MASTER THESIS BUSINESS ADMINISTRATION – SMALL BUSINESS AND ENTREPRENEURSHIP
Success Criteria of Dutch
Small Businesses
Organizational Antecedents of the Use and
Importance of Success Criteria
By Froukje Postma Studentnumber: 1892711
July 2Th 2013
MASTER THESIS BUSINESS ADMINISTRATION – SMALL BUSINESS AND ENTREPRENEURSHIP
Success Criteria of Dutch
Small Businesses
Organizational Antecedents of the Use and
Importance of Success Criteria
By Froukje Postma Studentnumber: 1892711
July 2Th 2013
University of Groningen, the Netherlands First supervisor: Dr. Ir. H. Zhou Second supervisor: Dr. O. Belousova
Abstract:
This study investigates the use and importance of success criteria of small businesses in the Netherlands. The organizational factors: size, industry, location and market orientation are investigated to find out whether they influence the success criteria of small businesses. Furthermore, it is investigated whether innovation, risk-taking and growth orientation of the owner influence small business success criteria. In this way, a distinction is made between small business owners and entrepreneurs. To test the relationships among the variables, data from 151 Dutch small businesses is used. The findings show that financial success criteria are less important for small businesses than non-financial success criteria. Furthermore, entrepreneurs give more importance to non-financial criteria than small business owners do. The findings of this study confirm that market orientation and, to a lesser degree, size have influence on the use of success criteria. A higher market orientation leads to a higher use of financial and non-financial success criteria. A larger business gives less importance to some non-financial success criteria.Acknowledgements
I would like to thank some special people who have been involved in the process of writing my master thesis, in particular:
My supervisor, Dr. Ir. H. Zhou for her valuable guidance, feedback and assistance.
The small business owners and entrepreneurs who participated in the quantitative research. Without them, this research would not be possible.
My fellow master students of Small Business and Entrepreneurship for giving me support and advice.
And last but not least, I would like to thank my boyfriend, family and friends who provided me with great support.
Table of Contents
1. Introduction ...6
2. Theoretical Background ...8
2.1 Business Success ...9
2.2 Success Criteria ...10
2.2.1 Variety of success criteria ...10
2.2.2 Methods of classification ...11
2.2.3 Classification in this paper ...12
2.3 Hypotheses ...13
2.3.1 Size of the business ...13
2.3.2 Location of the business ...14
2.3.3 Industry of the business ...14
2.3.4 Market orientation of the business ...15
2.3.5 Small business owners and entrepreneurs ...16
3. Methodology ...18 3.1 Questionnaire Development ...19 3.2 Procedure ...20 3.3 Models Tested ...21 3.4 Variables ...22 3.4.1 Concept constructs ...22 3.4.2 Dependent variable ...23 3.4.3 Independent variables ...24 3.4.4 Control variable ...25 4. Findings ...25
4.1 Use and Importance of Success Criteria ...25
4.2 Statistical Tests ...28
4.2.1 Correlation ...28
4.2.2 Regression ...30
5. Analysis and Discussion ...32
5.2 Influence of Organizational Factors ...34
6. Conclusion ...36
6.1 Conclusions ...37
6.2 Limitations and Future Research ...37
6.3 Implications ...38
7. References ...38
Appendixes ...43
List of Figures and Tables ... Figure 1: Conceptual model ...18
Table 1: Descriptives ...21
Table 2: Concept constructs ...22
Table 3: Dependent variables ...24
Table 4: Independent variables ...25
Table 5: Importance of success criteria ...26
Table 6: Use of success criteria ...26
Table 7: Concept ranking ...27
Table 8: Construct ranking SBO vs. Entrepreneur ...27
Table 9: Significant Pearson product-moment correlations ...29
Table 10: Significant outcomes of the hierarchical multiple regression test ...30
1. Introduction
A large part of the Dutch businesses belong to the SME sector (Small and Medium sized Enterprise) (mkbservicedesk, 2013). Small businesses can contribute to job creation, economic growth and poverty reduction (OECD, 2008); therefore, policies regarding the SME sector are very important (Carter and Jones-Evans, 2006). The Dutch government tries to stimulate growth and employment especially in those businesses. Their focus, and the focus in most literature, is on financial success criteria which implicitly assume that all small business owners strive for business growth (Walker and brown, 2004). However, not only maximizing profit and growth is important for businesses, also personal abilities and motivations do have important impact and may sometimes be more important than financial criteria. Therefore personal success often equates business success (Gorgievski, Ascalon, and Stephan, 2011; Walker and Brown, 2004).
In general, there is no consensus on how to define and how to measure small business success (Vesper, 1996; Watson et al., 1998); however, many researchers agree that both financial and non-financial criteria can be used (Ahmad and Seet, 2009; Murphy, Trailer and Hill, 1996; Song, Podoynitsyna, van der Bij and Halman, 2008; Walker and Brown, 2004). Jennings and Beaver (1997) suggest that the success or failure criteria of a small firm must reflect the principal stakeholders’ perspective. So the criteria for success would reflect the fulfillment of the business owner’s specific inspiration. This makes the attribution of success or failure to small firms complex and dynamic.
Insights into business owner’s financial and non-financial success criteria and the way they align with one’s values can be used to develop more valid methods to advise business owners on how to attain and sustain satisfying careers (Gorgievski et al., 2011, 208). Bates (2005) argues that it is important to understand the non-financial success criteria used by business owners, because owners who fail to fulfill their personal goals are more likely to close their business, even when those businesses are profitable. So, if a business does not grow, it does not necessarily mean that the business is financially performing poorly. The owner of the business may just not consider business growth as a success indicator of his business. Furthermore, when businesses are closed, it does not necessarily mean that they were not profitable, the owner could for example prefer more time with family above having his own business (Storey and Greene, 2010). In order to apply valuable policies to small businesses, it is important for a government to know what success criteria small businesses use (Van Praag, 2003).
individual entrepreneurs and small business owners. It is still unclear what exactly influences the choice of success criteria that small businesses make. Research by Stewart et al. (1998) has shown that business owners’ goals may vary depending on individual and business demographic factors such as age, gender, education and also type of business. Gorgievski et al (2011) investigated the relationship between gender and the use of certain success criteria, but did not find a significant relationship.
In order to clarify why business owners use certain success criteria, this paper focuses on the antecedents of the success criteria used by small businesses. Whereas most research especially focuses on the individual antecedents, this research tries to find out whether businesses with the same organizational characteristics consider business success in the same way.
This study investigates the organizational factors: size, industry, location, market orientation and the innovation, risk-taking and growth orientation of the business owner and their relationship with the use and importance of financial or non-financial success criteria. These organizational characteristics influence for example business growth, business closure, or business success. Therefore, it is possible that they also influence the choice of success criteria. Size of the business is investigated because many researchers expect that small businesses are more likely to grow because they have to reach the minimum efficient scale, whereas other researchers state that larger businesses are more likely to grow due to their sufficient human and financial capital to immediately overcome inefficiency problems (Storey and Greene, 2010). The industry of the business is studied because it has influence on growth of the business and on the likelihood of business closure (Storey and Greene, 2010). Furthermore, the industry of a business and how the business tries to protect itself from competition are pivotal to business success, which is the essential point behind Porter’s (1980) five forces framework. Although home-based businesses represent a large component of the SME sector, they have not got much attention from empirical research (Walker and Brown, 2004). Therefore, location is also chosen as organizational factor.
In order to be successful as a small business, it is argued that they have to be flexible, since they lack the opportunity of scale economies (Man et al, 2002). Although market orientation is a different organizational characteristic in nature than the other organizational factors, it is interesting to investigate it because especially small businesses need to be responsive to customers (Rangone, 1999). It is investigated whether the market orientation of a business influences the success criteria it uses.
seems to be an implicit assumption that the entrepreneur contributes in an important way to the economy of a country, little has been done to isolate the entrepreneur from the small business owner for further analysis (Carland et al., 1984). Since small businesses can be owned by small business owners and entrepreneurs, this study will also investigate whether small business owners and entrepreneurs differ in their considerations of success criteria. Entrepreneurs can be distinguished from small business owners by having a higher degree of innovation, risk taking and growth orientation (Carland et al., 1984; Mill, 1848).
The research question of this paper is:
‘How do size, location, industry and market orientation of the business, as well as innovation, risk-taking and growth orientations of the owner, influence small business success criteria?’.
The antecedents, at organizational environmental level, which may influence the success criteria used, are tested to discover why small businesses use certain success criteria to evaluate success. It is investigated whether and why small businesses use especially financial or non-financial success criteria. To answer the question, theory has been tested by doing an empirical study through distributing an online survey. Small businesses in the Netherlands have been asked to answer questions about the use and the importance they assign to success criteria.
The next section gives a theoretical framework to define business success, to discuss the success criteria used, and finally hypotheses will be set. The third section describes the methodology. Thereafter the findings are presented, analyzed and discussed. Finally, the research question is answered in the conclusion. When the term ‘small businesses’ is used during this paper, both entrepreneurs and small business owners are referred to. Small businesses are divided in small business owners and entrepreneurs. When this distinction is of interest, the terms small business owners and entrepreneurs are used separately.
2. Theoretical Background
This section discusses the existing literature about business success and different success criteria. Furthermore, the relevancy of investigating the chosen organizational factors is discussed, and finally, hypotheses are set.
Success can be defined as the achievement of something desired, planned or attempted (Maidique and Zirger, 1985; MacMillan et al., 1987). There are many other, less broad, definitions, and also definitions especially applied to small business success. However, no consensus has been reached. The most commonly used definitions in literature are business survival, business growth, financial criteria and individuals’ perception.
Business survival
Small business success has been defined in business literature in many different ways. In its simplest sense, small business success may be defined as the ability to survive or to remain in business (Lussier and Pfeifer, 2001). However, this definition seems to be too simple and narrow, because it assumes that young ventures that obtain profit decide to stay in the market while those that obtain losses end up abandoning the activity (Harada, 2002). But there are other reasons besides financial reasons to quit a business, which means that success and survival are very different concepts. The final decision to cease operations or stay in the market will partly depend on the entrepreneur and more specifically on his or her personal and professional interests, since in most cases this decision will have significant effect on his or her lifestyle (Perez and Canino, 2009, 994).
Business growth
Growth of the business may also be a criterion of success, however, not all small businesses may want to grow their business and some small businesses refuse to hire employees, even if it would be financially attractive (Gray, 1998). Walker and Brown (2004) also agree, based on their study that most small businesses are content to stay small. In accordance, Vesper (1980) has pointed out that many businesses never intend for their business to grow beyond what they consider to be a controllable size.
Financial criteria
Financial criteria have been used such as market share, sales growth, profitability and cash flow, to define small business success (Kelmar, 1990). Although these financial criteria are appropriate measures for examining success of large companies, they may not always be fully applicable to small entities. Jennings and Beaver (1997) suggest that many of the criteria simply identify the symptoms rather than the factors responsible for the success or failure of the enterprise.
Individual’s perception
differently. Owners, customers, suppliers and employees do use different criteria of organizational success, because different factors are important to them. The evaluation of success can also differ between persons in the same position, because according to Locke (1976), the criteria are undoubtedly related to an individuals’ satisfaction. There is substantial evidence that there may be a dispositional tendency to satisfactions that is different across individuals (Staw, Bell, and Clausen, 1986). Therefore, there is a reason to believe that different people are differently satisfied with the same level of performance, because they place diverse value to different organizational aspects.
From these definitions it becomes clear that there is no consensus in literature about the meaning of business success. In this study we choose to investigate what small businesses understand by the success of their business. The success criteria used depends on the perspective of the owner, and will therefore be different across businesses (Perez and Canino, 2009; Jennings and Beaver, 1997).
This idea is in line with one of the theoretical approaches of organization theory, namely the goal based approach. This approach suggests that an organization can be evaluated by the goals that it sets for itself (Etzioni, 1964). However, a difficult point is that the goals vary between organizations and can even be contradicting, which makes comparisons between organizations difficult. It is important to justify the way in which success is measured, because an effect of one chosen success variable does not guarantee that a similar effect will occur when other measures of success are used (Perrez and Canino, 2009, 993). So using different measures of success can make the outcome (success) very different across companies.
2.2 Success Criteria
This section shows the variety of success criteria that are identified from literature. Furthermore, methods of classification of these criteria are discussed and finally, one is chosen for this paper.
2.2.1 Variety of Success Criteria
Gorgievski et al (2011) reviewed management, business, entrepreneurship and psychological literature to identify a comprehensive list of possible small business success criteria, since there is a significant number of different success criteria used. Gorgievski et al. (2011) investigated the underlying motivators, the antecedents, of the success criteria used by small businesses. They hypothesize that small business’ success criteria reflect the value orientations of the owner. They ranked the success criteria after investigating 150 Dutch business owners as follows:
(Cooper and Artz, 1995). It bears upon many business decisions, i.e. whether to invest more time and money, whether to cut back or even whether to shut the business down.
2. Profitability: This criterion is about high yields, and getting a good profit margin. Profit and growth are the two main criteria most often used as performance measures in the entrepreneurship and small business literature.
3. Satisfied stakeholders: Satisfied and engaged employees and satisfied customers.
4. Balance between work and private life: Positive mutual influence between work and private life, allows time for you, family and friends.
5. Innovation: The introduction of new products or production methods. This criterion has been used less often as a performance criterion. It has been argued to be a critical part of firms’ activities. It is a means to increase growth and profitability of a firm, instead of being a separate goal/objective.
6. Firm survival/continuity: The business enables generational transfer or can be sold with a profit. It concerns the endurance or longevity of a company. Firm survival/continuity has been defined as the ability to continue the business for an indefinite period of time.
7. Utility/usefulness: The business fulfills a need in society; it provides an important service or product.
8. Contributing back to society: Socially conscious, sustainable production methods. It has been defined as meeting goals related to further social and environmental welfare beyond the direct economic, technical and legal interest of the firm.
9. Public recognition: Good reputation, prize winner.
10. Growth: Growth in the number of employees, sales, market share and /or distribution
One could argue that personal satisfaction should be ranked first because striving for personal satisfaction is always the underlying objective for all other objectives, including profit maximization. However, in the same study by Newby, Watson and Woodliff (2003) business owners rated financial returns and flexibility higher than personal satisfaction as objectives for the future (Gorgievski et al., 2011, 212).
2.2.2 Methods of classification
Many different classifications methods of success criteria exist. First of all, a distinction can be made between extrinsic and intrinsic outcomes (Paige and Littrell 2002). Extrinsic outcomes are financial performance, increased personal income and wealth (For example Burch 1986). Intrinsic factors are freedom and independence, and i.e. controlling your own future and being your own boss is an important intrinsic factor (Boyd and Gumpert, 1983).
processes and the human component of the firm, besides financial indicators, to provide information necessary to manage the firm. Therefore, they classified economic-financial indicators, which are indicators related to internal processes and indicators related to the customer and the workforce. They identified four perspectives: (1) The financial perspective, which includes all the economic and financial related data such as profit, liquidity or profitability. (2) The customer perspective, which comprises al the indicators related to customers and their affluence, satisfaction or loyalty. (3) The business process perspective, which refers to the volume and characteristics of internal business processes; and (4) the human capital perspective, which contains all those indicators related to human capital, from employees to entrepreneurs in the company. Perrez and Canino (2009) found that, while financial performance is the most used indicator of success in literature, customer satisfaction is the most used indicator by small businesses.
Finally, Pickle and Friedlander (1967) made another distinction from a different point of view. They took owner satisfaction as the most important criteria, and they considered it in two broad categories. First, financial satisfaction, including dollar amounts, return on investment, return on hours of work, profit relative to other organizations, previous financial record and growth potential. The second category is nonmonetary satisfaction which includes enjoyment and pride in ownership.
2.2.3 Classification in this paper
The classification of success criteria used in this paper is the distinction between financial and non-financial success criteria. This classification is most commonly used in literature and is closely related to the classifications used by Paige and Littrell (2002) and Pickle and Friedlander (1967). When making a distinction between financial and non-financial criteria, it is evident that the former has been given most attention in literature. They have generally been popular because those ‘hard’ measures can be easily administered and applied (Gibb and Davies, 1990; Ibraham and Goodwin, 1986). Those measures can be understood easily, and can be used for benchmarking. For instance Venkataraman and Ramanujam (1986) made a distinction between financial and non-financial performance, mentioning that financial measures have, for many years, been regarded as the most trustworthy measures of a company’s performance. According to Walker and Brown (2004) there is an implicit assumption of growth in the financial criteria, but it is already mentioned that not all businesses want to grow their business.
(1994, 180): ‘all businesses must be financially viable on some level in order to continue to exist’. So there must be other than non-financial criteria that these small businesses use to measure their business success. However, Walker and Brown (2004) found that owners of small businesses do not favor financial criteria over lifestyle criteria in how they measure their success. Personal satisfaction, pride and a flexible lifestyle were the most important non-financial criteria.
The success criteria identified by Gorgievski et al. (2011) are used in this paper. Basically, profitability, growth, innovation, and firm survival can be considered as financial criteria. Contributing back to society, personal satisfaction, satisfied stakeholders, good balance between work and private life, public recognition and utility can be considered as non-financial success criteria.
2.3 Hypotheses
Most small businesses put non-financial criteria above financial criteria, with the most widely used criterion being personal satisfaction (Gorgievski et al., 2011). However, it is still unclear what exactly influences the choice of success criteria that small businesses make. Personal factors were given most importance in literature, but it is also very interesting to investigate organizational factors. Organizational factors have for example influence on business success, growth and closure (Storey and Greene, 2010), making their influence on the use and importance of success criteria possible. Therefore, the organizational factors size, location, industry, market orientation and the innovation, risk-taking and growth orientation of the owner are discussed and hypotheses are set.
2.3.1 Size of the business
The results of the study of Gorgievski et al. (2011) indeed suggest that business characteristics may be associated with the way businesses define success. They found that for example business size is an important discriminatory variable. The larger the business the more important is continuity and business growth and the less important is a good balance between work and private life. A business owner of a larger company has more financial obligations than a business owner of a smaller company and should therefore be more focused on financial success rather than non-financial success. So when non-financial success criteria become less important when the business becomes larger, financial criteria become more important. Therefore it can be hypothesized:
H1a: Larger businesses are more likely to use financial success criteria H1b: Larger businesses are less likely to use non-financial success criteria
Walker and Brown (2004) studied companies in Australia. They investigated whether the location of a business has impact on the measures of success. They made a distinction between home-based businesses and externally based businesses. They found that the place where people choose to operate their business may well be an important factor in business owners’ measures of success, because businesses perceive different financial pressures related to whether the business has to pay accommodation expenses.
Non-financial factors were more important for home-based businesses than for externally based businesses and home-based businesses were less motivated by financial criteria compared to the externally based businesses. “Most businesses actually start off as small enterprises and often from a modest home-base, so the decision to grow and potentially move from a home-base has personal implications for the owner-operator in relation to aspects such as additional risk, both of financial and emotional nature” (Walker and Brown, 2004, 581). They also found that businesses that are financially motivated are in the minority and most small businesses are content to stay small and thus to keep their operations home-based.
Furthermore, their study shows that the longer a business operates from a home-base, the less likely it is that the business will move externally. They slip into a comfort zone and value a better work life balance higher than more financial rewards. Another important finding is that many home-based businesses are service oriented, therefore, there is no need to move out of home to external premises as the business can feasible be conducted from home due to the continuing technological advances in electronic communication (Walker and Brown, 2004). It is expected that businesses that are not operated from home-base are more likely to use financial success criteria. Furthermore, we expect that those businesses are less likely to use non-financial success criteria. Therefore it is hypothesized:
H2a. Non-home-based businesses are more likely to use financial success criteria H2b. Non-home-based businesses are less likely to use non-financial success criteria
2.3.3 Type of industry of the business
study they found that start-ups were significantly more likely to be service oriented, while inherited businesses were more likely to be wholesale and less likely to be service oriented. Furthermore, most retailers had very small businesses, while most manufacturers had much larger businesses in terms of the number of current and past employees. In this paper, a distinction is made between the service and the manufacturing industries.
Although it is expected that most home-based businesses operate in the service sector, it does not necessarily mean that all service businesses are home-based. Therefore the industry of the businesses is also included in this study. Service oriented businesses usually do not need to make large investments, because they can easier operate from home and they often do not need to buy expensive equipment. Furthermore, they deliver services as product; therefore, satisfied customers are very important to them. Manufacturing businesses usually have to make large investments and they care probably more about innovation and product quality. Therefore, it is expected that manufacturing businesses care more about financial success criteria and care less about non-financial success criteria than businesses in the service industry. Therefore it is hypothesized:
H3a: Manufacturing businesses are more likely to use financial success criteria H3b: Manufacturing businesses are less likely to use non-financial success criteria
2.3.4 Market orientation of the business
Market orientation is defined by Aaker (1989) as the creation of sustainable superior value for customers, which is important for a business in order to create a sustainable competitive advantage. Kohli and Jaworski (1990) define a market orientation as the organization wide information generation and dissemination and appropriate response related to current and future customer needs and preferences. The desire to create that value for customers drives a business to create a culture to really do so. Market orientation is in that sense the organization culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and, thus, delivers superior performance to the business (Narver and Slater, 1990, 21). Therefore, the business continuously needs to examine alternative sources to see how it can better serve the needs and give superior value to present and future target customers. A strong market orientation, when coupled with a culture that emphasizes entrepreneurship and innovativeness, promotes organizational learning (Slater and Narver, 1995).
Narver and Slater (1990) derived three behavioral components of market orientation from literature: customer orientation, competitor orientation and interfunctional coordination. Customer orientation is the understanding of the target buyers of one’s business in order to be able to create superior value for them. Competitor orientation is the understanding of the short-term strengths and weaknesses and long-term capabilities and strategies of the key current and the key potential competitors. Finally, interfunctional coordination typically involves more than the marketing department and is based on the customer and competitor information. Narver and Slater (1990) found that a greater market orientation of a business leads to greater business profitability. So businesses that are market oriented could financially perform at a higher level. It is therefore expected that a higher market orientation means a higher orientation on performance, which could mean that more performance-related (financial), and less non-financial success criteria are used. It is also possible that businesses that pursue high financial performance use more financial success criteria and are therefore more market orientated. Consequently, it is hypothesized. :
H4a: Businesses that are more market orientated are more likely to use financial success criteria
H4b: Businesses that are more market orientated are less likely to use non-financial success criteria.
2.3.5 Small business owners and entrepreneurs
The focus of this paper is on small businesses, which can be owned by a small business owner or by an entrepreneur (Carter and Jones-Evans, 2006). A person, who owns and manages an enterprise, does not need to be an entrepreneur (Martin, 1982).
“A small business owner is an individual who establishes and manages a business for the principal purpose of furthering personal goals. The business must be the primary source of income and will consume the majority of one’s time and resources. The owner perceives the business as an extension of his or her personality, intricately bound with family needs and desires. “
Whereas the definition of an entrepreneur is:
“An entrepreneur is an individual who establishes and manages a business for the principal purposes of profit and growth. The entrepreneur is characterized principally by innovative behavior and will employ strategic management practices in the business” (Carland et al., 1984, 358).
Gartner et al. (1992) suggest that an entrepreneur is both a manager and an owner with a willingness to accept risk and uncertainty. Furthermore, he is highly motivated to exploit change and profit from market niches. Also Steward et al. (1998) found that an entrepreneur is a risk-taker. Because of his vision, an entrepreneur is highly self-motivated and is therefore willing to take greater risks and can live with higher uncertainty (Burns, 2007). That is why the entrepreneur has a growth firm and pursues growth and personal wealth.
Carland et al. make a distinction between small business owners and entrepreneurs, because entrepreneurs are important for economic growth. Another reason why it is important to differentiate between small business owners and entrepreneur when studying business success is because different groups may strive for different goals (Wagener, Gorgievski and Rijsdijk, 2008). Recent investigations for example showed that business owners, who are guided by personal values of power and achievement, add more value to business growth as success criterion and also have larger businesses than business owners who value power and achievement less (Gorgievski and Zarasfhani, 2008). In contrast, business owners with other value orientations valued other success criteria more, such as having satisfied customers and employees, or social and environmentally friendly enterprising (Wagener et al., 2008).
Innovation, risk-taking, growth
orientation
H5a: Entrepreneurs are more likely, in comparison to small business owners, to use financial success criteria
H5b: Entrepreneurs are less likely, in comparison to small business owners, to use non- financial success criteria.
A visualization of all the hypotheses can be found in the conceptual model in figure 1.
Figure 1: Conceptual model
3. Methodology
The goal of this research is to identify the use and importance of success criteria as they are used by small businesses in the Netherlands. Furthermore, it is investigated what organizational factors influence the perceptions of the small businesses about the importance and the use of certain success criteria. Therefore a quantitative approach is used. The questionnaire measures the use and importance of success criteria and also contains questions about the independent variables of this research: size, location, industry and market orientation of the business. Furthermore, there are questions to measure whether the small business owner is highly innovative, risk-taking and growth oriented, and could
Business size
Use and importance of financial success criteria Business industry Market orientation Business location Control variable: age of the business
therefore be identified as an entrepreneur. The final questionnaire, as it is sent to small business owners in the Netherlands, is a combined questionnaire. It contains questions of another master student who also investigates the antecedents of success criteria used by small business owners, but he focuses on the influence of individual factors, while this research focuses on organizational factors.
This section describes the questionnaire development and procedure. Furthermore, it describes the methods that are used to test the hypotheses. Finally, the subsection ‘variables’ shows the concept constructs, the independent variables and the dependent variables together with the Cronbach alpha’s and the control variable.
3.1 Questionnaire Development
Most questions in the questionnaire are based on the articles of Walker and Brown (2004), Gorgievski et al, (2011) Narver and Slater (1990) and Hult, Snow, and Kandemir (2003). The concepts that are used by those authors and the question methods applied by them are copied, but the questions derived from the articles are rewritten and translated in Dutch, because the questionnaire is sent to Dutch businesses.
3.2 Procedure
For the questionnaire a list of small businesses has been used. The list is composed by another master student through a commercial database Orbis, available from bureau van Dijk. This student made a selection from all Dutch businesses that not exceeded 50 employees, in total a sample of 3288 Dutch small businesses. This sample will be used in this thesis as well, but it is necessary to mention the shortages of it. First of all, because the questionnaire was sent by email, the businesses without email addresses were excluded from the selection. Another imperfection is that it is one year ago that the email-list was derived from the database, which means that companies that started one year ago until now were also excluded from the selection. Another point is that some email addresses did not exist anymore probably because the company quitted. Furthermore, some businesses have had a growth in the number of employees, which makes the business size larger than the intended 50 employees. Data of two respondents have been removed because their businesses had both more than 100 employees while one of them even had 463 employees. Besides those, there are only a few respondents who own businesses with more than 50 employees. One has a business with 100 employees but there are way more employees than fte’s. Therefore, these data are not removed.
Two weeks after the first email was sent the intended amount of 80 completed questionnaires was not reached. Therefore; a second email was sent to the businesses that did not respond the first time. Two weeks later a total of 380 questionnaires had been received and the questionnaire was closed. There was a total of 177 completed questionnaires, so the total response rate was 5,4 percent. A completed questionnaire does not necessarily indicate that all questions are fully answered. Therefore, we took a closer look at the questionnaires with one or more missing values, and decided to delete the ones with too many missing values in important questions. Finally we ended up with a total of 151 usable completed questionnaires.
The response rate of 5,4 percent does not meet the normal response rate for online surveys of 10 to 20 percent (Borque and Fielder, 2003). The reasons for the lower response rate could be the earlier mentioned one year old email list, which made the list a bit outdated. Another reason could be that the questionnaire was too long, because two questionnaires were combined, and therefore many respondents did not fully complete the questionnaire. Finally, there were a lot of general email addresses like info@company.nl. These email addresses usually do not directly lead to the owner of a company and can be easily deleted. However, we easily reached the required amount of 80 respondents, so the lower response rate does not need to harm this research.
Descriptives
respondents (56%) is highly educated. 34,7 percent of all the respondents finished a HBO study and 21,3 percent finished a WO study. More than half of the respondents are operating in the service sector. Only a relatively small part (29,3%) is operating from their home. The average number of employees of the businesses is 13,36, whereas the average number of fte’s is 10.67. Most businesses have an average yearly turnover between 50.001 and 1.000.000 Euros. The percentages of the characteristics of the businesses and the business owners can be found in the table below.
Characteristic Percentages Male 79,3 Female 20,7 31-40 years 9,4 41-50 years 30,2 51-60 years 44,3
61 years and older 16,1
High educated 56 Service sector 66,4 Home base 29,3 Average turnover: Less than 50.000 10,6 50.001 – 500.000 27,8 500.001-1.000.000 15.9 1.000.001-2.000.000 10,6 2.000.001 – 5.000.000 16,6 5.000.001- 10.000.000 6 More than 10.000.000 7,3*
* The reason that the cumulative percentage of the average turnover is not 100 is that some business owners did not want to give information about their average turnover
Table 1: Descriptives
3.3 Models Tested
The importance of the success criteria and the use of the success criteria are ranked according their means. Furthermore, the different constructs are ranked. To investigate if the means are significant different, a paired-samples t-test is conducted. Furthermore, to investigate whether entrepreneurs are more or less likely, in comparison to small business owners, to use financial or nonfinancial success criteria, the respondents are divided in a group of entrepreneurs and a group of small business owners. Then, the constructs are ranked again. To check whether the means of the two groups are significant different, an independent-samples t-test is conducted.
between two variables. The correlation between two variables could be due to the fact that A causes B, that B causes A, or that an additional variable causes both A and B (Pallant, 2005). Finally, regression analysis is used to investigate if the organizational characteristics: size, location, industry, market orientation and the innovation, risk taking and growth orientation of the owner influence the constructs financial, autonomy, recognition/pride, flexibility, social responsibility/stakeholders and personal satisfaction.
Although the questionnaires with too many missing values have been deleted, there are still questionnaires with some missing values. For those, the box ‘exclude cases pair wise’ is picked for all tests. It excludes the cases only if they are missing the data required for the specific analysis. They will still be included in any of the analyses for which they have the necessary information (Pallant, 2005). It is also possible to exclude cases list wise, then a case will be totally excluded from all the analyses if it is missing even one piece of information. This can severely and unnecessary limit the sample size, therefore the first option is chosen.
3.4 Variables
This section gives an overview of the concept constructs, the dependent variable, the independent variables, and the control variable.
3.4.1 Concept constructs
Variable Construct Criteria Labels Cronbach’s Alpha Success criteria
Financial Ftotal F1,F2,F3,F
4,F5,F6
Making money, Profit, Continuity, Growth, Innovation
0,760
Autonomy Atotal A1,A2,A3 Own boss, independent, freedom
0,731
Recognition/pride Rtotal R1,R2,R3 Respect, pride, reputation 0,752
Flexibility FLtotal FL1,FL2,F
L3,FL4
Lifestyle, own time, family time, divide own time 0,676 Social responsibility/ Stakeholders SRtotal + Stotal SR1,SR2,S R3,SR4, S1,S2,S3 Employ people, responsibility, social benefit, Customer and employee satisfaction
0,770
Personal satisfaction PStotal PS1,PS2 Personal goals, satisfaction 0,769 Market orientation Competitor orientation COMPtotal COMP1, COMP2 Competitor information sharing 0,823 Customer orientation CUSTtotal CUST1, CUST2, CUST3, CUST4
Customer satisfaction and needs
0,658
Interfunctional coordination
INTtotal INT1, INT2 Information distribution 0,799 SBO vs.
Entrepreneur
SEtotal SE1, SE2,
SE3
Innovation, growth, risk 0,600
Table 2: Concept constructs
3.4.2 Dependent variable
The dependent variable is the criteria used by small businesses to measure success. Like mentioned before in the theory section, there are many ways of classifying these criteria, but we decided to divide them in financial and non-financial success criteria.
recognition/pride, flexibility, social responsibility, personal satisfaction and stakeholder satisfaction. The criteria with their definitions and corresponding literature can be found in the table below. The table is derived from the master thesis of Maatman (2010). The questions regarding these concepts can be found in appendix A.
Criteria Definition Literature
Financial Objective such as market share, sales, growth, profitability and cash flow
Storey et al., 1987
Autonomy Being your own boss
concerning work distribution
Volery, Doss, Mazzarol and Thein 1997
Recognition/pride Image of a business owner determined by the society or the business owner himself
Volery, et al. 1997
Flexibility Having freedom in the things you do related to time distribution
Birley and Westhead 1994
Social responsibility Goals related to further social and environmental welfare beyond the direct economic, technical and legal interest of the firm
Gorgievski et al 2011
Personal satisfaction Personally oriented objectives of the business owner
Gorgievski et al 2011 Stakeholder satisfaction Satisfaction of customers and
employees
Gorgievski et al 2011
Table 3: Dependent variables
3.4.3 Independent variables
Variable Way of measuring
Size Amount of FTE, number of employees, turnover
Location Home-based or externally based
Industry Service or manufacturing
Customer orientation High or low customer orientation Competitor orientation High or low competitor orientation Interfunctional coordination High or low interfunctional coordination SBO vs. Entrepreneur Innovation, growth, risk-taking
Table 4: Independent variables
3.4.4 Control variables
In order to make the multiple regression test more reliable, a control variable is used. The age of the business owner is chosen as control variable. The age of a person can for example have influence on the likelihood that he or she starts a business (Storey and Greene, 2010). There are two contrasting arguments. The first states that young people are best placed to run growth businesses, because they are more likely than older entrepreneurs to have the necessary energy and enthusiasm to both seek and achieve growth. The counter argument is that young people lack the required business experience, capital, and contacts to successfully grow a business. Because older and younger people differ in their enthusiasm and experience, it is possible that they also use different success criteria. In order to make sure that age does not disturb the results of this study, we will use it as a control variable.
4. Findings
This chapter presents the findings of the survey. First the most frequently used and the most important success criteria are presented. Thereafter a correlation analysis is done. Finally, it is investigated whether scores on the success criteria can be explained by the organizational characteristics size, location, industry, market orientation and whether entrepreneurs differ from small business owners regarding their success criteria.
4.1 Use and Importance of Success Criteria
Rank Criteria N M S.D. 1 Customer satisfaction 151 5,4 0,591 2 Personal satisfaction 151 5,22 0,711 3 Being independent 151 5,16 0,817 4 Obtain personal goals 150 5,11 0,716 5 Personal Freedom 150 5,07 0,803
6 Being your own
boss
151 5,03 0,832
7 Divide own time 151 4,85 0,950
8 Family time 151 4,73 0,993
Lowest Giving people a job
152 3,76 1,394
Table 5: Importance of success criteria
Table 6 presents the ranking of the use of different success criteria, by again computing the means. It now appears that satisfied employees and customers is ranked first, reputation is ranked second and a good balance between work and private time is ranked third. Business growth is ranked lowest with only a mean of 3,61. Rank Criteria N M S.D. 1 Satisfied employees and customers 150 5,29 0,729 2 Reputation 151 5,03 0,898 3 Balance between
private and work
150 4,84 0,875 4 Personal satisfaction 150 4,67 0,916 5 Profit 151 4,45 0,900 6 Continuity of the business 151 4,44 1,252 10 Business growth 150 3,59 1,281
Table 6: Use of success criteria
The magnitude of the differences can be found by calculating eta squared. The formula for eta squared is as follows:
An eta squared of 0,01 is a small effect, 0,06 is a moderate effect, and 0,14 is a large effect (Cohen, 1988). The eta squared statistic of autonomy and flexibility is 0,14, which indicates a large effect. The eta squared statistic of flexibility and stake/social is 0,02 which indicates a small effect. The eta squared of recognition/pride and financial criteria is 0,05 which indicates a moderate effect.
Rank Construct N M S.D. 1 Personal satisfaction 150 5,1633 0,64375 2 Autonomy 150 5,0889 0,65954 3 Flexibility 150 4,7567 0,67738 4 Stakeholder/social responsibility 146 4,5900 0,70171 5 Recognition/pride 149 4,5548 0,85390 6 Financial 148 4,2275 0,72847
Table 7: Concept ranking
Table 8 shows the ranking of the success criteria of small business owners and entrepreneurs. The ranking is for both groups the same except for stake/social and flexibility. Those criteria are ranked third and fourth for small business owners, while it is the other way around for entrepreneurs. An independent-samples t-test is conducted to compare the success criteria constructs means for small business owners and for entrepreneurs. There is only a significant difference in scores for small business owners and entrepreneurs regarding financial success criteria (sig: 0,000). The magnitude of the differences in the means was moderate (eta squared: 0,08). There are no significant differences in the means of the other constructs.
Rank Construct SBO M Construct E M
1 Personal satisfaction 5,16 Personal Satisfaction 5,18 2 Autonomy 5,08 Autonomy 5,11 3 Stake/social 4,51 Flexibility 4,78 4 Flexibility 4,74 Stake/Social 4,67 5 Recog/pride 4,61 Recog/pride 4,49 6 Financial 4,03 Financial 4,45
4.2 Statistical Tests
This section presents the correlation and the multiple regression tests.
4.2.1 Correlation
Measures 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1.Financial 2.Autonomy ,071 3.Regoc/pride ,196* ,238** 4.Flexibility ,159 ,630** ,387** 5.Pers.Satis ,037 ,559** ,307** ,511** 6.Stake/social ,425** ,104 ,357** ,185* ,293** 7.T Non F - - - - 8.Size ,354** -,182* -,067 -,180* -,099 ,304** ,025 9.Industry -,057 ,120 -,002 ,096 ,092 -,007 ,076 -,213* 10.Location ,246** -,070 -,047 -,060 ,033 ,209* ,049 ,499** -,081 11. T market ,562** ,036 ,185* ,147 ,210* ,457** ,383** ,398** ,048 ,366** 12.Comp ,519** -,026 ,196* ,128 ,124 ,314** ,270** ,310** ,061 ,381** - 13.Cust ,418** ,175* ,158 ,244** ,324** ,413** ,429** ,273** ,065 ,127 - ,558** 14.Int ,485** ,011 ,117 ,071 ,138 ,457** ,329** ,403** ,011 ,366** - ,657** ,576** 15.SBO/E ,285** ,023 -,071 ,028 ,016 ,113 ,084 ,330** -,044 ,274** ,362** ,342** ,351** ,245** **. Correlation is significant at the 0.01 level (2-tailed) Table 9: Pearson product-moment correlations
4.2.2 Regression
Multiple regression is a family of techniques that can be used to explore the relationship between one continuous dependent variable and a number of independent variables or predictors (Pallant, 2005). Basically multiple regression is based on correlation but allows a more sophisticated exploration of the interrelationship among a set of variables. Multiple regression can tell how well a set of variables is able to predict a particular outcome. It can tell which variable in a set of variables is the best predictor of an outcome, and whether a particular predictor variable is still able to predict an outcome when the effects of another variable are controlled for.
Table 10 shows the significant results from the hierarchical multiple regression analysis. The dependent variables are the six constructs and the independent variables are size, location, industry, market orientation and the differences between small business owners and entrepreneurs (measured by innovation, risk-taking and growth orientation). The control variable is the age of the business owner. The beta in the table shows the linear relationship between the dependent and the independent variables. A beta of 0,10 represent a weak or small relationship, a beta of 0,30 moderate and a beta of 0,50 or larger represents a strong relationship (Cohen, 1988). The B in the table represents the unstandardized beta and the SE shows the standard errors. If the significance is less than 0,05, then the variable is making a significant unique contribution to the prediction of the dependent variable.
Dependent variable
R square change
Significance Coefficients Beta B SE
Financial criteria ,340 0,000 Competitor orientation ,296 ,164 ,059 Autonomy ,141 ,030 Customer orientation ,254 ,195 ,089 Autonomy ,141 ,005 Size -,320 -,280 ,098 Flexibility ,133 ,025 Customer orientation ,263 ,208 ,091 Flexibility ,133 ,008 Size -,299 -,268 ,100 Recog/pride - - - - Stake/Social ,259 ,030 Customer orientation ,237 ,194 ,089 Stake/Social ,259 ,012 Interfunctional coordination ,299 ,163 ,064 Personal Satisfaction ,165 ,001 Customer orientation ,403 ,303 ,086 Personal satisfaction ,165 ,011 Size -,286 -,243 ,095 Total non-financial ,211 ,004 Customer orientation ,335 ,185 ,062
From the table can be seen that there is no significant relationship between industry and location with financial or non-financial success criteria, which means that H2 and H3 are not approved. Also H5 about the relationship between differences between small business owners and entrepreneurs and the use of financial or non-financial success criteria cannot be approved. Size is negatively related with autonomy, flexibility and personal satisfaction. It is not significant positive related with financial criteria as we expected, therefore, we cannot approve H1a. Furthermore, size does not have a significant relationship with the total non-financial success criteria. Therefore we cannot completely approve H1b.
Table 11: Significant outcomes of the second hierarchical multiple regression test
5. Analysis and Discussion
Now after the findings of the statistical tests have been given; the results will be analyzed, and compared with literature. First the different rankings of the success criteria will be discussed. Next, the discussion focuses on the outcomes of the correlation analysis and the multiple regression analysis.
5.1 Importance and Use of Success Criteria
In the questionnaire a difference is made between how important respondents thought different criteria were, and the actual use of certain success criteria in their businesses. With a mean of 5,4 on a Likert scale of 1 to 6, customer satisfaction is seen as the most important success criteria for small businesses. Personal satisfaction; being independent; obtain personal goals; personal freedom and being your own boss follow. Making money is ranked low. This ranking could indicate that small businesses give great importance to their own well-being while financial criteria are less important to them. Giving other people a job is ranked lowest what could indicate that small businesses do not give that much importance to social responsibility. It could also indicate that small businesses do not want to grow their business.
Dependent variable
R square change
Significance Coefficients Beta B SE
Financial ,335 ,000 Total market
orientation ,461 ,355 ,066 Autonomy ,101 ,008 Size -,309 -,270 ,100 Autonomy ,101 ,045 SBO vs. Entrepreneur ,211 ,150 ,074
Recog/Pride ,067 ,014 Total market orientation
,271 ,231 ,093
Flexibility ,106 ,009 Size -,306 -,274 ,102
Regarding the use of different success criteria, satisfied employees and customers is ranked first with a mean of 5,29 followed by reputation and balance between private time and work. Business growth is ranked lowest, which is in line with literature mentioned earlier, that many businesses do not see growth of their business as the most important goal.
So in both rankings respectively customer satisfaction and satisfied employees and customers are ranked first. The striking point here is that when those criteria would be combined as a construct, measuring stakeholder satisfaction, it does not lead to a satisfying Cronbach’s Alpha, meaning that both criteria do not measure the same construct. This indicates that people, who thought that customer satisfaction was very important, did not fill in that they also use the success criteria of satisfied customers and employees. This also is applicable the other way around. People, who use the criteria of satisfied employees and customers, did not fill in that a satisfied customer is very important to them. An explanation could be that for some people, while it is important, it is not doable to use certain criteria, which maybe because of external influences.
The different success criteria are combined in six constructs. With a mean of 5,1633, personal satisfaction is ranked first. Followed by: autonomy; flexibility; stakeholder/social responsibility; recognition/pride; and finally financial success criteria. Walker and Brown (2004) ranked personal satisfaction also at the first place, pride and flexibility followed. They also found that financial criteria were least important to business owners, the same as our results. The means of personal satisfaction and autonomy are not significant different, which indicates that they both could be ranked fist. The means of autonomy and flexibility are significant different with a large effect. This indicates that flexibility indeed should be ranked lower than autonomy. Only a small difference in the means of flexibility and stake/social exists. A moderate difference exits between the means of recognition/pride and financial criteria. This indicates that financial criteria are indeed less important for small businesses to measure success than non-financial criteria (Walker and Brown, 2004).
Small business owners vs. entrepreneurs
criteria for small business owners and entrepreneurs are significant different with a moderate effect. These results indicate that entrepreneurs are more likely to use and give importance to financial success criteria in comparison to small business owners.
5.2 Influence of Organizational Factors
The relationship between the organizational factors size, industry, location, market orientation and the differences between small business owners and entrepreneurs with success criteria constructs have been tested.
Size
The relationship between the size of the business and success criteria has been tested with correlation and multiple regression. In the correlation analysis, size shows a significant positive relationship with financial success criteria and stake/social. The analysis shows a significant negative relationship with autonomy and flexibility. The multiple regression analysis shows significant negative relationships with autonomy (Beta: -,320), flexibility (Beta: -,299), and personal satisfaction (Beta: -,286). These relationships have a moderate effect. The results indicate that when the business is larger, some non-financial criteria become less important. Since size does not have a significant relationship with all non-financial success criteria, we cannot completely approve H1b: ‘larger businesses are less likely to use non-financial success criteria’. Furthermore, size is not positively related with the use and importance of financial criteria, therefore H1a: ‘larger businesses are more likely to use financial success criteria’, cannot be approved regarding the regression analysis. Although the hypotheses cannot be approved, it is clear that size does have influence on success criteria. When the size of the business is larger, autonomy, flexibility and personal satisfaction become less important.
Location
The correlation analysis shows that location has a significant positive relationship with financial success criteria and with stake/social. This result could indicate that externally based businesses give more importance to financial success criteria than home-based businesses, although it is unclear if location influences financial success criteria or the other way around. The regression analysis does not show any significant relationship between the location of the business and the use and importance of success criteria. Therefore, probably other variables have influence on the relationship. Hypotheses 2a, based businesses are more likely to use financial success criteria’, and 2b, ‘non-home-based businesses are less likely to use non-financial success criteria’, cannot be approved.
Industry
importance of success criteria. Therefore, H3a, ‘manufacturing businesses are more likely to use financial success criteria’ and H3b, ‘manufacturing businesses are less likely to use non-financial success criteria’ cannot be approved. It indicates that the industry in which the business operates does not influence the success criteria of small business owners.
Competitor orientation
The correlation analysis shows that competitor orientation has a significant positive relationship with financial success criteria, recognition/pride, stake/social and with total non-financial success criteria. The multiple regression analysis only shows that competitor orientation has a positive significant relationship with financial criteria (Beta: ,296). It is hypothesized that companies that are more market oriented are more likely to use financial success criteria. The hypothesis can be approved regarding the competitor orientation part of market orientation. A business that is more oriented on competitors is more likely to use financial success criteria; however, the effect size is moderate. It is not clear from these results whether businesses that are more competitor oriented are also less likely to use non-financial success criteria.
Customer orientation
Customer orientation shows a significant positive correlation with financial success criteria, flexibility, stake/social, personal satisfaction and total non-financial success criteria. The multiple regression analysis shows that customer orientation has a positive significant relationship with autonomy (Beta: ,254), flexibility (Beta: ,263), stake/social (Beta:, 237), personal satisfaction (Beta: ,403) and with total non-financial success criteria (Beta: ,335). It is hypothesized that businesses that are more market oriented are more likely to use financial success criteria. However, the multiple regression analysis does not show that relationship. Customer orientation only has significant positive relationships with almost all non-financial success criteria and with the total non-financial success criteria construct. Although the hypothesis cannot be approved regarding customer orientation, it is interesting that more customer orientation leads to more importance given to and more use of non-financial success criteria.
Interfunctional coordination
non-Total market orientation
Since customer orientation and competitor orientation have both a different effect on success criteria, a higher customer orientation leads to the use of more non-financial success criteria, while a higher competitor orientation leads to the use of more financial success criteria, another regression analysis is done to measure the total effect of market orientation on success criteria. This analysis shows that market orientation has a significant positive effect on financial success criteria (Beta: ,461) and also a significant positive effect on non-financial success criteria (Beta: ,402). This means that a higher market orientation leads to the use of more financial success criteria, which approves H4a: ‘businesses that are more market oriented are more likely to use financial success criteria’. Furthermore, a higher market orientation leads to the use of more non-financial success criteria, which we did not expect in the first place. Therefore, we cannot approve H4b: ‘businesses that are more market orientated are less likely to use non-financial success criteria’. So when market orientation is higher in a business, both financial and non-financial criteria become more important. From the two multiple regression analysis we can see that competitor orientation is positively related with the use of financial success criteria, whereas customer orientation is positively related with the use of non-financial success criteria.
Small business owners vs. entrepreneurs
Innovativeness, risk-taking and growth orientation shows a significant positive correlation with financial success criteria. The multiple regression analysis does not show significant relationships between innovativeness, risk-taking and growth orientation and success criteria. This indicates that being a small business or entrepreneur does not necessarily influence the use of success criteria. Therefore, H5a: ‘entrepreneurs are more likely, in comparison to small business owners, to use financial success criteria’, and H5b: ‘entrepreneurs are less likely, in comparison to small business owners, to use non-financial success criteria’, cannot be approved.
6. Conclusion
6.1 Conclusion
It is investigated whether size, location, industry, market orientation and the innovation, risk-taking and growth orientation of the business owner influence the success criteria of small businesses. It was expected that larger businesses are more likely to use financial success criteria, but this could not be approved. However, larger businesses give less importance to some non-financial success criteria. The location and the industry of the business do not influence the use of different success criteria. Furthermore, the differences between small business owners and entrepreneurs do not have a relationship with success criteria.
It was expected that businesses that are more market orientated are more likely to use financial success criteria and less likely to use non-financial success criteria. The intention was to measure market orientation along three dimensions: competitor orientation, customer orientation and interfunctional coordination. Some interesting results are found. First of all, a business that is more oriented on competitors is more likely to use financial success criteria. Second, a business that is more oriented on customers is more likely to use non-financial success criteria, instead of financial criteria as expected. Third, a higher interfunctional coordination does not lead to either a higher use of financial or non-financial success criteria. So, a higher customer orientation and a higher competitor orientation lead to different results. When investigating the relationship of total market orientation with success criteria, the results show that a higher market orientation leads to a higher use of financial as well as a higher use of non-financial success criteria. It could indicate that when businesses are more market oriented, they pay in general more attention to success criteria.
Overall, as an answer on the research question: ‘How do size, location, industry and market orientation of the business, as well as innovation, risk-taking and growth orientations of the owner, influence small business success criteria?’, it can be concluded that there are organizational characteristics that have influence on the success criteria of entrepreneurs and small business owners. Especially market orientation has influence, and also the size of the businesses, although this relationship is less clear. This study has not found a significant relationship with location, industry and the differences between small business owners and entrepreneurs.
6.2 Limitations and Future Research
