizations in healthcare. From there, he worked at several other companies as a consultant or manager. The main purpose of those jobs was coordinating the projects involving automation and improving the infrastructure. In 1999, he started as a freelance project and risk manager and became the chief executive of Company Y. Company Y was an institution for mental health in the

Netherlands. He became a team leader who was responsible for client administration. He also was involved in another project at Company Z. Company Z worked with a client administration system of the Dutch Ministry: Ladis. This program was only usable at one local PC, and Company Z wanted something that the employees could use at every location in Utrecht. To fulfil these needs, Willem started this project in 2002 with the goal to make it work on January 1st_{2004. The law changed on}

January 1st_{2003, which made it obligatory to register every action in order to gain a compensation}

from the insurer. Before the change in the law, health care providers would receive a substitution. At the end of September 2002, a plan was approved to set up a new system that should be ready on January 1st_{2003. The system was completed in the first week of 2003, and this was the first version of}

EPDWeb. Willem bought the Company Z program’s rights and named it EPDWeb, and this was the start of CareEPD.

However, why was CareEPD founded in 2003? Before the company was founded, the founder worked as a consultant and was looking for a new challenge in his life. One of the options was to go to college again and start a new study. However, his wife was pregnant. A young child and studying made it harder to concentrate, and he, therefore, decided to set up a business. Willem made a start on the development with EPDWeb. He thought it would be more exciting to work on EPDWeb and bring it on the market, instead of working as a consultant. There were several opportunities for setting up a company, but this decision felt right at that time. In 2008, the major growth of the company started because of the DBCs (Diagnosis Treatment Combination) of the GGZ. CareEPD was the only company that had a system that could register and declare DBCs.

As mentioned earlier, the founder of the company decided to leave the company in the summer of 2015 for several reasons. The company became larger over the years. According to the financial results, that change increase the CEO’s workload. He did not have the time to do his work to his full efficiency. He was the one who had to solve the problems that nobody was able to solve at the company. The founder was the person who knew everything about the market, the customers, and the regulations. In short, if there was a question or problem, the easiest and fastest way to resolved it was to go to the founder for an answer. With the growth of CareEPD, the founder experienced two things. At first, the founder was able to solve as much as possible by himself with enough time to deliver a good quality of work. When the company became bigger, this became more difficult because the founder’s workload expanded. Everyone trusted the leader and the autonomy of the employees

(11)

11 declined. The second thing he experienced was that some of the employees’ questions were too difficult for them to solve. That should not be the case, because they should not be dependent on the CEO. The main point why he left the company was that he wanted the employees’ autonomy to increase. A third reason why he decided to leave the company, is that he knew that new management could give more new insights, which is confirmed in Scott and Bruce’s (1987) article. Willem is still the company’s largest shareholder, which is why he is trying to do the best for the company. The new manager is the former Senior Software Developer Mobile, Simon. He is not the founder of the company CareEPD and will, therefore, be characterized as the manager of the company. His duty is to increase the autonomy of the employees and maintain or increase the growth of the company in terms of sales, employees, and trust.

(12)

12

3. Literature Review

3.1 Leadership

Entrepreneurial leadership is becoming more popular but is still quite young in academic research. This lack of research is because many researchers think that it resembles “normal” leadership. Nowadays, the discussion has started as to whether entrepreneurial leadership should be seen as a distinctive and separate status because of the different emerging competencies (Vecchio, 2003). In this paper, entrepreneurial leadership is categorised as a distinctive style of leadership because it focuses on stimulating employees for entrepreneurial opportunities (Renko, Tarabishy, Carsrud, & Brännback, 2015), which is a combination of entrepreneurial and leadership behaviour (Yang, 2008).

3.1.1 Managerial Leadership

Leaders can be described as people who are influential in determining the fate of the organizations in terms of their decisions, strategies, and influence (Dinh, Lord, Gardner, Meuser, & Liden, 2014). Leadership involves influencing the activities of a group toward a goal that has to be achieved (Renko, Tarabishy, Carsrud, & Brännback, 2015). In 2014, Dinh et al. (2014) researched all the existing leadership theories and found 66 different leadership theory domains. There are many theories that still capture the interest of the field, including neo-charismatic theories, information processing theories, trait theories, and leader-follower exchange theories.

Leadership is still an important subject for research, and many research theories evolved over time. The first theory written about leadership is the Great Man theory from 1840 where certain individuals, mainly men, are seen as gifts from God who provide the lightning that the human being needs to be uplifted. In short, great leaders are a god’s gift and not man-made. This is a theory that is not scientific validated (Spector, 2016). The Trait Theory evolved in the 1930s. This is a theory about the personal attributes of the leaders. The theory shows how certain traits are related to leadership behaviour and effectiveness (Yukl, 1989). Shortly after that the behavioural theory arose in the 1940s. This is a theory that not only focuses on the mental or social characteristics, but on the behaviours of the leaders. This theory is mainly based on the behavioural frameworks of the Ohio State University Leadership Studies. Leaders are made, not born, in contradiction to the Great Man Theory. After that, the contingency theories gained interest in the 1960s: A leader adjusts to the situation, also known as situational leadership. Adapting the situation to the leader or vice versa (Dinh, Lord, Gardner, Meuser, & Liden, 2014). The last theories are the transformational and transactional leadership styles from the 1970s.

As mentioned earlier, neo-charismatic theories are still in growing in popularity in research. There is a frequency of 39% of neo-charismatic theories that are being discussed in the ten top-tier journals from

(13)

13 2000 to 2012 (Dinh, Lord, Gardner, Meuser, & Liden, 2014). Entrepreneurial leaders tend to behave in two ways of leadership style: Transactional and transformational leadership. Those two styles are part of the neo-charismatic theories (Yang, 2008). Transactional leadership is focused on motivating through giving rewards and punishments. It also focuses on motivating to inspire and to adopt the vision of the organization and to focus the employees’ energy toward the fulfilment of higher level goals (Ensley, Pearce, & Hmieleski, 2006). The other form of leadership is transformational

leadership, which is by nature entrepreneurial and change orientated, concerning the employees of the entire organizations in a way so that they show proactive behaviour, like taking actions and persisting until the desired goals are achieved (Reyal & Kark, 2004).

Another theory about leadership is Theory X and Theory Y. In 1960, McGregor studied the human side of economic enterprising. He discovered two extremes in terms of leadership (Jacobs, 2004). McGregor believed that how managers motivate their employees depends on their human nature. Managers who are characterized as users of Theory X assume that their employees are incapable of self-direction, need to be forced to work, and avoid taking any responsibility for organizational results. Thus, those managers motivate their employees with tangible rewards, like pay and bonuses, and with the avoidance of disincentives, like threats and discipline. The employees need to be managed. Managers who are characterized as users of Theory Y often assume that employees have an intrinsic motivation to perform, be responsible for organizational results, and are capable of self-direction. This is the complete opposite of Theory X. These managers stimulate their employees through

accomplishing meaningful work, being involved, and providing valuable input to enhance the organization effectiveness (Russ, 2011).

Another leadership theory is contextual leadership. This theory consists of four contexts. The first is stability. In which environment is the leader working? One should consider the macro variables, such as external environment, structure, and size of the company. The second context is crisis, which is a dramatic departure from day to day work to a sudden threat of other priority goals. The third context is the dynamic equilibrium. An organization should be in a stable environment, which can be hard when the company has considerable competition, new technology and innovations, internal initiatives or institutional evolution. The last context is an edge of chaos. This is a transition zone between order and chaos that many complex adaptive systems experience (Osborn, Hunt, & Jauch, 2002).

3.1.2 Entrepreneurial leadership

Entrepreneurial leadership is the convergence and intersection between leadership and

entrepreneurship literature. Several articles contributed to the academic field of the entrepreneurial leadership process (Dinh, Lord, Gardner, Meuser, & Liden, 2014). Entrepreneurial leadership can be defined as “Influencing and directing the performance of a group of members toward achieving those

(14)

14 organizational goals that involve recognizing and exploiting entrepreneurial opportunities” (Renko, Tarabishy, Carsrud, & Brännback, 2015, p. 54).

Entrepreneurial leadership is a distinctive style of leadership, but what exactly makes it distinctive? First, on an intuitive level, the risk-taking propensity of an entrepreneur is higher than a leader in a company (Vecchio, 2003). Entrepreneurs also have a higher need for achievement because research has shown that entrepreneurs have a higher achievement motivation than corporate managers (Stewart, Watson, Carland, & Carland, 1998). The third distinction is the need of entrepreneurial leaders for autonomy. Being a leader at a larger firm supresses personal freedom and the potential for

entrepreneurial behaviour, which is essential to being an entrepreneur. A fourth distinction is self-efficacy. People who believe that they will be the perfect entrepreneur will engage in activities associated with firm start-ups (Vecchio, 2003). Current research has shown that entrepreneurial leadership is more prevalent among founder-leaders because they score higher than non-founder leaders on a measure of entrepreneurial self-efficacy. Non-founder leaders are more focused on leadership in general (Renko, Tarabishy, Carsrud, & Brännback, 2015). The last and fifth distinction is the locus of control. Entrepreneurs have an internal locus of control, which means that entrepreneurs believe that they can determine their own life. (Vecchio, 2003).

Entrepreneurial leadership consists of two phases: The formative growth phase and the institutional growth phase. The entrepreneurial leader is, in the first phase, mainly concerned with inventing a product or service, establishing a market niche, attracting new customers, and marketing the product. The second phase starts when the daily operations become more systematic. The leader is now more concerned with answering questions about long-term stability, for example (Swiercz & Lydon, 2002). According to Bagheri and Pihie (2011), there is a strong belief that entrepreneurial competencies and, in particular, entrepreneurial leadership can be learned, also known as entrepreneurial learning. They, therefore, developed a model for entrepreneurial leadership development based on an integrated approach to entrepreneurial learning. Through experience, observation, social interaction, and reflection, it is possible to become an entrepreneurial leader. Being an entrepreneurial leader consists of scenario enactment, namely pro-activeness and innovations, and cast enactment, consisting of commitment building and specifying limitations. (Bagheri & Pihie, 2011)

It is important to study entrepreneurial leadership because entrepreneurial leaders have the drive to move the world of business forward as they challenge the unknown. This stimulates the economic market (Kuratko, 2007). Potential entrepreneurs, who take the initiative when an opportunity presents itself, can help the local economy or help an organisation to become more innovative (Brazeal & Krueger, 1994). It is, therefore, necessary to research the effect of an entrepreneur leaving the company.

(15)

15 Zhao and Seibert (2006) researched the relationship between personality and entrepreneurial status with the big five personality dimensions. They performed this research because personality variables may have an important role in developing theories about entrepreneurial leadership. Considerable research has been conducted on this correlation, but other researchers could not find an identifiable relationship between personality and entrepreneurship. Zhao and Seibert (2006) thought that that conclusion was premature because of two major developments the last decade. First was the

development of the five-factor model by Costa and McCrae (1992). Second was the development of psychometric analysis. Thus, the purpose of their research was to provide the first meta-analytical review of the relationship between the five-factor model and entrepreneurship.

The five-factor model consists of personality traits in five broad dimensions: Neuroticism,

Extraversion, Openness to Experience, Agreeableness, and Conscientiousness (Costa, McCrae, Scally, Terracciano, & Abecasis, 2010). Neuroticism concerns differences in adjustment and emotional stability. When one scores high on this, he or she will experience more anxiety and hostility. On the opposite, when scoring low, self-confidence and calmness will be experienced. Extraversion involves how assertive, dominant, and talkative people are. People scoring high on this are cheerful and seek excitement opposed to low scoring people who will be more reserved and quiet. Openness to Experience is a dimension that tells whether someone is open to new ideas and exploring. Scoring high on this will mean that someone is creative and innovative. A person who scores low on Openness to Experience is conventional and unanalytical. Agreeableness is someone’s interpersonal orientations. This can result in being someone who has cooperative values opposed to being manipulative (McCrae & Costa, 1992). The last dimension, Conscientiousness, concerns an individual’s degree of persistence and motivation. This will differ from being highly motivated to being low on goal accomplishment (Zhao & Seibert, 2006). Zhao and Seibert (2006) showed, in their research, by conducting a meta-analysis that entrepreneurs scored lower than managers on Neuroticism and Agreeableness. Entrepreneurs scored significantly higher than manager on Openness to Experience and

Conscientiousness. Managers and Entrepreneurs did not differ on the dimension extraversion. Thus, Hypothesis 1 was formulated as follows:

Hypothesis 1: When an entrepreneur is replaced by a manager, the manager should have a high score on Neuroticism and Agreeableness.

3.1.3 Founder of the company

Being an entrepreneurial leader does not mean that one has set up the company.

Entrepreneurs/founders create organizations and are there from the start (Gartner, 1989). A founder locates a business opportunity, accumulates resources, markets products and services, produces the

(16)

16 products, builds an organization, and responds to the government and society (Gartner, 1985). There are different intrinsic motivations why a founder sets up a company. There are two types of

entrepreneurs: Opportunity-driven or necessity-driven. An opportunity entrepreneur examines the circumstances under which he or she has left his or her previous job as a paid employee. Opportunity entrepreneurs pursue more profitable opportunities than necessity entrepreneurs. A necessity

entrepreneur will set up a new business because of the need for income. He or she left his or her previous job involuntary (Tyszka, Cieslik, Domurat, & Macko, 2011). The founders also need knowledge, skills and contacts to be able to begin a new company. They are growth-oriented to make sure that the company is the correct size to provide adequate income (Begley, 1995). The entrepreneur will also be the shareholder who has, in most cases, the cash flow available for the firm, which has a private benefit of controlling the firm and diverting a share of the firm’s resources to him- or herself. The entrepreneur will also invest in the company with his or her own money to prevent financial troubles at the company (Chan, Hu, & Wang, 2003).

3.2 Entrepreneurial companies

Entrepreneurs will set up a company through improvising and change. This is also known as the effectuation theory. Entrepreneurs deal with the ongoing challenge of setting up companies when there are limited means and when the situation is unpredictable and pre-existing goals are absent. They start with three categories of “means”: They know who they are, what they know, and who they know (Nielsen & Lassen, 2012). This is the first principle of the effectuation theory. The second principle is the affordable loss principle. Entrepreneurs limit risk by understanding what they can afford to lose at each step they undertake. This is the opposite of thinking of the profit they could earn. The third principle is the crazy quilt principle. Entrepreneurs build partnerships with the people they select and do not research the competition. The fourth principle is the lemonade principle. Entrepreneurs do not make what-if scenarios, but they interpret bad news and try to create new markets from it. The last and fifth principle is the pilot-in-the-plane principle. Entrepreneurs believe that they can make the future, instead of it being predicted, by their control and expertise.

Once the entrepreneur has set up the company, the business will go through different stages, which are described in growth. There are five phases of growth: Creativity, direction, delegation, coordination, and collaboration. Each phase is characterized by a specific management style to achieve growth, but to achieve a second phase of growth, it is necessary to solve the management problem. Every phase of growth has its own revolution stage/management problem: Crisis of leadership, autonomy, control, and red tape (Greiner, 1997). Scott and Bruce (1987) used the Greiner model of the five stages of growth and proposed an alternative to this model. They added the product lifecycle, which is equal to the five stages: Inception, survival, growth, expansion, and maturity. They also stated that every business may fail at any time, but failure is likely at one of the crisis points, which are extremely

(17)

17 important for the entrepreneur’s business and personal life. The first two stages will have the most insecurity. The founder’s values will be the drive for setting up a firm. This is where the inception stage starts. The most likely crises in this stage is the emphasis on profit, the administrative demands, and the increased activity with a higher demand on time. The company can be a potential workable business entity if it has reached the survival stage. The crises that could happen in this stage are overtrading, increased complexity of expanded distribution channels, change in the competition, and pressures for information.

These stages are valid for start-ups, companies who just started and have been set up by entrepreneurs. In the Netherlands, there are ten types of legal forms for companies. The most important types of legal forms are the following. The first is the sole proprietorship, which has only one owner who is 100% privately responsible for any losses. The second is the private company with limited liability, which consists of a board of directors. The third legal form is the limited company, which distinguishes itself from the second legal form in terms of capital requirements (€45,000 instead of €0.01) and in terms of liability because, with this type, only a board is needed to control any

inappropriate management. The fourth is the general partnership where there are associates instead of a board. All the associates are 100% privately responsible for any losses. The fifth is the limited partnership. The board consists of the managing partners and are supported by the limited partners. The managing partners are 100% privately responsible and the limited partners have limited responsibility (Kamer van Koophandel, 2016).

Being a start-up, or in Dutch terms sole proprietorship, at the beginning does not mean that a company will stay that type of legal form. There are also high-growth firms. Every high-growth firm does not grow in the same way. There are seven growth measures that will measure how large a firm has grown: Super absolute grower are absolute both in sales and employment; steady sale growers only grow in sales; acquisition growers have a high growth in sales, achieved by acquiring other firms; super relative growers have a strong, but somewhat erratic, development of sales and employment; erratic on-shot growers are, in general, during the year not good in development, with the exception of a single year; the employment growers are relatively better in growth in employment than general growth; and steady overall growers have a weaker development overall (Delmar, Davidsson, & Gartner, 2003).

The opposite of growth is downsizing, which is currently happening in the Netherlands at some big companies, for example Blokker, which laid off 390 employees (Lonkhuyzen, 2016). The Financieel

Dagblad, a magazine in the Netherlands, stated that big stock market listed companies of the

Netherlands have again declined in profits the last three months. According to the IMF, the growth forecast will be tempered because of the global economy. This shows that companies are dependent on their environment as to how well they will do in the market (Molenaar & Kakebeeke, 2016).

(18)

18 Companies should change their strategies with, for example, new management. De Bijenkorf decided to only focus on the high segment of the market opposed to Action who benefits from the economic crisis (Lonkhuyzen, 2016).

3.3 Entrepreneurial leaders leaving the company

As mentioned earlier, entrepreneurial leaders experience two phases in their careers. The transition between these phases is of great importance. This transition is a strategic inflection point, and it represent a time in the life of the business where the requirements for having success have profoundly changed. That’s why the entrepreneurial leaders should acquire new leadership competencies

compatible with the changing nature of the business (Swiercz & Lydon, 2002). The leader has learned his or her current competencies to be successful and now has to change them. These leaders often become blinded by previous success, which is also called “inertia of success” or “paradoxical intent” (Frankl, 1977). Not all of the entrepreneurial leaders are able to change these competences and that is why several authors suggest that entrepreneurs should relinquish their power to professional managers (Rubenson & Gupta, 1992).

Vecchio (2003) developed a model of entrepreneurial leadership that involves the stages pre-launch and launch, on-going concern, and exiting. Ultimately, entrepreneurs disengage and leave the

company even if the exit is only via their own deaths. Psychological and economic factors can have an influence on entrepreneurial withdrawal, for example, problems of fatigue and family succession. Economic factors can be a new strategy in the organization of financial difficulties.

It is important to research the effect of entrepreneurs leaving on the business performance of the company because the exit of the founder has a significant effect on the firm and will be a milestone in the organization (DeTienne, 2010). Becker and Hvide (2013) researched the effect of the death of 500 entrepreneurs on the performance of their businesses. They found that entrepreneurs strongly affect firm survival. The entrepreneur leaving the company has a strong effect on the quality of the firm. The departure can have a negative side because it could diminish the organization’s performance, disrupt work routines, and increase employee insecurity (DeTienne, 2010). There is also an effect on a company’s share price when senior management leaves the company because of a sudden death. The effect of the death of the CEO is negative, but it is positive for CEOs that were also founders of the company (Johnson, Magee, Nagarajan, & Newman, 1985). The impact of the entrepreneur leaving the company can be negative but also positive when the acquisition of new resources and new energy occurs (Haveman & Khaire, 2004).

(19)

19 There are some articles where the effect of the entrepreneur’s death on the success of the company have been researched, but there is little research about the effect on the company when the

entrepreneur leaves the company and is replaced by a manager. This is extremely important to research because a manager is different from an entrepreneur in his or her way of working. Another article researched how entrepreneurs, small business owners, and corporate managers differs in terms of operating at their work: Achievement motivation, risk-taking propensity, and preference for innovation. Entrepreneurs have a greater need than small business owners and corporate managers for achievement motivation, risk-taking propensity, and preference for innovation (Stewart, Watson, Carland, & Carland, 1998). This shows that if an entrepreneur is replaced by a corporate manager, there will be a decline in achievement for motivation, risk-taking propensity, and preference for innovation.

Other literature proved the contrary. There will be a point that the founder of the company has achieved a solid foundation for the business. At that point, the position of the founder will be put to discussion. Founders who enjoy the business and want to focus on the growth of the company will become something similar to non-founding managers. On the contrary, some founders’ drives are exclusive to the company’s start-up phase. Once the company has developed itself to a further phase, the founder may decide to sell the company and move on to find a new challenge (Begley, 1995). However, will it be a good thing to replace the founder with a manager? Several literature studies say yes. When a company grows rapidly, the founder’s manager capabilities will be soon outpaced. That founder should be replaced by professional managers if the company’s performance is to be

maintained or improved. When a founder stays in a company, firm performance could start to

deteriorate because of delayed decision making, inability to delegate authority and responsibility, and the unwillingness to master new sets of skills needed for success in a larger organization (Willard, Krueger, & Feeser, 1992). A founder is likely to leave when there is an increase in employees, rather than an increase in sales. This shows that leadership is an important factor. If a founder participates on a board through equity ownership, he or she appears to have more power and influence that permit founders to protect their own positions (Boeker & Karichalil, 2002). If the entrepreneur is replaced by a professional manager, the company could gain specific management skills, the ability to raise more cash and expand into other markets and products, and an increase legitimacy among employees and in the market (DeTienne,2010). Thus, Hypothesis 2 is as follows:

Hypothesis 2: The entrepreneur leaving the healthcare company has a positive effect on the trust of the employees in the new manager.

(20)

20 Trust is a key factor in organizational success and human resources practices (Morgan & Zeffane, 2003). The change of management has an influence on the company, and therefore also on the employees, so trust is essential if change is to succeed. Change creates uncertainty among employees which will result in their working behaviour. Management will react to this and have negative interpretations of the employees’ reaction. This is a vicious cycle that should be avoided before it has the chance to start (Sørensen, Hasle, & Pejtersen, 2011). According to Morgan and Zeffane (2003), change has a negative effect on trust. Mutual trust is needed to make organizational change a success. If not, the company will downsize because of the declining trust, and the employees’ negative

experiences of organizational change are likely to increase the level of cynicism. Diminishing this negative effect of change on trust can be best achieved through consultation, participation, and empowerment (Morgan & Zeffane, 2003).

Measuring trust is a key variable in several fields including sociology, social psychology, political science, and economics. The accuracy of measuring trust is an important factor when used in the scientific field. (Miller & Mitamura, 2003) Miller and Mitamura (2003) researched the validity of a survey question that is commonly used for measuring generalized trust. The researchers concluded that trust levels can be generalized, but it would be of more value if those results can be generalized across certain categories. It is therefore important to look at the perception of trust by different levels. This is what Perry & Mankin (2004) applied in their research, where they examined employee trust in management to determine if similar variables are correlated with trust. One of those variables was gender. Gilbert & Tang (1998) researched that a different gender than the manager may feel lower levels of trust. Perry & Mankin (2004) researched whether being a female has an impact on the level of trust in management at a fire municipal department and a private manufacturing company. Female was the chosen gender because of the male managers at both companies. The result of this test was not significant enough to state that this is a good predictor of trust in the CEO. Yamagishi & Yamagishi (1994) also showed in their research that several studies that use surveys to measure trust do not see a significant gender difference. Therefore, hypothesis 2b is as follows:

Hypothesis 2a: The entrepreneur leaving the healthcare company has a positive effect on the trust of both male and female employees in the new manager

Another category is the period that an employee work at a company. Loyal employees have more trust in the company than other employees. According to the model exit-voice-loyalty, loyal employees will choose to voice their concerns so that the organization is in a stronger position to address working problems. Employees who are not loyal would rather exit in response of those workplace problems. (Luchak, 2003) Another study indicates that trust is a feature of a relationship that forms over time,

(21)

21 which makes the behaviour of someone easier to predict. Thus, the period that an employee has worked under a manager is related to the level of trust in him or her. (Perry & Mankin, 2004) Perry & Mankin (2004) researched the relation between trust in management and the period of working for a manager, which was statistically significant correlated with each other. So looking specifically at the working period of the employees and not employees in general, those who have worked the longest under a manager have a higher level of trust. If the manager decides to leave, the impact on the level of trust is the most on the employees who have worked there the longest. Thus, hypothesis 2b is formulated as follows:

Hypothesis 2b: The entrepreneur leaving the healthcare company has a negative effect on the trust of the employees who have worked the longest at CareEPD in the new manager

3.4 The Healthcare Market

3.4.1. The Dutch Healthcare Market

Everyone in the Netherlands is required by law to have health insurance. This insurance covers the costs of a visit to a general practitioner, a visit to an hospital, or for any needed medicine

(Rijksoverheid, 2016). There were two insurance options to choose from before 2006. These where the private health insurance for the rich or the stage coverage for the rest. The law for insurance

companies changed in 2006 from a government-run system to an insurance market that aims to be patient-focused and competitive. The government only makes sure that the system is regulated and monitored for quality, ensuring universality of care (Daley & Gubb, 2013). Every insurance company has to offer the same basic products and services, which are defined by the government. Each

insurance company offers its own additional products and services, which is a wide variety (Okma & Crivelli, 2013). Everyone who is older than 18 years in the Netherlands has an “own risk” with his or her insurance policy. This is a specified amount of 385 euros per year, in 2016, that the insured must pay before an insurance company will pay a claim (Rijksoverheid, 2016). In some situations, the insured is obliged to pay his or her personal contribution. The government determines for which care this applies, for example, medicine or patient transport, and how high that contribution is

(Rijksoverheid, 2016).

The Dutch healthcare system consists of three compartments. First is the long-term care for chronic conditions. Second is “basic care”, for example a visit to a general practitioner (GP), a short-term stay at a hospital, and specialist appointments or procedures. The third compartment is supplementary care, for example the dentist and physiotherapy. The care in the Netherlands is also divided into three compartments. The first is the primary care, which is taken care of by a general practitioner.

(22)

22 Secondary care is reached through accident and emergency department or with a referral from the general practitioner. When someone receives the tertiary care, they will need specialized care not offered in secondary care (Daley & Gubb, 2013).

A multitude of information about the patients is handed over to the GPs, hospitals, pharmacies, and to the health insurance companies. That is why the government developed a law to protect personal information. The authority of personal information is monitoring this. Medical workers are obliged to gather the essential information for the health insurance companies so that they will know whether the patients are entitled to reimbursement (Rijksoverheid, 2016). The government introduced the “care infrastructure”, so that medical workers are able to exchange information about the patients and their use of medicine. The patient has to give permission that the general practitioners, pharmacies, and medical specialist can see that patient’s medical data (Rijksoverheid, 2016). This only shows a small part of the healthcare industry and the regulation that every company in healthcare needs to

incorporate.

3.4.2. E-Health

In 2012, Minister Schippers started a permanent monitor for E-health (Rijksoverheid, 2012). E-health stands for digital care. For example, a patient can book an appointment online to visit his or her general practitioner. The biggest advantage is that people can have more insight into their own health. They could also share that digital information with their practitioner to prevent any miscommunication between the care providers (Rijksoverheid, 2016). The e-health monitor shows percentages of usage of different e-health applications in the Netherlands, for example, making online appointments,

requesting repeat prescriptions online, and the use of the electronic patient file by healthcare providers.

From 2013 to 2015, the use of the electronic patient file by general practitioners increased from 93% to 98%. The usage of medical specialists increased from 66% to 79% in three years (Krijgsman, et al., 2015). This shows that e-health is becoming more popular. This does not mean that this enthusiasm about e-health is the same for the uptake and utilization in practice. Implementing new technology can be a great difficulty at the micro level for professionals and at the meso level for healthcare

organizations (Mair, et al., 2012). The ethical issues about the electronic patient file are overshadowed by these technical issues but are important for the success or failure of the electronic health record systems. These issues are equity and justice in a system, who benefits from the system and who should pay for it, the legitimate use of personal information for public purposes, how to implement privacy, and what is the degree of control (Spriggs, Arnold, Pearce, & Fry, 2012).

E-health systems provide many benefits, like a reduction in costs, improved quality of care, mobility and recording patients’ medical use. In E-health systems, the privacy and security regulations are

(23)

23 important because the patient may encounter serious problems if sensitive information is disclosed. This is one of the issues that is increasingly in the news nowadays. Harmonisation is needed in terms of standards and regulations related to privacy and security concerns. It is, therefore, also important to look into wireless internet technologies, which the healthcare systems use (Fernández-Alemán, Carrión, Pedro, Lozoya, & Ambrosio, 2015).

3.5 Entrepreneurial leadership in the Dutch Healthcare Market

Being an entrepreneur in the healthcare market can be a challenge, and it is, therefore, more complicated to succeed. This can be related to the contextual leadership theory, explained earlier. There are several contexts to be considered, for example, the context dynamic equilibrium and an edge of the chaos, which applies in the healthcare industry. Successful leaders in healthcare organizations must overcome their barriers to resist change. Working in a healthcare industry is all about the changing environment. Transformational leadership would appear to be the best style of leadership to be successful in this industry (Kumar, 2009). Giltinane (2013) agreed with this but believed that a situational leadership approach would be more suitable because of the changing nature of the industry. Situational leaders adapt their style of leading to particular situations and recognising any complexity that requires a different approach (Giltinane, 2013).

The healthcare industry is a changing environment because the drive is to achieve sustainable

healthcare. The aging population, increase of people living unhealthily, and an increasing demand for a higher quality of healthcare jeopardizes the sustainability of the environment. A transition is needed through innovations, ranging from new products and services to new systematic changes.

Entrepreneurs are the people who could make this transition happen because of their ability to discover and innovate. There are four types of sustainable healthcare entrepreneurs: Revolutionary, evolutionary, innovative, and isolated. Revolutionary entrepreneurs believe that they can directly and successfully induce system change. Evolutionary entrepreneurs also believe this but also believe they can induce system change through their innovation. Innovative entrepreneurs are only able to

innovate; they are not able to cause structural changes. Isolated entrepreneurs believe that the system context is irrelevant for the success of their innovation (Janssen & Moors, 2013).

Guo (2006) developed an integrated model of management and entrepreneurship processes for health services organizations in 2006. An entrepreneurial manager has several roles to perform: A designer, strategist, innovator, risk taker, and communicator. The entrepreneurial management processes should support this and recognize opportunities, create innovation, invest in organizational resources, and convert structure. This should cause patient satisfaction, an improved quality of care, enhanced performance, and survival and growth of the organization.

(24)

24 Another article of Guo (2009) addresses the core competencies of an entrepreneurial leader in

healthcare organizations to ensure the survival and growth of healthcare organizations in the US. The approach of identifying the core competencies of entrepreneurial leaders is useful for practitioners in complex healthcare organizations. With the development of the competences, leaders could enhance their skills to become more effective. Healthcare organizations can use this knowledge as a tool to understand more about leadership and improve the business. An entrepreneur should have in-depth knowledge of the external and internal company environment and should develop risk-taking and innovative strategies to tackle challenges in the environment. An entrepreneur should also master the internal organization. He or she should be skilled at performance management, which consist of information, finance, risk, and quality management. The last competence an entrepreneur should possess is interpersonal skills via the use of communication, human resources, and motivation to develop one’s self and others. This is a combination of being an entrepreneur with managerial skills. Thus, Hypothesis 3 was formulated as follows:

Hypothesis 3: When an entrepreneur leaves a company in the Dutch health market, the new CEO should have entrepreneurial and managerial skills.

This article of Guo (2009) shows that it is important to research the relationship of an entrepreneurial leader and the health market because of the turbulent market. The article researched the competences an entrepreneurial leader should have, but not the effect when the entrepreneurial leader leaves the company. The Dutch health market is also different than the US health market. In the US market, there is some research about the entrepreneurial leader leaving the company and the effect of this on the company, but not in the Dutch health market.

3.6 Summary

The literature review gave more insight into the differences between an entrepreneur, a leader, and a founder. The literature review then disclosed more information about what entrepreneurial companies are and what existing literature addressing the entrepreneur leaving the company. It was also important to find articles about the Dutch healthcare market and the product that CareEPD offers to understand more about the environment CareEPD is operating in. In the end, entrepreneurial leadership in the Dutch healthcare market was discussed, and five hypotheses were developed based on this literature. Hypothesis 1 will test Zhao and Seibert (2006) findings to determine whether there is a difference between the former CEO Willem and the current CEO Simon with the help of the big five personality dimensions and entrepreneurial status. The second hypothesis was developed to test the existing theory and to determine whether the employees of the CareEPD still have trust in the company in terms of

(25)

25 success in general. Hypothesis 2a and 2b also research this effect, but make a distinction in gender and in the period that the employee works at CareEPD. The third hypothesis was developed to test whether it is essential to be a manager or an entrepreneur as the leader of the company in the Dutch health market. Does the environment have such a big impact that CareEPD is in need of another type of leader than suggested in the theory? The hypotheses will answer the following research question: “What is the effect on the success of a company in the Dutch health market when the entrepreneurial leader leaves the company?”

(26)

26

4. Methods

This paper attempts to answer the research question with a quantitative research method. Quantitative research is applied in this thesis for several reasons. First, this approach was chosen because it tests the existing theory. The second reason is the employees’ workload. As CareEPD is a company in a

turbulent market, the employees’ workload will remain high. It was, therefore, too time-consuming to make appointments for interviews. This way the employees could complete the survey at a time that was convenient for them and was it possible to have a higher response rate in terms of the number of employees. The third reason is that a survey also guaranteed their animosity because the opinions of the employees are such a delicate subject to research. The employees should feel completely free to elaborate on this subject because of the guaranteed animosity. There were also some qualitative, open-ended questions in the survey. This way it was possible to observe objective facts and look, at the same time, at the perceptions of those involved with these facts (Greener, 2008).

Two surveys were distributed to obtain answers to the hypotheses and the research question. The first survey was completed by the entrepreneur who decided to leave the company and the current manager of CareEPD to determine whether they have the same characteristics, reflected in the Big Five

personality dimensions. The second survey tested the trust of the employees in the company CareEPD because of the change in management. Trust was chosen as a measure because the employees are the one who will experience the most effect of the change of management. Sales developments are not reliable because of the recent departure of the sales manager. Interviewing the customers is not reliable because they do not have enough inside information about the company. The purpose of this paper is to research the effect on the success of the company and this will be measured through the trust of the employees in the previous leader and current leader.

4.1 Sample

CareEPD consists of four departments, shareholders, and the CEO. One of the shareholders is the entrepreneur Willem, who decided to leave the company as CEO. Simon, a former Senior Software Developer Mobile working in the Development department, replaced him. The department Training and Services consists of 11 employees, Development has 15 employees, Sales has 3 employees, and Finance has 1 employee for a total of 30 employees working at CareEPD. CareEPD is not a company with a traditional hierarchy because it doesn’t believe in hierarchy. The company wants the employees to be as autonomous as possible. All the employees of CareEPD received a survey to complete and 21 employees completed it. The other nine employees were temporary employees who could not

contribute as much as the other employees or were on leave. The survey consisted only of obligatory questions and one question was whether the employee had worked for the entrepreneur Willem or whether they became an employee of CareEPD when Simon was the CEO. Twelve people worked for both Willem and Simon, and the other nine only for the current manager, Simon. Of the 21 employees,

(27)

27 were 10 males and 11 females. In Appendix 1, a distinction is made between how many males and females worked for only the manager or for the manager and the entrepreneur excluding the surveys of the employees with missing values. Most of the employees were between 30 and 49 years old, namely 11. 8 were between 18 and 29 years old, and 2 were between 50 and 64 years old. Fourteen of those employees have completed university degrees. There was a great diversity in the time period that they work for CareEPD. Two people work there less than six months, seven people between six months and one year, six people between one and three years, two people between three and five years, and the remaining four people worked for more than five years at CareEPD.

This data shows that there is an equal variety in gender, a greater variety in the period of working and whether they worked for the entrepreneur Willem. Many theory exists about gender difference at the work floor and most of them state that there will be no gender difference in terms of trust. It is

important to research this effect, to test the existing theory. Is it true that there will be no difference or does the impact of the turbulent environment state otherwise? Another distinction that will be made in the results is the working period of the employees. Employees who worked more than five years at the company will perceive the change of management in a different way than employees who only worked there for a year. The employees who worked less than a year at CareEPD did not experience the growth of the company and how the company achieved that. There is also a great variety in terms of working period. Although the age, education, and departments are mentioned in the sample, a distinction will not be made in the results because CareEPD does not have a traditional hierarchy. Employees work in groups together from different departments with a coordinator as the head of the group. There is not a big enough distinction between age and education. The groups chosen were also the one who had the most impact on the results for the company.

This paper only used one case study because it is difficult to find a company that recently underwent a change of management. A founder being replaced by a manager is a circumstance that does not often happen. When that rare circumstance happens, it is important to research this transition more in-depth to gain as much information as possible. Finding multiple case studies for this type of problem is quite difficult. Not many companies announce beforehand that there will be a change of management. Even then, companies are not always willing to let “a stranger” into the company. Many researchers consider this type of research unscientific because many journals in management publish few articles with just one case study. The researchers see the use of multiple cases as the perfect approach, but their opinion is based on the examples in the journals. Authors should make an effort to legitimize the single case study by meeting positivist criteria. Those criteria are increasing rigor, generating theory through a single case study, and falsifying or refining the theory (Mariotto, Zanni, & De Moreaes, 2014). The research of Eisenhardt and Graebner (2007) also used a single case for theoretical sampling. They choose this type of sampling because the use of one single case study can be

(28)

28 revelatory, an extreme exemplar, or an opportunity for unusual research access. Using a single case study exploits opportunities to explore a significant situation under rare circumstances.

4.2 Data collection

4.2.1 The Big Five Personality Dimensions

Surveys were selected as the most appropriate method for examining the trust of the employees and the personality dimensions of the entrepreneur and manager. The surveys were distributed via email. For this research it is important to discover certain characteristics of the entrepreneur and the current manager to determine whether there is a big difference in their leadership styles. To test the

personality dimensions of the entrepreneur and the manager, an existing survey was used. This survey is the International Personality Item Pool, which is based on Goldberg’s 1992 and 1999 articles and included in Appendix 2. The survey is available in the public domain at http://ipip.ori.org/New_IPIP-50-item-scale.htm. The survey includes five factors with ten items each. Those five factors are Extraversion, Agreeableness, Conscientiousness, Neuroticism, and Openness To Experience. The respondents rated the items from “Very Inaccurate” to “Very Accurate” on a 5-point Likert scale. The questions were or negatively or positively stated. This encourage the respondents to pay close

attention to the items, which should increase the validity of the answers. For the factor Extraversion, an example of a question is “I’m the life of the party” and for Agreeableness “I insult people”. The researchers of this survey performed a meta-analysis. They found that a manager scores differently from an entrepreneur on the Big Five Personality Dimensions. They developed a scoring table, which can be applied to a Big Five Personality survey, because of this meta-analysis. Other researchers can use this for their research. It is important to use this test in this research because I have characterized Willem as the entrepreneur and Simon as the manager in this paper. However, can I make those characterizations? Maybe Simon would score higher on certain dimensions that would characterize him more as an entrepreneur than a manager.

4.2.3 Trust of the employees

Another survey was distributed to the employees to test their trust in the company. This survey can be seen in Appendix 3. The survey started with some demographic questions to gain some general information about the employees: Gender, age, and education level, as well as in what department they work and for how long. These are questions with a nominal scale. It was necessary to make a

distinction between the employees who worked for the previous entrepreneur and those that just worked for the current manager. This way it was possible to determine which employees saw the change of management happen and knew the situation before the change. Their perception of trust in the management is the most important one. The current employees who did not work for the

(29)

29 atmosphere in the company, the turbulence, and the changing environment of the company. They also know that Simon is new in his position. To test whether they believed Simon was doing a good job, an existing survey was distributed to all the employees. The employees who worked for the entrepreneur and the manager completed the same questions about trust for Willem and Simon. Employees who did not work for the entrepreneur were only required to answers the questions about trust in Simon. The questions are drawn from the Trust in Leaders Scale (Adams & Sartori, 2008) to test the Benevolence, Integrity, Predictability, and Competence of the leader, which will translate to trust of the employees. Benevolence shows how leaders score on being genuinely caring and concerned. Integrity shows how they score on being honourable and that their words match their actions. Predictability tells whether the employees believe the leaders’ behaviour is consistent, and

Competence shows how leaders’ score on the level of skills, competencies, and characteristics that allow them to influence others. Each item consists of five questions, which results in a total of 25 trust questions. Employees were asked to rate their agreement with the items using a 7-point Likert scale ranging from “Completely Disagree” and “Completely Agree”. Examples of the questions are “I believe my leader is fair” and “My leader performs their job well” (Adams & Sartori, 2008). The survey ended with two open questions. The first asked the employees whether they still have the confidence in CareEPD, despite the change of CEO in the company. The last question asked the employees to give the new manager Simon some feedback so that their trust in CareEPD will stay the same or increase.

4.3 Data analysis

4.3.1 The Big Five Personality Dimensions

The purpose of this survey was to score the entrepreneur and manager on the five dimensions. According to Zhao (2006), entrepreneurs score lower than managers on Neuroticism and

Agreeableness. Entrepreneurs score significantly higher than managers on Openness to Experience and Conscientiousness. Managers and entrepreneurs do not differ on the dimension Extraversion. These results should give more insight into how the founder and new CEO can be characterized. Are they entrepreneurs or managers?

With the use of the program SPPS, a frequency analysis showed the response number, minimum, maximum, mean, and standard deviation of the results. A Cronbach’s alpha showed the reliability of the test. Bar charts showed how high the entrepreneur and manager scored on the five personality dimensions. Twenty-four statements in the survey were stated negatively and needed recoding, which was done in SPSS. The results of the tests and the bar charts address Hypotheses 1 and 3.

(30)

30

4.3.2 Trust of the employees

The results of this survey address Hypotheses 2, 2a and 2b. Before using the data that’s in SPSS, several tests were needed to determine whether the data was good. First, I checked the reliability of the survey with the Cronbach’s alpha. The Cronbach’s alpha internal consistency coefficients for the Trust in Leader scales needs to be higher than 0.7. Adams and Sartori (2008) did this in their article, and every scale scored higher than 0.7. Also, the validity is an important factor. An explanatory analysis showed that the factor Benevolence was not valid. Adams and Sartori (2008) used a confirmatory factor analysis to determine whether the validity of the survey was high enough. This was indeed the case, and therefore, the survey was suitable to distribute. Then, a descriptive frequency test showed the number of respondents, minimum, maximum, mean, and standard deviation of the results. This test also showed the missing values in SPSS. Recoding was not needed for this survey because all the statements were positive stated. To analyse the data more in depth, a Wilcoxon signed ranks test was performed. The answers for the survey are in an ordinal scale. The purpose of this research is to compare the surveys. Therefore, I performed a Wilcox Sign for the significance test. The Wilcoxon signed should have at least ten paired observations. This way the distribution of the W-value approximates a normal distribution (Statistics Solutions, 2016). The critical value for this two-sided test with a sample size of 11 and a two-sided level of significance is α = 0.05. Hypothesis 2, 2a and 2b will be rejected if the significance level is higher than 0.05.