RESEARCH INTO THE INFLUENCE OF
ORGANIZATIONAL CULTURE ON THE DEGREE OF
ENTREPRENEURSHIP IN FAMILY BUSINESSES
ALONG DIFFERENT LIFE CYCLE STAGES
Master thesis, MSc Business Administration, Small Business & Entrepreneurship
University of Groningen, Faculty of Economics and Business
TIM SMIT
Student number: s2063832
Professor E. D. Wiersmastraat 36
9713 GJ Groningen
Tel.: +31 (0)6 – 53 42 41 62
E-mail: timsmit87@hotmail.com
First university supervisor: prof. dr. P.S. Zwart
Second university supervisor: dr. ir. H. Zhou
Abstract – The influence of organizational culture on the degree of entrepreneurship is hardly
researched hitherto. In this article the research of the influence of different dimensions of organizational culture and entrepreneurship over certain life cycle stages within family businesses is done. In 2004 Zahra, Heyton and Salvato already did some research in this subject, they concluded that there is a different influence of certain dimensions of organizational culture on entrepreneurship between family- and non-family businesses. In this research, besides the dimensions of Zahra et al. (2004), other dimensions of organizational culture are added and tested on entrepreneurship. Within twelve family businesses questionnaires are conducted in order to perform a regression analysis with SPSS to be able to give an answer on the main research question and propositions. Unfortunately not enough significant results were found to give a decent answer on the main research question. In this way, this article must be seen as a new insight in this particular research field. There can be concluded that there is a certain variety in the influence of organizational culture on entrepreneurship across different life cycle stages within family businesses.
TABLE OF CONTENTS
1. INTRODUCTION 5
2. LITERATURE REVIEW 8
2.1ORGANIZATIONAL CULTURE 8
2.1.1 Defining organizational culture 8
2.2ENTREPRENEURSHIP 11
2.2.1 Entrepreneurial orientation 12
2.3LIFE CYCLE STAGES 15
2.4FAMILY BUSINESSES 17
2.5DIMENSIONS OF ORGANIZATIONAL CULTURES 19
2.5.1 Individual vs. group orientation 20
2.5.2 External orientation 21
2.5.3 Decentralization of coordination and control 22
2.5.4 Short- vs. long-term orientation 22
2.5.5 ‘Strong’ conservative cultures 23
2.5.6 Organizational change 25
2.5.7 Informal organizational culture 25
2.5.8 Taking the organizational environment into account 26
2.6CONCEPTUAL MODEL 27
3. METHODOLOGY 28
3.1SAMPLE DESCRIPTION 28
3.2DATA COLLECTION 29
3.2.1 Organizational life cycle stages 29
3.2.2 Entrepreneurial orientation 31
3.2.3 Dimensions of organizational culture 32
3.2.3.1 Dimensions of organizational culture of Zahra et al. (2004) 32 3.2.3.2 Remaining dimensions of organizational culture 33
3.3DATA ANALYSIS 33
3.4QUALITY OF RESEARCH 34
4. RESULTS 36
4.1RESPONSE QUESTIONNAIRES 36
4.2RESULTS ORGANIZATIONAL LIFE CYCLE STAGES 37
4.3RESULTS ENTREPRENEURIAL ORIENTATION 38
4.4RESULTS ORGANIZATIONAL CULTURE 38
4.5RESULTS LINEAR REGRESSION ANALYSIS 40
5.1ORGANIZATIONAL LIFE CYCLE STAGES 42
5.2SPSS RESULTS 42
5.3PROPOSITIONS 43
5.3.1 Proposition individual vs. group cultural orientation 44
5.3.2 Proposition external orientation 44
5.3.3 Proposition decentralization of coordination and control 45 5.3.4 Proposition short- vs. long-term orientation 45
5.3.5 Proposition strong conservative culture 46
5.3.6 Proposition organizational change 46
5.3.7 Proposition informal organizational culture 47
5.3.8 Proposition taking the external environment into account 47
6. CONCLUSION 49
6.1SUB QUESTIONS 49
6.2MAIN RESEARCH QUESTION 51
6.3LIMITATIONS 52
REFERENCES 53
APPENDIX 1, THE COMPETING VALUES MODEL (QUINN, 1988) 59
APPENDIX 2, OPERATIONALIZED QUESTIONS OF INNOVATIVENESS, PROACTIVENESS AND
RISK-TAKING (LUMPKIN & DESS, 2005) 60
2.1INNOVATION 60
2.2PROACTIVENESS 61
2.3RISK-TAKING 62
APPENDIX 3, ORGANIZATIONAL LIFE CYCLE MODEL (SMITH ET AL., 1985) 63 APPENDIX 4, ORGANIZATIONAL LIFE CYCLE STAGE QUESTIONNAIRE OF SMITH ET AL. (1985) 64 APPENDIX 5, DESCRIPTION OF SAMPLE AND CLUSTERS BY MEAN SCORES (SMITH ET AL., 1985) 66 APPENDIX 6, QUESTIONNAIRE ORGANIZATIONAL CULTURE DIMENSIONS OF ZAHRA ET AL. (2004) 67 6.1.1QUESTIONNAIRE OF INDIVIDUAL CULTURAL ORIENTATION 67
6.2QUESTIONNAIRE OF EXTERNAL ORIENTATION 68
6.3QUESTIONNAIRE OF DECENTRALIZATION OF COORDINATION AND CONTROL 69
6.4QUESTIONNAIRE OF FINANCIAL CONTROLS 70
6.5QUESTIONNAIRE OF STRATEGIC CONTROLS 70
APPENDIX 7, QUESTIONNAIRE OF ORGANIZATIONAL CULTURE DIMENSIONS (ALL IN DUTCH) 71
7.1QUESTIONNAIRE OF ‘STRONG’ CULTURES 71
7.2QUESTIONNAIRE OF ORGANIZATIONAL CHANGE 72
7.3QUESTIONNAIRE OF INFORMAL ORGANIZATIONAL CULTURE 72
1. Introduction
Small businesses should create value for being viable; according to Zahra, Neubaum and Huse (2000) entrepreneurship is important for value creation. A lot of research is done within small businesses in how they could create value. One of the subjects that is of influence on how entrepreneurial an owner manager behaves is organizational culture. Zahra, Hayton and Salvato (2004) found in their research that organizational culture is an important strategic resource that family firms can use to achieve a competitive advantage by promoting entrepreneurship and enhance the distinctiveness of these firms’ products, goods and services. They also state that entrepreneurship enables family firms to obtain a competitive edge over their rivals by reducing the cost of operations. Applying the resource based view (Barney, 1991), the results of the research of Zahra et al. (2004) show that four dimensions of a family firm’s culture significantly influence their entrepreneurial activities (i.e. individual cultural orientation, external cultural orientation, decentralized coordination and a short vs. long-term time orientation). Organizational culture is defined as the enduring values that shape the firms’ characters and how they adapt to the external environment (Dertouzos, Lester & Solow, 1989). One could conclude that when an organization is taking the external environment into account, this could influence the degree of entrepreneurial orientation of that organization. According to Lumpkin and Dess (1996, p. 148), entrepreneurial orientation is described as ‘posited to reflect the extent to which firms establish the identification and exploitation of untapped opportunities as an organizing principle of the firm’. In other words, the extent to which firms have the ability to see and exploit untapped opportunities, which is an important subject of the organizations viability.
businesses, which are; the inception stage, the high-growth stage and the maturity stage. So several owner managers have a different view on entrepreneurship and are influenced by different cultures within a family business. Therefore, the research question for this research paper will be:
‘To what extent does organizational culture influence the degree of entrepreneurship of Dutch family businesses across different life cycle stages’.
To answer the main research question, different subjects have to be researched, like family businesses, organizational culture, life cycle stages and entrepreneurship. Those subjects are the basis of this thesis. To give an answer to the main themes and to support the research question, different sub questions are made. The sub questions are:
- What is stated in the literature concerning family businesses, i.e. what are family businesses?
- Which different life cycle stages of a family business could be separated? - What is entrepreneurship and how could it be measured?
- What is stated in the literature about the influence of organizational culture on entrepreneurship in family businesses?
2. Literature review
This chapter contains a review of existing theories on organizational culture, life-cycle stages, entrepreneurship and family businesses, which concerns the main subjects of the content of this research paper. The different subjects are clarified first, after that, propositions are made. The propositions are partly based on the article of Zahra et al. (2004), those authors already researched the influence of organizational culture on entrepreneurship. Within this article, the differences between organizational culture and entrepreneurship between life cycle stages are added to the scrutiny of Zahra et al. (2004). Besides the organizational culture dimensions of Zahra et al. (2004), other dimensions of organizational culture – who have influence on entrepreneurship – will be tested in this article, which are elaborated in the last part of this chapter.
2.1 Organizational culture
Within the organizational culture literature, a lot of authors defined organizational culture. In this chapter organizational culture is discussed.
2.1.1 Defining organizational culture
Hofstede (1991, p. 1) defines organizational culture as 'the collective programming of the mind which distinguishes the members of one organization from another'. So following this author’s definition, organizational culture is unique across organizations and – when talking about measuring – must be measured at group level. Again, Hofstede states in 2000 that ‘culture is distinct from both individual personality (one person) and human nature (all humans)’. So according to Hofstede (2000) a culture could only be defined for a group of people.
According to Hofstede, Neuijen, Daval Ohayv and Sanders (1990), most authors will agree that organizational culture espouse the following characteristics: it is holistic, historically determined, related to anthropological concepts, socially constructed, soft and difficult to change. All those characteristics have been recognized in the literature concerning organizational theory.
In 2000 Hofstede defines that:
could be that national or professional cultures of an organization's members far dominate organizational culture’ (p. 136).
Although the conclusion of Hofstede is easily made, in that an organization does not necessarily have much of a culture, the national culture could be of influence on the organizational culture.
Schein (1992, p. 12) defined organization culture as:
‘A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way you perceive, think and feel in relation to those problems’.
So, according to this author an organizational culture is a form of group learning to overcome external adaptation in a way that could also be taught to new members of a company. Within Schein’s (1992) definition, the external environment is coming to the forth, most researchers agree that it is important to include the external environment in a definition of organizational culture, because adapting or anticipating to the external environment is important for organizations to stay viable. But, according to Scheffknecht (2011) in comparison with Schein’s definition, an organizational culture can only be imposed by an internal development of culture instead of programs developed by externals. So, companies should adapt their organizational culture to the external environment by developing internal programs. Scheffknecht (2011, p. 76) further argues that value transfer or company culture makes only sense if ‘an organization is able to fill this intrinsic knowledge and shared basic assumptions into a common framework’.
When Schein wrote a book in 2004 he argued that by observing organizational culture it is manifested at three levels (to which degree the culture is visible to the observer). According to this author:
So following Schein in that writing in 2004, organizational culture should be considered as a framework that consists of artefacts, espoused beliefs and values and basic underlying assumptions. A company should keep the framework in mind when trying to influence an organizational culture. Artefacts are ‘all phenomena that you would see, hear and feel when you encounter a new group with an unfamiliar culture’ (Schein, 17). Espoused beliefs and values often leave large areas of behaviour unexplained, so scholars understand a piece of the culture but still do not have the culture as such in hand, to predict future behaviour correctly, scholars have to understand more fully the category of basic assumptions. According to Schein (2010, p. 22), ‘culture as a set of basic assumptions defines for us what to pay attention to, what things mean, how to react emotionally to what is going on and what actions to take in various kinds of situations’.
According to Gallato et al. (2012) organizational culture represents the organization personality. They argue that an organizational culture comes naturally without training or coaching, when a group of people have worked for years together and so their behaviour becomes standard practice and norms of that organization. Robbins & Judge (2009, p. 573) argue on their turn that there ‘seems to be a wide agreement that organizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations’. So according to them, an organization distinguishes itself by their organizational culture and according to Gallato et al. (2012) organizational culture is created by nature when people work together.
According to Florentina & Georgiana (2012) the most common components that are the core of organizational culture given in the literature which can be observed, are symbols, processes, forms and behaviour, those which have to be inferred from observable components are feelings, beliefs & values and basic assumptions.
Leidner & Keiworth (2006, p. 359) define organizational culture in terms of ‘the values that represent a manifestation of culture that signify espoused beliefs identifying what is important to a particular cultural group'. This is in line with the definition of Tsui, Zhang, Wang, Xin & Wu (2006, p. 53) who defined organizational culture as ‘a set of core values consensually shared by organizational members’.
Van Muijen et al. (1999) elaborated on the competing values model of Quinn (1988). In this model, Quinn described an organizational culture along two dimensions, internal versus external and flexibility versus control. Combining these two dimensions result in four organizational culture orientations. Organizations can score high on none, one or any combination of the orientations. The four orientations are the support, the innovation, the rules and the goal orientation (Van Muijen et al., 1999). See appendix 1 for the model. When a company fits into one orientation, its managers could be guided by this model how to deal with certain circumstances.
In sum, most authors agree about organizational culture that it is unique across each organization (Hofstede, 1991; Hofstede, 2000; Gallato et al., 2012; Robbins & Judge, 2009; Leidner & Keiworth, 2006). Also an organizational culture should adapt to the external environment (Schein 1992) and have shared feelings, beliefs and values (Leidner & Keiworth, 2006; Lewis, 1992). Concluding, the enhanced definition of organizational culture in this paper – which covers most of the previous mentioned elements – is that of Schein (1992, p.12):
‘A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way you perceive, think and feel in relation to those problems’.
2.2 Entrepreneurship
through which new value is created as a result of the project: the entrepreneurial venture’. So Wickham’s focus lies on new venture creation, but there is more.
Within this paper, there needs to be measured how ‘entrepreneurial orientated’ an organization is, in order to find out how different dimensions of organizational culture of influence are on entrepreneurship across different life cycle stages. Entrepreneurial orientation is ‘posited to reflect the extent to which firms establish the identification and exploitation of untapped opportunities as an organizing principle of the firm’ (Lumpkin and Dess, 1996, p. 148). Covin and Slevin (1989) argue that the more small firm owners adopt an entrepreneurial orientation, the more they achieve competitive advantage and enhanced performance. So, when organizations want to become or stay competitive and viable by maintaining performance, the organization should adopt an entrepreneurial orientation. According to Lumpkin & Dess (1996) the dimensions of an entrepreneurial orientation that permeate the decision-making styles and practices of a firms members are autonomy, innovativeness, proactiveness, competitive aggressiveness and risk-taking. Following other authors, only innovativeness, proactiveness and risk-taking should be considered by measuring entrepreneurial orientation (Miller, 1983; Runyan, Droge & Swinney 2008). Considering Miller (1983, p. 771) ‘an entrepreneurial firm is one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with "proactive" innovations, beating competitors to the punch’. And, as Runyan et al. (2008, p. 569) stated: ‘entrepreneurial orientation is evidenced through visible entrepreneurial tendencies toward innovativeness, proactiveness and risk taking’.
2.2.1 Entrepreneurial orientation
Considering the previous paragraph, it is assumed that it is widely accepted that entrepreneurial orientation should be measured along three dimensions, i.e. innovativeness, proactiveness and risk-taking. These dimensions will be elaborated in this section.
be divided in three forms. First, technological innovativeness consists primarily of research and engineering efforts aimed at developing new products and processes. Second, product-market innovativeness includes market research, product design, and innovations in advertising and promotion. Third, administrative innovativeness refers to novelty in management systems, control techniques, and organizational structure. Lumpkin & Dess (1996) operationalized innovativeness with questions about stimulation of technological, product-market and administrative innovation, stimulation of creativity and experimentation, investing in new technology and Research & Development and if innovative initiatives of the company are hard to innovate. Within this paper, in order to operationalize innovativeness, the questions of Lumpkin and Dess (2005, p. 150) will be used, see appendix 2 for the questions. More details are presented in the methodology chapter. In this paper the definition of Lumpkin and Dess (2005) is followed of innovativeness and is defined as ‘a firm’s efforts to find new opportunities and novel solutions. It involves creativity and experimentation that result in new products, new services or improved technological processes’ (p. 142).
Proactiveness. Lumpkin and Dess (2005, p. 150) defined proactiveness in their article as: ‘a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand’. This is in accordance with Renko, Carsrud and Brännback (2009) who state that proactiveness refers to a posture of anticipating and acting on future wants and needs in the marketplace. So following those definitions, proactiveness concerns anticipating in the present, in that opportunities could be exploited in the future. As Lumpin and Dess (2005, p. 150) state later in their article: ‘proactiveness refers to a firm’s efforts to seize new opportunities’.
paper, in order to operationalize proactiveness, the questions of Lumpkin and Dess (2005) will be used, see appendix 2 for the questions. More details are presented in the methodology chapter. Concluding, following Lumpkin and Dess (2005), proactiveness in this paper is seen as a forward-looking perspective characteristic of an organization that has the foresight to seize opportunities in anticipation of future demand.
Risk-taking. Lumpkin and Dess (2005, p. 148) defined entrepreneurial orientation in terms of risk-taking as: ‘making decisions and taking action without certain knowledge of probable outcomes; some undertakings may also involve making substantial resource commitments in the process of venturing forward’. So an important aspect of risk-taking according to this definition is the uncertainty of outcomes of certain decisions. As the authors state later in the article: ‘risk-taking refers to a firm’s willingness to seize a venture opportunity even though it does not know whether the venture will be successful and to act boldly without knowing the consequences’ (p. 152). Risk-taking could end in either high profits or high losses. Sitkin and Pablo (1992) state that firms could obtain high financial returns by taking risks in assuming high levels of debt, committing large amounts of firm resources, introducing new products into new markets and investing in unexplored technologies. But on the other hand, when a decision turns out to have negative outcomes, losses could be suffered. Also argued by Renko et al. (2009), who mentioned that a risk taker is associated with a willingness to commit large amounts of resources to projects, at which the likelihood and cost of failure may be high. In extension of definitions about risk-taking is the ‘prospect theory’ of Kahneman and Tversky (1979), which suggests that a person’s willingness to take risks is dependent on the perception of the situation. When the company is running well, an entrepreneur is less inclined to take risks, but when the company is in a loss situation, the entrepreneur will turn out to be a risk-seeker.
According to Drucker (1985) a successful entrepreneur should not be a risk-taker, but take steps in trying to make risks more certain in understanding them. So following Drucker (1985), an entrepreneur who wants to have success, should avoid risks and focus on opportunities. This is in agreement with Lumpkin and Dess (2005, p. 152) who argue that the most successful companies ‘investigate the consequences of various opportunities and create scenarios of likely outcomes’.
Overall, considering the previous definitions of risk-taking, within this paper risk-taking is described as making decisions – that lead to taking actions – that have uncertain outcomes. Concerning measuring an entrepreneurial orientation of an organization, it could be the case that one organization has no proactive propensity, but has an innovative and risk-taking propensity. When this occurs, an average of the three dimensions could be taken. In the methodology chapter further interpretation is given to this aspect.
2.3 Life cycle stages
In 1959 Haire was one of the first authors who proposed that the development of organizations may follow some uniform pattern, i.e. organizations move through different life cycle stages. ‘Chandler introduced stages to a life-cycle model in which he noted that as stages changed, so did firms' strategies and structures’ (Smith et al., 1985, p. 801). Following Smith et al. (1985) models of life-cycle stages ‘presuppose that there are regularities in organization development and that these regularities occur in such a way that the organizations' developmental processes lend themselves to segmentation into stages or periods of time’. So according to them, to a certain extent, organizations show the same patterns when they become older.
Different authors described how organizational life cycles look like. The one author described it along three life cycles, the other along more than three life cycles. Many different models are developed and many contain common elements. According to Mintzbergs simple structure (1981), an organizational life cycle contains three stages which are survival (the firm’s founding stage in which it struggles to stay alive), success (a period in which the growing company breaks out of resource poverty and reaches a plateau of success) and take-off (a period in which the company evolve toward a big organization).
detailed overview). Overall, the inception stage ‘occurs when top-level managers think about building support from suppliers of resources and about getting their organizations going’ (p. 803). The high-growth stage ‘occurs when top-level managers concentrate on managing the demands that expansion brings’ (p. 803). And finally, the maturity stage ‘occurs when top-level managers garner support for the status quo or for restructuring organizations to allow new growth’ (p. 803). Each organizational life cycle stage is defined in terms of key functional characteristics by Smith et al. (1985).
In the article of Masurel and Montfort (2006) different other authors who researched organizational life cycles were described. According to them, Greiner (1972) provides ‘the basic foundations for the theory on firm development’ (p. 462). Following Greiner, a growing organization moves through five different stages of development and ‘each phase contains a relatively calm period of growth that ends with a management crises’ (p. 462). The five phases are: growth through creativity, followed by a crisis of leadership; growth through direction, followed by a crisis of autonomy; growth through delegation, followed by a crisis of control; growth through coordination, followed by a crisis of red tape; growth through collaboration; followed by a crisis of psychological saturation among employees.
Cameron and Quinn (1983) described in their article nine different organizational life cycles they found in existing literature. The nine models each emphasize different factors to ‘explain the changing characteristics of organizations over time’ (Cameron & Quinn, 1983, p. 34). They divided all models in four major stages, which are the entrepreneurial stage (early innovation, niche formation, and creativity), the collectivity stage (high cohesion, commitment), the formalization and control stage (stability and institutionalization) and the structure elaboration and adaption stage. However most of the models did not include the four stages, ‘all of the authors incorporated elements of start, growth, maturity and decline in their studies’ (Cameron & Quinn, 1983, p. 33).
et al. (1985) used in their research will be used in this paper for determining if a company finds itself in the inception, high-growth or maturity stage. The questionnaire (in Dutch) is shown in appendix 4. Different boundaries will be set up in the method section. The questionnaire contains 12 indicators divided into five principal factors representing organizational growth, maturity, structure, decision style and formalization.
One could wonder whether family businesses could still have an entrepreneurial orientation in the maturity phase. Since Smith et al. (1985) found that overall there is more entrepreneurial decision making (instead of professional decision making) in the maturity phase as in the high-growth phase, it is assumed that organizations could still be entrepreneurial in the maturity phase.
2.4 Family businesses
According to Colli (2003) it is not as simple to delineate the boundaries and features of family businesses as it is of big businesses. Assuming, like Colli (2003) argues that family businesses are by definition small, it is in accordance with Chua, Chrisman & Sharma (1999, p. 19), who also argue that ‘the literature have difficulty in defining the family business’. Colli (2003, p. 9) argues that ‘from the perspective of managerial capitalism, it is theoretically possible to suggest a definition of the family firm based upon its size, whatever its measure’. In this manner, the family firm should be considered as only one of the initial stages in the life cycle stages of the enterprise, following the start-up period and preceding the public company phase. In Dyers’ (1986) model, family firms are characterized as small and medium-sized, slow growing, have flat organizational structures and are less profitable than managerial firms. This is the usual perspective suggested by traditional economics (Casson, 2000). However, on the opposite Colli (2003, p. 9) argues that ‘it is possible to find many examples of dynamic, large, and profitable family firms’.
Following Flören (1998) definitions of family businesses are often incomplete by intensions of family to keep the business ‘in their family’ or whether firm members consider the firm as being a family business are not taken into account. There are many different definitions of family businesses defined by authors in the past years (Hulshoff, 2001; Chua et al., 1999). Like Colli (2003) argues, ‘it is possible to make an almost infinite taxonomy of suitable definitions of family businesses’(p. 19). In their article, Chua et al. (1999) summarized definitions of family businesses that were made by authors over the past years. They found that, overall, several observations could be made about these definitions, first, ‘they do not differentiate between governance and management’ (p. 20). Second the definitions include three qualifying combinations of ownership and management; family owned and family managed, family owned but not family managed and family managed but not family owned. Finally, ‘while some definitions do not require family ownership, those that do imply, explicitly or implicitly, controlling ownership, although they differ with respect to the acceptable patterns of controlling ownership’ (p. 20). The list of controlling owners include; an individual, two persons, unrelated by blood or marriage, two persons, related by blood or marriage, a nuclear family, more than one nuclear family, an extended family, more than one extended family and the public. Following Chua et al. (1999), also in overcoming the limitations of a family business definitions according to Flören (1998), the definition of a family business enhanced in this paper is:
‘The family business is a business governed and/ or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families’ (p. 25).
Wherein the business is governed by a family when more than 50% of the voting shares are owned by one single family, the business is managed by a family when more than 50% of the management team is drawn from the family that owns the business. Family means the extended family, including uncles and aunts, nephews and nieces and other relatives related by blood or marriage (Hulshoff, 2001). This is a quite broad definition, following Colli (2003) it is better to rely on a broad definition that is ‘flexible enough to cover all the possible situations while also encompassing the changing nature of the family itself, according to the period and geographical area considered’ (p.19).
2.5 Dimensions of organizational cultures
Within this study, four dimensions of organizational culture that have influence on
entrepreneurship that will be tested through the different life-cycle stages are individual orientation, external orientation, decentralization of coordination and control and short- vs. long-term
orientation. In 2004, Zahra et al. already tested those four dimensions of organizational culture on entrepreneurship, they stated in their hypotheses that all these dimensions have influence on entrepreneurship, their hypotheses are all accepted. Besides the dimensions of Zahra et al. (2004), four other dimensions of organizational culture are assumed to have influence on entrepreneurship, which are strong conservative cultures, organizational change, informal organizational cultures and adapting to the organizational environment. Those dimensions of organizational culture are based on the writings of other authors, mainly on Peters and Waterman (1982); Hofstede (2000); Jones (1998 and 2010) and Schein (1992 and 2004). The reason to test those dimensions – besides the
dimensions of Zahra et al. (2004) – is because in this way a more complete impression of the influence of organizational culture on entrepreneurship in family businesses could be tested. The reason for choosing those four dimensions is given below.
It is interesting to test the influence of strong conservative cultures on entrepreneurship since stronger cultures could lead to greater job satisfaction of employees, which on their turn could lead to increased success of the organization (Eskildsen, Kristensen & Antvor, 2010). The influence of organizational change on entrepreneurship is interesting to research since it could be concluded of the articles of Hofstede (2000) and Jones, Jimmieson, and Griffiths (2005), that when an organization is implementing some changes within an organization (an attribute of innovation), while employees are willing to enhance this change, it could have influence on the performance of the company. There is chosen to research the influence of an informal organizational culture on entrepreneurship because when an organizational culture is characterized by informality, one could assume that (for example) it is easy to implement a change, since relationships and interactions between employees are well organized. Taking the external environment into account by businesses is the last dimension that will be tested of organizational culture that could influence the degree of entrepreneurship. When businesses are taking the external environment into account, this could have a positive influence on entrepreneurship, since organizations could gain from it when they understand the environment.
et al., 2000). The aim of this paper is to measure to what extent the different dimensions of organizational culture have influence on entrepreneurship over the different life cycle stages (which are inception, high-growth and maturity) of a family firm. A dimension could have a positive or a negative influence, or have no influence at all on entrepreneurship. With which questions the different dimensions of organizational culture are measured in the field, is described in chapter 3.2.3.
2.5.1 Individual vs. group orientation
A group oriented organizational culture is characterized by cooperation and collaboration in the firm’s decision making processes (Zahra et al., 2004). Individuals are rewarded when knowledge is shared and when there is a high level of cooperation and collaboration. On the other hand, individual orientated organizational cultures are characterized by ‘opportunities and rewards that result from demonstrations of individual excellence’ (Zahra et al., 2004, p. 365). The downside of an individual oriented organizational culture is that members of the company are less inclined to collaborate, cooperate and share knowledge or information. According to Zahra et al. (2004), Herbig (1994) stated that ‘while a cultural orientation of individualism facilitates the recognition of radical innovation by individual entrepreneurs, a group cultural orientation encourages entrepreneurship’ (p. 366). Therefore, Zahra et al. (2004) concluded that in a perfect situation for entrepreneurship, individual and group oriented organizational cultures should be balanced. On the other hand, Morris, Davis and Allen (1993) stated that overall; an individual oriented organizational culture is more strongly associated with entrepreneurship than a group oriented organizational culture is. In this paper, the conclusion of Zahra et al. (2004) is enhanced, since they tested this dimension, and Morris et al. (1993) only stated this. Since Zahra et al. (2004) concluded that there is a curvilinear relationship between the organizational cultural dimension of individual-versus-group orientation and entrepreneurship in family firms and that a balanced level of individualism vs. group will be associated with the highest levels of entrepreneurship, there is expected that organizations will be little entrepreneurial in the inception stage, more entrepreneurial in the high-growth stage and again little in the maturity stage. This expectation is made because it is expected that in the start-up of an organization people will work together, in the high-growth stage individual vs. group orientation will be high and in the maturity stage there is a group oriented cultural orientation. Proposition 1:
(a) ‘An individual oriented organizational culture has no influence on entrepreneurship in the inception stage of a family business’;
(c) ‘An individual oriented organizational culture has no influence on entrepreneurship in the maturity stage of a family business’.
2.5.2 External orientation
When Zahra et al. (2004) referred to the internal vs. external organizational orientation they defined it as the ‘dominant beliefs within the family firm about its relationship to the external environment’. So this dimension of an organizational culture refers to its internal beliefs about how the relationship is with the external environment. According to the business dictionary, the external environment concerns ‘conditions, entities, events, and factors surrounding an organization that influence its activities and choices, and determine its opportunities and risks’. So one could consider the external environment as the influences outside a company, which determines its opportunities and risks. Zahra et al. (2004) concluded that when a family business has a high external cultural orientation, it is positively associated with entrepreneurship. This is, as Zahra et al. (2004) argue, because organizations see customers, competitors, suppliers and markets as important sources of information that can be used in the identification of organizational problems and in developing innovative solutions for them.
In contrast with an external cultural orientation is an internal cultural orientation, this emphasizes the development of knowledge and expertise that resides within the firm’s boundaries (Zahra et al., 2004). Detert, Schroeder & Mauriel (2000) argue that in such an organizational culture, entrepreneurship results from the intellectual capital within the organization.
Since, Zahra et al. (2004) stated that ‘an externally focused organizational culture is dedicated to greater resources to develop the capabilities that allow family firms to acquire knowledge from a variety of external sources and thus increase their entrepreneurial activities’ (p. 366), it is expected that an external orientated organizational culture has a positive influence on entrepreneurship in each organizational life cycle stage of a family business. Therefore, proposition 2 is drawn:
2.5.3 Decentralization of coordination and control
The third dimension to be tested is the position of coordination and control. There are two types of coordination and control possible within an organization, there could be a decentralized type of coordination and control (e.g. bottom up) or there could be a centralized type of coordination and control (e.g. top down). Zahra et al. (2004) found in their research that an emphasis on decentralization of coordination and control is positively associated with entrepreneurship, instead of a centralized form of coordination and control. A decentralized form of coordination and control is defined as ‘an organizational setup in which the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy’ (Jones, 2010). According to Kanter (1983, p. 48) decentralization will enhance ‘flexibility and promote the independent contributions of their members’. And as Miller (1983) and Pinchot (1985) argue, decentralization enables employees to take initiative and propose new entrepreneurial ideas. So, following those theories a decentralized organizational culture enhances entrepreneurship, therefore it is expected that when a family business has a decentralized organizational form of coordination and control this will enhance entrepreneurship in all three life cycle stages. Proposition 3 is drawn:
‘A decentralized form of coordination and control has a positive influence on entrepreneurship in (a) the inception stage, (b) the high-growth stage and (c) the maturity stage in family businesses’.
2.5.4 Short- vs. long-term orientation
employees’ willingness to assume the risks associated with entrepreneurship (Zahra et al., 2004). Since an emphasis on financial controls and entrepreneurship is important in the inception stage of a business, it is expected that entrepreneurship is positively associated with financial controls in this stage. It is expected that financial controls are negatively associated with entrepreneurship in the high-growth and maturity stage of family businesses, as Zahra et al. (2004) also concluded. Therefore, proposition 4 is drawn:
(a) ‘Financial controls are positively associated with entrepreneurship in the inception stage of a family business’;
(b) ‘Financial controls are negatively associated with entrepreneurship in the high-growth stage of a family business’;
(c) ‘Financial controls are negatively associated with entrepreneurship in the maturity stage of a family business’.
Strategic controls are associated with a long-term time orientation. It is expressed in understanding tasks at hand, the risks involved and the potential tradeoffs among the choices managers might make (Zahra et al., 2004). According to Hitt, Hoskisson, Johnson & Moesel (1996), an organizational culture that is characterized by patient investments in long-term but risky activities is more likely to support entrepreneurship. Therefore, it is expected that in all life cycle stages of a family firm, a long-term time orientation has a positive influence on entrepreneurship. Proposition 5 is drawn:
‘Strategic controls are positively associated with entrepreneurship in (a) the inception stage, (b) the high-growth stage and (c) the maturity stage of a family business’.
2.5.5 ‘Strong’ conservative cultures
culture could be that all members of an organization have their beliefs and values in the same direction. According to Eskildsen et al. (2010), a stronger organizational culture allows employees towards realizing greater job satisfaction, which should ultimately lead to increased productivity, commitment, and success to the organization. So strong organizational cultures could lead to a competitive advantage.
There are different authors who questioned the value of a strong culture. Saffold (1988) sees five weaknesses in a strong culture. For example, he argues that the use of the ambiguous dimension of strength to measure organizational culture is one of its weaknesses. Schlesinger and Balzer (1985, p. 49) argue that ‘no direct link is seen between culture and performance. As long as organizations are composed of people, outcomes will never be totally predictable. The culture-performance link is therefore a tenuous one at best’. But when people’s behaviour is restricted to standards and boundaries, outcomes could be predicted to a certain amount. Also, a strong organizational culture could contain that people are so restricted to each other, that a conservative organizational culture could emerge. And a conservative organizational culture is expected to have a negative influence on entrepreneurship, since it is expected that such an organizational culture is not open to new ideas, processes or products.
Overall, on the one hand a strong organizational culture could enhance organizational success (Peters & Waterman, 1982; Eskildsen et al., 2010) by having trust and creating respect and realizing greater job satisfaction. On the other hand some authors have their thoughts if strong cultures really enhance organizational success (Saffold 1988) and even íf there is a relationship between them (Schlesinger & Balzer, 1985). When overcoming the weaknesses according to Saffold (1988), by for example having an unambiguous definition of a strong culture and go along with most authors that there is a relationship between a strong organizational culture and performance and assuming that a strong culture has a negative influence on entrepreneurship (considering it is a conservative strong culture), proposition 6 is drawn:
(a) ‘A strong conservative organizational culture has a negative influence on entrepreneurship within a family business in the inception stage’;
(b) ‘A strong conservative organizational culture has a negative influence on entrepreneurship within a family business in the high-growth stage’;
2.5.6 Organizational change
According to Hofstede (2000) changes in organizational cultures could be promoted by introducing new- or changing practices, by rewarding and punishing or hiring and firing. He further argues that a change within organizations most demands vision and communication, which also demands changes in perceptions of daily practices, which is part of the organizational culture. Jones et al. (2005, p. 365) found in their longitudinal study that:
‘Employees who perceive their workplace to be dominant in human relations values (training and development, open communications, and participative decision making) are more likely to hold positive views towards organizational change, have higher levels of readiness for change, and report higher levels of satisfaction’.
So following Hofstede (2000) and Jones et al. (2005) the most valuable organizational culture is (when trying to change this culture) a culture which is characterized by rewards and punishment, hiring and firing, training and development, open communications and participative decision making. A simple conclusion is that when an entrepreneur is trying to change some practices within an organization (which is an attribute of innovation) and employees are willing to enhance this change, this could have influence on the performance of the company. In sum, proposition 7 is drawn:
(a) ‘When employees perceive their workplace to be dominant in human relations this has a positive influence on entrepreneurship within family businesses in the inception stage’; (b) ‘When employees perceive their workplace to be dominant in human relations this has a
positive influence on entrepreneurship within family businesses in the high-growth stage’; (c) ‘When employees perceive their workplace to be dominant in human relations this has no
influence on entrepreneurship within family businesses in the maturity stage’. 2.5.7 Informal organizational culture
between employees are well organized it could be easier for an entrepreneur to implement and communicate changes (like an innovation), since innovativeness is an characteristic of entrepreneurial orientation (see paragraph 2.2.1). It is expected that an informal organizational culture has positive influence on entrepreneurship through all organizational life cycle stages. Proposition 8 is drawn:
‘An informal organizational culture has a positive influence on entrepreneurship within family businesses in the (a) inception stage, (b) the high-growth stage and (c) the maturity stage’.
2.5.8 Taking the organizational environment into account
As mentioned before, one important characteristic of the organizational culture is taking the external environment into account (Schein, 1992, p. 81). An organizational environment is characterized by ‘the set of forces and conditions that operate beyond an organizations’ boundaries but affect its ability to acquire and use resources to create value’ (Jones, 2010). The most important players in an organizations environment are customers, shareholders, suppliers, distributors, government and competitors (Jones, 2010). Since the external environment can change often – like customers demanding other services or products – organizations should take the environment into account to stay competitive. When taking the external environment into account, this could have influence on entrepreneurship because in this manner the organization understands the external environment better and so could gain from it. Since it is always wise to understand the organizational environment (Schein, 2004), it is expected that taking the external environment into account has a positive influence on entrepreneurship through all organizational life cycle stages. According to this, proposition 9 is drawn:
Now, since the theory that will be used is described and the different propositions are made, the conceptual model is drawn:
3. Methodology
Since the relationship between organizational culture and the degree of entrepreneurship within different organizational life cycle stages is not scrutinized hitherto, this research should be considered as an explanatory study. This type of study is advised by Marshall & Rossman (1995, p. 41) since they described the purpose of an explanatory study as ‘to explain the forces causing the phenomenon in question and to identify plausible causal networks shaping the phenomenon’.
In this part of the paper the research method chosen will be discussed. First, the kind of businesses that were participating in this research will be discussed. After that, the different variables are operationalized. Which starts with determining in which organizational life cycle stage a family business finds itself, after that there will be determined how entrepreneurial orientated a family business is (with the factors innovativeness, proactiveness and risk-taking) and finally there will be determined in how far a family business scores on the different dimensions of organizational cultur. In the third part of this section, there is discussed how the different data is analysed. In the fourth and last part the reliability and validity will be discussed.
3.1 Sample description
As given in chapter 2.4, a family business in this paper is defined as:
‘The family business is a business governed and/ or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families’.
industries, since this article must be seen as an indicative research (as described in the introduction), future researchers could overcome this limitation by scrutinizing this subject within one industry.
The only extra limitation to the sample group (besides that it must be a family business) is that it is a Small or Medium-sized Business, since this paper is written in order to contribute to the Small Business & Entrepreneurship literature. A business is considered to be small if it meets the following conditions: it has a maximum of 249 employees and a maximum of €43 million on their balance sheet (European Commission, 2003).
3.2 Data collection
Several variables have to be measured in order to give an answer to the different propositions and in the end to the main research question. The different variables can be divided into one dependent variable, several mediating variables and one independent variable. Within this paper, the dependent variable is the degree of entrepreneurial orientation (see for questionnaire appendix 2), the mediating variables are the three different life style stages (inception, high-growth and maturity, see for questionnaire appendix 4) and organizational culture is the independent variable (see for questionnaire appendix 6 and 7). The variables need to be defined into measurable factors to conduct questionnaires to operationalize and measure them; they are presented in the following subparagraphs.
3.2.1 Organizational life cycle stages
obvious facts of the organizations. During this scrutiny, in determining in which life cycle stage an organization finds itself, there is chosen to look at the outcomes of the four previous mentioned indicators of the company where the questionnaire is conducted. The company is considered to fall in a certain life style stage if it scores closest to the mean scores of the four indicators of Smith et al. (1985). For example, consider an organization that has a growth rate in dollar sales of 12%, a growth rate in number of employees of 3%, it is 15-year-old and has 15 employees, this organization falls in the inception stage. This is, because a 12% growth rate in dollar sales is closest to 6% growth in dollar sales of the mean score of the clusters of Smith et al. (1985), a 3% growth rate in number of employees is closest to 1% growth in number of employees of the mean score of the clusters of Smith et al. (1985), a 15-year-old organization is closest to the 17-year-old organization of the mean score of the clusters of Smith et al. (1985) and the organization has 15 employees is closest to 1 in organization’s size in number of employees of the mean score of the clusters of Smith et al. (1985). This company falls into three indicators of the inception stage and in one indicator of the high growth stage, so it is assumed that the company is in the inception stage of the organizational life cycle. See for clarity of the discussed example the following table:
Mean scores of Company where
Smith et al. (1985) questionnaire is conducted Growth rate in dollar sales
Inception stage 6% 12%
High Growth stage 24%
Maturity stage 20.60%
Growth rate in # of employees
Inception stage 1% 3%
High Growth stage 17%
Maturity stage 12%
Organization's age in years
Inception stage 11
High Growth stage 17 15
Maturity stage 20.6
Organization's size in # of employees
Inception stage 1 15
High Growth stage 107
Maturity stage 53
Table 1: organizational life cycle stages
organizations with over 1000 employees and in this research questionnaires are conducted in organizations with a maximum of 249 employees, it is decided to divide the results of Smith et al. (1985) – considering this indicator – by 10.
When it is considered to be tricky to decide in which organizational life cycle stage an organization falls, for example when an organizations falls in exactly the middle of a few indicators, the other indicators of the questionnaire of Smith et al. (1985) – see appendix 5 – are used. They will be used in the same way as is done with the four ‘main’ indicators.
3.2.2 Entrepreneurial orientation
Within this section, there is elaborated how the entrepreneurial orientation of a family business will be measured; measuring the degree of entrepreneurial orientation of an organization is in this research divided into three dimensions, which are innovativeness, proactiveness and risk-taking. As mentioned previously those three dimensions of entrepreneurial orientation will be operationalized with help of the existing questionnaire of Lumpkin & Dess (2005). Since Lumpkin and Dess (2005) did not gave a scale for answering the questions, in this paper a seven-point Likert-type scale is added to the questionnaire (see for the questionnaire appendix 2). A Likert-type scale specifies the level of totally disagreement to totally agreement, with 1 as ‘totally disagree’ and 7 as ‘total agree’. This scale is added in the answering form to give a possible answer in whether an organization is entrepreneurial orientated or not. Whether an organization is considered to be entrepreneurial orientated or not is measured in the following way; there are five questions of innovation, four of proactiveness and four of risk-taking, the mean of the answers of those questions is calculated per dimension, after that the mean of those three numbers is calculated. When overall an organization scores above 5.00 on the last calculated figure, it is considered to be entrepreneurial. When it scores a 4.99 or lower it is considered to be not entrepreneurial. So it is possible that an organization is considered to be entrepreneurial orientated if it scores under 5 points at risk-taking, but score above 5 points at innovation and proactiveness. See the following example in table 2:
Q 1 Q 2 Q 3 Q 4 Q 5 Mean Entrepreneurial orientation Innovation 7 4 5 7 6 5.8 Proactiveness 7 7 4 6 6 Risk-taking 3 4 3 5 3.75 15.55 /3 = 5.18
So an organization could score below the 5 points on risk-taking but above the 5 points on innovation and proactiveness could still have an entrepreneurial orientation. As one can see in table 2 this organization scores a mean of 5.8 on the five questions of innovation, a 6 on the four questions on proactiveness and a 3.75 on the four questions of risk-taking, divided by 3 gives a mean of 5.18.
3.2.3 Dimensions of organizational culture
This subsection is divided into two parts, the first part exists of how to measure the already tested dimensions of organizational culture by Zahra et al. (2004), since there are existing questions of those dimensions in their article. The second part considers the dimensions of organizational culture which lacks an already tested questionnaire.
3.2.3.1 Dimensions of organizational culture of Zahra et al. (2004)
The four dimensions of organizational culture of Zahra et al. (2004) are tested with existing questions, the same as in the article of Zahra et al. (2004). Added to the existing questions is the answer possibility. The same seven-point Likert-type scale as was added to the answer possibilities of the entrepreneurial orientation questions is added here. Reason to add this seven-point Likert-type scale is that an average of the answers could be determined which is important to decide if an organizational culture is for example characterized by an individual orientation or a group orientation.
The dimension of individual vs. group oriented organizational culture is measured along the four questions shown in appendix 6.1. Since this dimension could end up in three types of organizational cultures; individual, group or a balanced individual vs. group organizational culture, it is assumed that an organization has an individual orientation when it scores an average of 5.00 or more on the questions of appendix 6.1, it has an group oriented organizational culture when the company scores below a 3.00 on average on the questions and it has an balanced individual vs. group oriented organizational culture when it scores between 3.01 and 4.99 on average.
So different questions were asked per dimension, with three, four or five questions per dimension. The average score on a dimension was calculated by adding the answers per dimension with each other and divided by the amount of questions asked per dimension.
3.2.3.2 Remaining dimensions of organizational culture
The following dimensions of organizational culture that has to be operationalized are, ‘strong’ conservative cultures, organizational change, informal organizational culture and taking the external environment into account, further they are called the ‘remaining dimensions of organizational culture’. Since there is not an existing questionnaire available of those four dimensions of organizational culture, a new questionnaire is made. Questions are based on the literature described in the theoretical part of this paper and, since there are no existing questionnaires available about these dimensions of organizational culture, are assumed to represent those dimensions.
Appendix 7 shows all questions concerning the remaining dimensions of organizational culture that have to be operationalized. An organization is considered to be characterized by a ‘strong’ conservative culture if it scores at least 5.00 on average on the five questions represented in appendix 7.1 about this dimension. The same principle holds for the organizational change, informal organizational culture and taking the external environment into account dimension of organizational culture, which one can find in appendix 7.2 to 7.4 respectively. The questions of the ‘strong’ conservative culture dimension are based on one side on the article of Peters and Waterman (1982), on the other side on existing questions of the article of Banon, Ford & Meltzer (2010). The questions of the organizational change dimension are based on the article of Jones et al. (2005). The questions of the informal organizational change dimension are based on the book of Jones (1998). The questions of the dimension taking the external environment into account are based on the books of Schein (2004) and on the book of Jones (2010). The main part of the questions was derived from statements and definitions of the different articles used.
The same calculation to come to an average score within those dimensions was done, as was done within the dimensions described in the previous paragraph.
3.3 Data analysis
organization finds itself, by using the method described in paragraph 3.2.1. After that, there was measured in how far a family business was entrepreneurial orientated or not, by using the method described in paragraph 3.2.2. Lastly, the eight dimensions of organizational culture were ordered and measured by using Microsoft Excel, by using the method described in paragraph 3.2.3.
In the following step the derived data will be filled in in the Statistical Package for the Social Sciences (SPSS) program. In testing the propositions, 27 times (since there are 27 propositions) a simple linear regression analysis test was done. A regression analysis is used to make an estimation of a linear relation between a dependent and one or more independent variables (Huizingh, 2010). Within this research, the dependent variable is the degree of entrepreneurship and the independent variables are the dimensions of organizational culture. Following Huizingh (2010) it is useful to perform a correlation analysis to research if there is a possible link between the independent variables before a regression analysis is made; within this research this was not done since there are tested single relations (e.g. the influence of a strong conservative culture on the degree of entrepreneurship), in this way it is not necessary to perform such a correlation analysis.
Our goal is to conduct questionnaires within twelve companies, four companies in each stage of the organizational life cycle. Since each proposition is divided into three sub propositions (1 sub proposition for companies within the inception stage, 1 sub proposition for companies in the high-growth stage and 1 sub proposition for companies within the maturity stage), there will be four perceptions per sub propositions.
3.4 Quality of research
Overall, within the social sciences methods, four tests are used to establish the quality of empirical social research (Yin, 2009). Those four tests (which are construct validity, internal validity, external validity and reliability) are described and elaborated within this subsection.
(1985). A questionnaire was made with help of the theories for answering the research question. So, the construct validity could be considered as high.
Secondly, internal validity is described as ‘seeking to establish a causal relationship, whereby certain conditions are believed to lead to other conditions, as distinguished from spurious relationships’ (Yin, 2009: 40). The outcomes of the questionnaires are analyzed with help of the Statistical Package for the Social Sciences (SPSS) program. A regression analysis is done in order to find a (positive or negative) relationship between organizational culture and entrepreneurship along the different life cycle stages.
Thirdly, Yin (2009, p. 40) describes the external validity as ‘defining the domain to which a study’s findings can be generalized’. Since this research is described as indicative and because there were conducted questionnaires in twelve family businesses ‘only’, the outcomes cannot be generalized. Future researchers should conduct questionnaires or take interviews in a lot more companies and within one industry to make the research generalizable.
4. Results
This chapter starts with an analysis of the respondents of the questionnaires. After that the results of which companies are finding themselves in which organizational life cycle stages are presented. In the third paragraph the results of the degree of entrepreneurial orientation per company is given. The fourth paragraph contains the results of the dimensions of organizational culture. The main subject of this chapter is presented in the last paragraph, which are the regression analyses performed in order to test the relationships between the different dimensions of organizational culture and the degree of entrepreneurship.
4.1 Response questionnaires
After the questionnaire was typed with the computer, it was put online with help of www.thesistools.nl, a program to conduct online questionnaires. Seven companies were sent an email without calling them with the request to fill in the questionnaire, eight companies were called and six companies were visited to conduct the questionnaire. The response rate of the companies that were emailed but not called was 57% (four companies filled in the questionnaire), the response rate of the called companies was 56% (five companies) and the response rate of the companies visited was 67% (four companies). This high response rate could be declared since most of the companies where the questionnaires were conducted from are in the network of the author. As mentioned before, questionnaires were conducted in different industries, which are: the insurance industry, the retail industry, the hospitality sector and the raw material industry. The response rate per industry was 60% in the insurance industry (3 out of 5), 50% in the retail industry (3 out of 6), 62.5% in the hospitality industry (5 out of 8) and 50% in the raw material industry (1 out of 2).
4.2 Results organizational life cycle stages
In order to determine in which organizational life cycle an organization finds itself, the answers of the questionnaires are ‘filled in’ according to table 1 in chapter 3.2.1. Table 3 provides the outcomes.
Organizational life cycle stages
Growth Growth rate Age #
rate in sales in employees in years Employees
Company 1 0% -5% 70 35 I Company 2 -1% 0% 17 16 I Company 3 5% 0% 34 14 I Company 4 5% 1% 30 40 M Company 5 30% 20% 154 48 HG Company 6 5% 15% 10 9 I Company 7 3% 6% 67 65 M Company 8 5% 0% 70 12 I Company 9 15% -4% 72 110 HG Company 10 5% -2% 138 65 M Company 11 2% 5% 75 17 I Company 12 13% 22% 133 18 HG Smith et al. (1985) Inception (I) High Growth (HG) Maturity (M)
Growth rate in sales 6% 24% 20,60%
Growth rate in employees 1% 17% 12%
Age in years 11 17 20,6
# Employees 1 107 53
Table 3: outcomes questionnaires organizational life cycle stages
